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Regal Entertainment Reports 38% Drop in Quarterly Profit

The cinema operator blames an industrywide box-office slump. Its CEO is looking forward to holiday-season films.

October 28, 2005|Claire Hoffman | Times Staff Writer

Pointing a finger at a string of summer flops, Regal Entertainment Group, the nation's largest theater operator, said Thursday that profit plunged 38% in the third quarter.

Regal, controlled by Denver billionaire Philip Anschutz, said its net income was $17.2 million, or 11 cents a share, in the third quarter, down from $27.8 million, or 19 cents, in the year-earlier period. Revenue rose 2.8% to $628.4 million from $611.3 million.

Chief Executive Mike Campbell said the drop in profit was no surprise in the face of this year's box-office doldrums, with nationwide attendance down 8% and revenue off 6%.

Campbell acknowledged that the company also had felt the sting of competition for people's time from Web surfing, video games and DVDs.

"It has to be a special event to get people out of their home now," he said.

Still, he said, the downturn isn't anything that a few great movies can't change. Campbell said he was hopeful that such films as the upcoming "Harry Potter and the Goblet of Fire" and "King Kong" would lure people back to the theaters.

The troubles at the Knoxville, Tenn.-based company underscore a growing unease in the film exhibition industry. A 19-week nationwide summer slump was plagued by such duds as "Stealth," "The Island" and "Herbie: Fully Loaded."

"No question that this has been a very tough year for the theatrical moviegoing box office, and it has got to affect the bottom line," said Paul Dergarabedian, head of Exhibitor Relations Co., a box-office tracking firm in Los Angeles.

September saw a spurt of successful openings with "The Exorcism of Emily Rose" and "Flightplan." But even with potential holiday hits still to come, it will be hard for exhibitors to surpass last year's record gross of $9.4 billion and attendance of 1.5 billion.

John Fithian, president of the National Assn. of Theatre Owners, said companies were taking a long-term view as they faced box-office declines.

"We will bounce back when the movies bounce back," Fithian said.

In a report to clients, Banc of America Securities analyst Michael Savner said that he was optimistic about the future of the theater industry and that the 2005 downturn was a temporary phase.

Regal shares fell 49 cents to $18.77. The chain operates 568 theaters with 6,537 screens in 40 states under such names as United Artists, Edwards and Regal.

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