Consolidated Theatres looking for new owner
By Andrew Gomes
Advertiser Staff Writer
The owner of Consolidated Theatres has decided to exit the Hawai'i movie business after 44 years and put the chain with 109 screens on three islands up for sale.
Los Angeles-based Pacific Theatres late last week told its 750 Hawai'i employees of the decision, which it said it made to concentrate on operating 300 theater screens in California.
The company said it is only beginning the process of marketing the theaters, and noted that it may not be able to reach an agreement to sell its Hawai'i operations held by subsidiary Consolidated Amusement Co.
Pacific Theatres estimated that if it finds a buyer, it would take another six to 18 months to complete a sale.
If reached, a deal would introduce a new dominant theater operator in one of the most saturated markets in the country, and transfer control of a company with an 86-year history in Hawai'i.
Observers said a sale also could provide an opportunity for one of Consolidated's rivals to thin out the market by acquiring several strong theaters and closing competing locations, or it could attract one of the industry's giants.
Dennis McAlpine of independent media and entertainment research company McAlpine Associates in New York said Missouri-based AMC Entertainment, which has previously explored a Hawai'i expansion and has theaters overseas, would be an obvious suitor.
Other big companies that have been buying smaller chains include the nation's largest, Tennessee-based Regal Entertainment Group, which has about 6,000 screens, or nearly twice as many as AMC.
Oregon-based Wallace Theatres has about 550 screens, including about 70 screens in Hawai'i. Signature Theatres of California operates about 250 screens, including 40 in Hawai'i.
Representatives of the potential buyers could not be reached yesterday. But analysts said that consolidation among the mid-size and giant movie theater operators has been ongoing for several years.
"Consolidation has been and continues to be a routine facet of the theater exhibition market," said Lee Westerfield, a media analyst for New York-based investment banking firm Jefferies & Co. Inc. "Consolidation helps the economics for operators."
Hawai'i has been called one of the most saturated theater markets in the country, with roughly one movie screen for every 5,500 residents — nearly double the industry's rule of thumb of one screen per 10,000 people.
In recent years, Hawai'i movie theater operators have faced what former Consolidated president Phil Shimmin said was flat revenue and increased expenses, according to a March 2001 interview. Shimmin retired in May 2001.
A Consolidated spokeswoman yesterday said the company's decision to sell does not have to do with performance.
For several years, Consolidated has been closing underperforming locations with few screens and no stadium seating, and leasing, redeveloping or selling the real estate.
The company also has added a few more modern multi-plexes, including 16 screens at Ward Centres, which opened two years ago, and 10 screens at Temple Valley Shopping Center, which opened in 1999.
Last year, Consolidated closed its trio of theaters in Waikiki and is planning to redevelop the property into retail stores.
The Waikiki theater property and other Consolidated real estate is not for sale. The company leases all or nearly all of the real estate under its theaters in Hawai'i, which are on O'ahu, Maui and the Big Island.
Estimating a price for Consolidated's theater business is difficult, because values are based on operating revenue rather than theater seats. Business information provider Hoover's pegged 2001 revenue for Pacific Theaters at $150 million. According to a 1997 study from the U.S. Census Bureau, Hawai'i movie theater revenue totaled $62 million.
Consolidated Amusement was established in 1917. In 1958, the company, which then owned 18 theaters and 75 percent of TV station KGMB and a radio station, was sold for $8 million to investors from Oklahoma. Pacific Theatres, a firm founded in 1946 by William Forman, bought Consolidated's theater business a year later.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
