LATEST CHAPTER 11: UA

With 752.3 mil in debt, exhib joins competish

By DAVE MCNARY

The United Artists chain, continuing the blood bath in the exhibition sector, has filed for Chapter 11 federal bankruptcy protection.

UA, the nation's sixth largest chain with 225 theaters, declared that the filing will enable it to continue operations and eventually return to profitability.

The prepackaged filing in U.S. Bankruptcy Court in Wilmington, Del., listed $16.8 million in assets and $752.3 million in debts for parent United Artists Theatre Circuit Inc. It includes a debt-restructuring plan that will transfer 55% of new UA shares to Denver billionaire Philip Anschutz in exchange for his claims.

The filing had been in the works for several weeks with Anschutz widely expected to take control (Daily Variety, Aug. 29).

It was the third major movie-house chain to file for Chapter 11 in recent weeks following Carmike Cinemas and Edwards Theaters as the industry struggles with the twin burdens of debt from frantic megaplex expansion and declining business at older theaters. The Regal chain has indicated it was considering a similar step.

"This is a unique situation where an entire industry is going bankrupt," noted entertainment analyst Barry Hyman of Weatherly Securities Corp. "The chains have fallen in love with the idea that entertainment has to be part of a whole package and that megaplexes were the only way to go. So it raises questions about the long-term viability of the exhibition industry."

UA, of Englewood, Colo., said Anschutz will provide $25 million debtor-in-possession financing and noted that studios, other business partners and creditors have been helpful and supportive during negotiations to work out a debt restructuring.

Cost-cutting failed.

UA topper Kurt Hall admitted Tuesday that his cost-cutting plan had failed. "While our efforts to reduce and focus capital spending exclusively in our key markets, manage our business in a more prudent manner and dispose of underperforming theaters has resulted in improvements in our operating margins, these improvements have not been sufficient to mitigate the impact of the unprecedented level of investment and predatory over-screening that has occurred in our industry over the past three years," he said.

Hall said the industry's 26% gain in screens since 1996 has outpaced growth from admission revenues and has not justified the higher cost of construction and over-expansion.

Hall said if the reorganization plan is confirmed, debt will be cut to $260 million and annual interest expense will decline from over $75 million to $27 million. That will allow UA to internally fund reinvestment in key locations and rebuild lost market share and cash flow, he added.

 |  IP: Logged

 |  IP: Logged

I don't know where the money went, but it wasn't into the theaters.

Then they had to build a monster mega-plex practically right across the street from another mega-plex in New York city.

For many years the theatre circuit was the shining light as the studio of the same name sank.

What would Fairbanks, Pickford, Chaplin and Griffith think today of the companies that bear there orginal name?

I remember visiting various UA locations in malls around Orange County, CA over 10 years ago and thinking they were old and out of date then - most of these have since closed.

I have not seen many new UA locations but several I visited in NYC also left little to be desired.

They may have been clever not building megaplexes at quite the rate of others, but UA was stuck with too much old theatre stock.

I always did love the Egyptian on Hollywood Blvd, even though it was way past its glory days when UA ran it as a triple.

No, I never did work Joe Kelly. He never came to our theater (a twin, with about 80 seats in each house.) I only met him once, at another theater for a demo of very unusual sound equipment. He seemed like a really nice guy. People were all around him, talking to him and stuff. When he walked around, people moved out of his way, like water parting. He wasn't putting on "airs" or anything; Everyone really respected him, and wanted to hear whatever he had to say.

The only famous person I ever worked with was Andy Marglin(sp?) only for a day in 1978. We had some Kelmar stuff acting strange, and he came out to see why. He told me a little about Cinerama. I knew quite a bit about electronics, and he told me a little about syncing the 3 projectors and sound. I couldn't believe all the stuff that went into making that work. Unfortunately, I was new to projection at the time, and didn't even know the right questions to ask. Even in 1978 it would have been easy to do what took them racks of vacuum tubes in 1952 or so.

Andy Marglin is a projectionist's projectionist, and it shows in Kelmar's products. He was there at the birth of Cinerama, and was a lead "console" operator for many of the early shows in NYC. Lots of stories to tell.