Four ‘coming attractions’ eye future Star 40 rankings
05/05/2014 12:00 AM
05/06/2014 12:40 PM
The drought is over. It’s raining companies.
AMC Entertainment Holdings Inc. — the national cinema chain based in Leawood — heads a group of four new publicly traded companies in the Star 40 universe. Combined, they raised $1 billion last year by selling stock to the public.
Star 40 hasn’t seen that kind of action in more than a decade. And since 2007, only one business has held an initial public offering to raise capital throughout the entire Star 40 footprint, which covers Kansas and Missouri, excluding the St. Louis area.
Inergy Midstream went public in 2011 but already has fallen out of the Star 40 universe of companies because it merged into a Texas company.
Tallgrass Energy Partners LP, a newly public company in Overland Park, competes in the same field as Inergy Midstream. The two other new names: QTS Realty Trust Inc., also in Overland Park, deals in data centers, and Aratana Therapeutics Inc., based in Kansas City, Kan., is developing pet medicines.
This shower of new public companies comes in the nick of time. Star 40 has been withering steadily since 2002 as companies merged, moved, failed or simply opted out of public life.
Our 2002 rankings had compared 80 public companies based on their financial data for 2001 and 2000. (We also called this section Star 50 then.) Among them was No. 18 AMC Entertainment, which last showed up in the 2004 ranking before the company was bought by private investors.
Now AMC is back, though it and the other new public companies won’t qualify for rankings until their stocks have traded for at least a year.
Here’s a look at them and their potential to stir next year’s rankings.AMC Entertainment
Investors who owned AMC shares a decade ago may not recognize the company today. It is opening bars, installing leather recliners, running kitchens and serving up meals seat-side.
“We’re trying to change the fundamental dynamics that have characterized the business literally for the last 100 years,” said Gerry Lopez, chief executive of AMC Entertainment.
Movies for years have been about setting more seats in front of more screens inside more theaters in more markets. Bigger meant better.
Lopez argues that has changed. Better is bigger now, and AMC is promising a business built on a new experience for moviegoers.
For example, the company ripped out the seats at Ward Parkway 14 and installed leather recliners that stretch out with the push of a button. It meant only a third as many customers could see the movie at the same time.
No problem. More than 80 percent of the seats available throughout the week go empty regardless of the crowds you might see on weekends or evenings. With the better seats in place, significantly more paying customers are showing up.
And those relaxed movie viewers luxuriating in leather recliners spend more on food and beverages.
AMC also is changing its comestible offerings. The company recently opened its expanded concessions stand called Marketplace at the AMC Town Center 20 in Leawood. And there is a full kitchen for the Fork Screen and Cinema Suites — dine-in theaters at AMC Studio 30 in Olathe.
Its MacGuffins bars are popping up pretty much wherever AMC can get liquor licenses and spare a little bit of floor space in its existing multiplexes.
All this is being watched from afar — by AMC’s principal owner, China-based Dalian Wanda Group. It bought the U.S. business in 2012, and its ownership fell to about 80 percent when AMC went public.
Mostly a commercial property company, Wanda is interested in AMC’s business as more than an owner. It operates China’s biggest cinema chain, though it’s considerably smaller than AMC’s operations and only a couple of decades old.
Lopez served as host to a dozen or so Wanda officials last month when they visited AMC and attended an industry convention in Las Vegas. The executives compared best practices, Lopez said.
In competing in the United States, AMC essentially is zigging as its rivals are still zagging by expanding their screen counts, said analyst James Goss at Barrington Research, though Regal Cinema, the industry’s biggest, has started installing reclining seats in a few theaters.
The goal, of course, is to make more money, and AMC says it is. In theaters where changes have come, AMC estimates recliners have added $1.17 to what it earns on average from customers, MacGuffins bars an extra 30 cents, Marketplace 12 cents and the Freestyle Coke dispensers 8 cents.
“They’re not really raising ticket prices right now,” Goss said.
Lopez said the company works closely with movie studios, which earn a share of the take from tickets, when it considers price changes. But he said tickets are going up over time as renovations settle in.
Fewer seats, for example, present an opportunity to charge more for the most popular show times on the most popular movies. And that would be nothing new.
AMC already charges more for weekend shows than for matinees and weekday shows. Premiums for highly sought show times with limited seating would be no different.
“We’re already down that road,” Lopez said.
AMC’s revenues last year topped $2.7 billion. That’s bigger than H Block and sure to affect rankings in next year’s Star 40.
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