By Pat Kramer (Variety)
After a decade which has seen only marginal growth for the company, General Cinema Theatres (GCT), the nation’s 7th largest theatre circuit with 1200 screens in 180 locations, is now poised for a major expansion which includes new developments, rebuilds, acquisitions, and partnerships virtually propelling the circuit into a whole new league.
On November 18, Rob Smith, president and COO of General Cinema Companies, Inc. (GCC) announced the promotion of GCT’s CEO and president Paul Del Rossi to the newly-created position of chairman. William B. Doeren, former executive vice president and COO was named his replacement. With his senior management team now in place, Smith says the company is embarking on a $250 million dollar expansion of their domestic circuit while also making their first foray into international waters in Latin America. Del Rossi, who has 17-years experience as GCT’s CEO and president, will be overseeing international and strategic partnerships while Doeren, a veteran in international exhibition as chairman and CEO for MGM International Cinema Group, heads up the domestic front.
With his senior management team in place, Smith says the company is now in a very strong position to move forward, taking advantage of many different business opportunities. “We’ve brought Bill in, we’ve substantially bolstered the U.S. team in really every functional area, we’ve given Paul this massive new assignment and we’re fortunate to have people in place to pursue it. Because if we didn’t, we wouldn’t be able to pursue the opportunities before us.”
One of the most exciting new areas in which GCT is moving, is in partnership with Robert Redford’s Sundance Institute for the 300-screen chain of Sundance Cinemas. Plans call for the development of these “destination locations” with six to ten screens per site in city and suburban areas as well as in college towns. It’s a concept that Smith says they’ve been exploring for some time. “We’ve been impressed with opportunities in the independent film market and have tried to find a way to bring it into our mainstream movie theatre product. [However] the fact is, it’s a different kind of product and requires a different marketing and merchandising environment. We think we’ve teamed up with the best brand and the best team in the business with Sundance and Bob Redford. We’re going to do it in a very high quality fashion with the personal, ethical, and business standards we’ll all be proud of.”
Though Sundance Cinemas signifies a new direction for the circuit, risk-taking is nothing new to General Cinema Companies. Since its founding in the ‘30s, the Smith family has always been known as a trendsetter due their far-sighted investments in a variety of lucrative businesses including film, TV, radio, Cable TV and video, publishing, specialty retail and soft drink bottling.
However, this business ideology also somewhat limited the theatre circuit’s growth until four years ago, when General Cinema Theatres was spun off of then, parent company Harcourt General, creating a stand-alone business for the exhibition circuit. Says Smith, “It didn’t make sense in the context of a publishing and retail company, to put a lot of money into theatre assets. Yet from a family point of view, we believed this was a good investments and an attractive business to be in. Rather than have the theatre business continue to be a small piece of a large company, we though it ought to stand on its own.”
With the change in the business structure, Harcourt General became known as General Cinema Companies (GCC) and the emphasis again returned to the core theatre business. At that time, Smith says they also realized the importance of developing megaplexes, 14 to 18 screen theatres, as an important tactical element in competing for the exhibition business.
Since then, GCT has begun a major overhaul of its shopping mall-based exhibition circuit, replacing smaller theatres with state-of-the-art megaplexes in the suburbs of Boston, Chicago, Los Angeles, Philadelphia, Seattle, and Columbia, S. Carolina, to name a few.
“One of the legacies of General Cinema,” says Smith, “is that we were built on a foundation of very solid real estate. As regional shopping centers were built throughout the country, we built close working relationships with all the major developers and really seeded the country with twins, triples, four and five-plexes. Now, as shopping centers recognize the value of megaplexes in the overall shopping, entertaining and eating environment, they go back and find their trusted friend, General Cinema, has done a quality job for them for many years and is ready to build where the opportunity presents itself.”
On the international front, GCT is now expanding into Latin America as a result of their acquisition of United Artists’ assets in Argentina and Mexico. By the end the fiscal year, estimates are that their 36 new screens in Buenos Aires and 40 in Mexico will be up and running. On that note, Smith says, “We expect to have a significant overseas presence in Latin America and perhaps Europe. Frankly, the development pipeline there could be as robust as in the U.S.”
As the company celebrates its 75-years in the exhibition business, Smith says that their success has, in part, come from GCC’s ability to metamorphosize. “We started off as an in-town movie theatre company, but we’ve been through a lot of changes over the years. Whether it’s been in the theatre business into the bottling business, the TV business, specialty retail business or the publishing businesses, all these spawned from a variety of changes and improvements in the base business, the theatre business.”
And while the circuit continues to grow rapidly, the company’s executives says they are really not concerned with what share of the exhibition market they own. “We run the highest quality theatre circuit in the country, says Smith, and we’ll pursue those opportunities that allow us to build the kind of buildings and run the kind of operations we’re proud of.”
Del Rossi adds that rather than being #2 or #12, it’s about running a business as evidenced by their increased earnings each year. “I’ve been here since 1980 and every year, Richard Smith [chairman and CEO of GCC] has said in his letter to shareholders that the purpose of the company is to combine the intelligent application of capital with experienced management to create superior returns for its shareholders.” He adds, “We stand on the springboard to a very exciting future for the company and with the current management group, I think we can get there.”