Signature Theatres' Windward Mall complex is among the company's properties being sold to Regal Entertainment Group.
SOLD!
Regal Entertainment of Tennessee
buys isles' Signature Theatres
The country's largest movie theater chain has agreed to buy California-based Signature Theatres, owner of the 18-screen Dole Cannery complex and three other Hawaii cinemas, in a deal likely to put pressure on Hawaii's other theater operators.
The acquisition marks the Hawaii debut for Knoxville, Tenn.-based Regal Entertainment Group, which has been aggressively expanding and owns 545 theaters containing 6,020 screens, giving it nearly 17 percent of all movie screens in the country.
Movie royalty
Regal Entertainment Group, the country's largest movie theater chain, is buying California-based Signature Theatres, including its Hawaii properties.
Signature's Hawaii theaters
Dole Cannery, 18 screens
Windward Stadium, 10 screens
Pearl Highlands, 12 screens
Keauhou, Big Island, 7 screens
Regal Entertainment
Home base: Knoxville, Tenn.
Properties: 545 theaters with 6,020 screens
Market share: Nearly 17 percent of all U.S. movie screens
Buying spree: Signature would be the 15th movie theater circuit acquired by Regal.
Source: Associated Press
The industry has brought diminishing returns in recent years, partly because of the rise of home entertainment. But Regal has pursued a strategy of snapping up premium theater properties and closing older venues, and is rolling out new services at mainland theaters that include renting out theaters for meetings and screening music concerts.
Regal's Chief Executive Officer Mike Campbell said Signature's Hawaii theaters, all developed since 1996, fit perfectly with the acquisition strategy.
"We saw these as high-quality, modern assets," Campbell said in an analyst's conference call yesterday.
Regal said it will buy all 30 theaters and 309 screens controlled by Signature, which is based in San Ramon, Calif., as well as seven theaters with a total of 75 screens in separate deals on the East Coast. The total price for all 37 theaters was $226 million.
Executives with both Regal and Signature were unavailable for further comment.
The Hawaii theaters involved in the deal are the Signature Dole Cannery, Pearl Highlands and the Windward Stadium venue at Windward Mall, as well as the Keauhou 7 complex on the Big Island. None of the venues will involve land sales, since each complex is leased.
The transaction is expected to inject a new dynamic into the local movie theater sector -- long seen as having a glut of movie screens -- that could put further pressure on Signature's competitors Consolidated Amusement and Wallace Theatres.
Though still the largest theater chain with nine venues in Honolulu, Consolidated's commitment to staying on top has been questioned recently since the company, which owns the land under many of its theaters, could see potentially higher returns in redevelopment than it would in the theater business.
The company closed its Waikiki theaters last year and plans to redevelop the property for retail. Parent company Pacific Theatres of California said late last year that it was considering selling Consolidated Amusement or exploring "other opportunities."
Wallace, meanwhile, has resorted to discounted tickets to try to lure more business to its four older and smaller-capacity theaters.
"Whenever you have someone like (Regal) coming in with a lot of money behind them, they have the power to change a marketplace, especially in a market in flux like we have here," said retail analyst Stephany Sofos.
A spokeswoman for Consolidated Amusement declined comment.
Regal recently began rolling out new gimmicks at its existing theaters that are aimed at luring more customers and taking advantage of downtime during low periods. These include the meetings and concert screenings, as well as 20-minute programs that mix content from NBC News and other providers with advertising. Similar blends of educational, entertainment and advertising content have been rolled out in theater lobbies.
Campbell said the company would study whether to introduce those offerings in the theaters it planned to acquire.
Gordon Hodge, an entertainment analyst with Thomas Weisel Partners in San Francisco, said it was likely that Regal would do so.
"That's been their whole strategy: to acquire high-quality assets and try to lure customers with these new things," he said.
Hodge said that otherwise, he would expect the deal to have little impact on Signature's Hawaii theaters, either in terms of staffing or format, calling Signature "a well-run circuit with a nice footprint." Regal has not always changed the name of the chains it acquires.
The sale came as a surprise to Signature's local staff.
Hawaii region manager Ian Anselmo said the news was "totally unexpected."
"I'm not sure why they'd want to sell. We had a great year last year," he said. "Maybe they just got a really good offer."
