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To Russia With Theaters (and Digital Sound)

Media: National Amusements, Viacom's parent company, plans to enter the Moscow market by building a modern multiplex.


National Amusements Inc., the parent company of media giant Viacom Inc., plans to build and operate the largest modern multiplex in Moscow, becoming the first major U.S. theater chain to venture into Russia.

The 11-screen theater complex, which will feature state-of-the-art screens, digital sound and stadium seating for 3,500, is expected to open next spring under the name KinoStar.

The project is a joint venture between National Amusements--the Dedham, Mass.-based theater circuit headed by President Shari Redstone--and exhibition entrepreneur Paul Heth. The two also are partners in the Bridge Cinema in Los Angeles and the soon-to-open second Bridge location in Philadelphia.

The Moscow theater will be located at Mega, a development of IKEA Russia, which will be billed as the largest family retail and entertainment center in Russia when it opens in December.

Redstone said this is the first of a series of cinema ventures she and Heth are pursuing in the Moscow area under their newly formed outfit, Rising Star Media. Heth is an expert on the Russian cinema market, operating three single-screen theaters in Moscow during the mid- to late 1990s, including the first Western-style cinema that was the highest-grossing complex in the country.

Redstone, whose closely held National Amusements owns and operates 1,400 screens in the United States, Britain and South America, said she believes that Heth's hands-on experience in Russia and her company's expertise as a major international multiplex operator will result in expanding what has long been an under-performing territory for Hollywood.

"We hope to open the market for the U.S. studios," said Redstone, whose father, Sumner Redstone, heads Viacom, with entertainment assets including Paramount Pictures, CBS Television, MTV Networks and Blockbuster Inc.

Heth said that when he first embarked on the theater business in Moscow in 1993, the total box-office gross for the country was about $1 million. Last year, it was about $74 million, and it is expected to climb this year to $90 million to $110 million.

Redstone said that she and Heth and his core team of executives at Rising Star will work closely with their new Russian landlord IKEA and National Amusements' sister company MTV to run various movie promotion campaigns.

In addition to exhibiting American-made movies, the Moscow theater will showcase Russian films.

"There is not a lot of Russian production," Redstone said. "We hope this will stimulate more of that."

Redstone said that Heth, who began his career in Moscow and has been instrumental in helping to revitalize the Russian cinema sector, first approached her about doing business there in 1994. But "the timing wasn't right," said Redstone, who only recently had taken the reins at National Amusements.

This April, however, Redstone went to Moscow on a three-day "massive due diligence" tour, meeting with bankers, local distributors, vendors, government officials and others to size up the market. She said she was impressed with what she learned.

"What I found was that people in Russia have a fascination with American film product and they love going to the movies," Redstone said.

She found Moscow to be a "very sophisticated, first-class city where people have a high-quality lifestyle--why shouldn't they have a first-class movie-going venue?"

Nonetheless, Redstone and Heth are realistic about the numerous difficulties they will face, including cultural differences, currency and tax issues, language barriers and banking and legal systems that are underdeveloped compared with those in the U.S.

"It's not a land of opportunity without challenges," Redstone said.

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