National Amusements Inc.  

Industry Information

·    Leisure

o        Entertainment

§         Movie Theaters (primary)

§         Amusement Parks, Arcades & Attractions

o        Gambling

§         Gaming Equipment & Services

·    Media

o        Film & Video

§         Motion Picture Production & Distribution

o        Information Collection & Delivery

o        Internet Content Providers

o        Internet Search & Navigation Services

o        Music

o        Publishing

§         Book Publishing

o        Radio Broadcasting & Programming

o        Television

§         Television Cable, Pay & Broadcast Networks

§         Television Production & Distribution

§         Television Station Groups

·    Retail

o        Music, Video, Book & Entertainment Retail

·    Computer Software

o        Entertainment & Games Software

·    Business Services

o        Advertising & Marketing
 

Subsidiaries/Affiliates Covered By Hoover's

·    Midway Games Inc.

·    MovieTickets.com, Inc.

·    Viacom Inc.

o        BET Holdings, Inc.

§         BET Interactive, LLC

§         Black Entertainment Television, Inc.

o        CBS Broadcasting Inc.

§         King World Productions, Inc.

§         Paramount Network Television

§         SportsLine.com, Inc.

§         United Paramount Network

o        Infinity Broadcasting Corporation

§         Infinity Solutions & Beyond

o        MovieTickets.com, Inc.

o        MTV Networks Company

§         Comedy Partners

§         Country Music Television, Inc.

§         MTV Games

§         MTV Networks Europe Ltd.

§         MTV Networks On Campus Inc.

§         Neopets, Inc.

§         Nickelodeon Networks

§  Nickelodeon Movies Inc.

§  Paramount Parks Inc.

§         Paramount UK Partnership

§         Spike TV

§         VH1

o        Paramount Pictures Corporation

§         Famous Music Corporation

§         Movielink, LLC

§         Paramount Classics

§         Paramount Home Entertainment Inc.

§         United International Pictures

o        Showtime Networks Inc.

o        Simon & Schuster, Inc.

§         Simon & Schuster Children's Publishing

§         Simon & Schuster UK Ltd.

o        Viacom Outdoor, Inc.

§         Viacom Outdoor Ltd.

·    WMS Industries Inc.

A NATIONAL TREASURE

The Redstones and the Circuit's Corporate Family
Celebrate 65 Years of (Inter)National Amusements

By Francesca Dinglasan

F or most, turning 65 usually means entering a period of slowdown and retirement -- the "autumn years" of a life cycle, so to speak. But for Dedham, Mass.-based National Amusements, the company that began as a drive-in theatre in Valley Stream, New York and today stands as a multi-billion-dollar international media conglomerate, things seem to be getting only better with age. The empire that began as a single ozoner now encompasses 1,400 screens in the United States, the United Kingdom and Latin America under its Showcase Cinemas and Multiplex Cinemas banners. In addition, the company's 1987 acquisition of Viacom gives it control of a profusion of multimedia concerns, including -- among many others -- studio giant Paramount, cable channels MTV and Nickelodeon, CBS Television, book publisher Simon and Schuster, and national retail chain Blockbuster Video.

It's no wonder, then, that National Amusements president Shari Redstone says her "favorite season is fall." While the head of the country's seventh-largest cinema circuit is literally telling BOXOFFICE about the beautiful color changes that take place in her native New England in September and October, it seems appropriate that her preferred time of year reflect the so-called "autumn years" associated with the 65th birthday of her company. But in fact the atmosphere inside National Amusements these days carries more of a brightness more often associated with the coming spring. Says Redstone, "[Our] approach is to celebrate every day with everything we do."

And the corporation has done quite a bit in its more than six decades of operation. Founded in 1936 by Redstone's grandfather Michael, National Amusements has taken its place as one of the leading enterprises in the entertainment industry -- a place largely established under the aegis of Michael's son and Shari's father, Sumner.

The legendary mogul told BOXOFFICE in 1994, "I have a personal sense of satisfaction, which I hope is understandable, when I think that I started with about three drive-in theatres -- and that has become National Amusements, Viacom and Paramount."

I t's a sense of accomplishment that many other executives at the movie theatre chain share. "Our company has had a tremendous number of major achievements," says 32-year National Amusements veteran and senior vice president of operations William Towey. "If we look at ourselves solely as a theatre circuit, I think [one of our major successes] is the changeover our company has accomplished from one of the premier major drive-in circuits to one of the top ten premier indoor circuits in the United States."

National Amusements senior vice president of finance Jerome Magner, who, like Towey, has spent 32 years with the chain, also cites the company's ability to bring the magic of the outdoor moviegoing experience to the indoors as a pivotal moment in its history. "When I came, we were basically a drive-in theatre operation," he says. "Around 1964, we started building multiscreen theatres, or what were originally called 'twin theatres.' Certainly, converting from one of the major drive-in theatre circuits to what is today one of the major indoor theatre circuits and devising what today people are calling 'multiplexes' and 'megaplexes' [have been important achievements]."

Of course, National Amusements not only transformed itself from being a circuit of ozoners to one of modern multiplexes, but it also grew from one New York state location into hundreds of sites on three different continents. However, before the company ventured abroad, it made sure to establish itself on its own home ground. According to several National Amusements executives, an underlying component of this ability to become a stable and steadfast regional player was the fact that the company was very pro-active about owning, and avoid leasing, the land underneath its theatres.

"We always have been very strategic, very focused and very determined to create long-term value in that we've owned our own real estate, so we didn't have a lot of the crazy rental deals that other people had," notes Shari Redstone. "Also, we were very regionalized, and we focused on strengthening our core markets, rather than expanding into new markets. We really focused on the viability of everything we did, and never get caught up in growth just for the sake of growth."

"We own probably 80 percent of the theatres we're in," adds Magner. "In fact, we'd probably own closer to 100 percent if it weren't for the fact that, over the years, there were some theatres that were leased -- in the areas that we were very strong -- that our competitors wanted to get rid of. For competitive reasons, we took over some of their leases. Or, in certain areas, where it became impossible to acquire the land, we did a lease if it was a fantastic, five-star location.

"Owning your own land gives you a tremendous ability to make decisions effectively," he continues. "I must say that we focused on being the best, rather than the biggest, [by] buying the fee under our property and building what we consider the most luxurious theatres around."

National Amusements' general counsel, Thaddeus Jankowski, who has been with the company for more than 18 years, also feels that understanding the importance of owning as opposed to renting, as well as concentrating on one's home market, are what have helped keep the circuit afloat -- even in the most trying of exhibition times. "I've worked with Sumner Redstone and the Redstone family since I came here," he says, "And what I have seen over time is a very strong, underlying belief in the value of land and the value of diligent oversight, even on a micro-management [level].

"I think all exhibitors are having some difficulty. The box office is not as we had expected it to be, we're all affected by interest rates [and] we're all affected by overscreening and competition.... [National Amusements] focused regionally -- we didn't have a national focus. Other companies with a national focus found themselves dispersed and having to protect themselves in any number of markets, which caused them to either cannibalize others or cannibalize themselves in construction."

L ike the careful long-term planning that went behind establishing the company as an important player in the New England territory, prudent steps were taken to ensure the company's viability outside the United States. "We started exploring [the possibility of going international] in 1986," explains Magner. "We started in the U.K. -- it was where we wanted to be first. First of all, from the point of view of [a shared] language. Also, because they were 40 years behind the times. There were no theatres built [there] since the end of the Second World War. Other than in London, they had old, single-screen theatres, and I guess no one wanted to take the risk of building something differently."

That was, of course, until National Amusements came along. "We skipped across the Atlantic Ocean and started building theatres and became one of the top three circuits in the U.K. in a relatively short period of time," says Towey, "with now, I think, just over 200 screens in the U.K. And we did that in a span of nine or 10 years. And, again, [the theatres] are all owned properties, just like we have -- for the most part -- in the United States. So, it's not an acquisition of leased properties, but rather an ownership of land."

After establishing itself successfully in the U.K. -- a triumph underscored by the fact that several other international exhibitors followed National Amusements into the territory -- the company decided it would look into other underscreened markets for further expansion. As Magner puts it, "The price of success is competition. What we proved to our competition was that [the U.K.] is a great place to be, and they started coming in droves. We therefore decided that we wold look for areas that were underserved. We explored parts of Europe, Bangkok and other areas in the Far East, and we sent our people to South America."

Of all the worldwide markets scrutinized by the company, it was the latter region in the southern hemisphere that appealed to National Amusements on several different levels. Though South America certainly had its fair share of obstacles to overcome, the company execs say that, because of their careful and thorough research, they were able to determine that the benefits were, in fact, enough to outweigh the hardships associated with building new venues in the territory.

"One of the things you should know about National Amusements is that, by being privately owned, we were small enough -- and still are -- to operate like a family organization," explains Magner. "Everybody in management really became well-versed in all phases of the operation. Therefore, we had this diversified knowledge that allowed us to each individually make a decision and pass it on.... We'd all walk the land, Sumner included, and we just knew if we saw a location what we could do business-wise there."

The locations the company ended up setting its sights on were Chile and Argentina -- the former because it "was the most economically and politically stable country" and the latter because of its "much larger population and greater potential," according to Magner.

T hese qualities certainly were attractive to National Amusements, but Towey notes that the company still needed to remain fully cognizant of the issues inherent in entering the two markets. Among the challenges he names: "Skipping to a foreign country with a difference in language and culture, and trying to almost instantly learn the driving forces of a culture and the economic base, which is substantially different than our own." He adds, "To be able to build some locations and have those operations become successful certainly was a challenge, and to what degree we've accomplished that has yet to be said."

Jankowski also acknowledges that crucial variances needed to be considered, and plans ultimately readjusted, to compensate for the differences between domestic and foreign markets. "In the United States, our philosophy is, 'We own the land, it becomes an underlying asset.' You build on it, you retain flexibility, and that becomes power that grows into the future," he says.

"In South America, our philosophy differed a little bit because the land is viewed differently than it is here. The cost is very, very high and we chose a different model to develop there. However, I think in the long run, as we get more experience in South America, the model will go back to trying to own much more of the underlying real estate."

A lthough the company remains optimistic about the future of its South American circuit and is actively exploring opportunities in other areas of the region, its concerns -- like any other domestic theatre operator attempting to stay afloat in this particularly volatile time in the industry -- lie mainly at home. With a string of Chapter 11 filings plaguing what were once thought to be the indomitable giants of exhibition, observers have predicted the closure of as many as one-quarter of all screens operating today. National Amusements, however, remains well above those on the critical condition list -- and its company executives each have explanations as to why that is.



"I think there are several things involved in it," says Towey regarding National Amusements' relative success during the past few turbulent years. "We're a privately held company [which has an] ability to select premier locations, build quality theatres and operate those theatres throughout their lifespan with the goal in mind to really be in it for the long haul..... We want to be part of the communities in which we operate."

Magner, too, believes that the importance of the company's privately held status cannot be underestimated, noting, "We don't worry about shareholders, and we don't have to worry about quarterly reports, which many companies that are public are driven by."

Also important, he says, is the company's executive-level staff, whose many years of experience have helped guide the company through the rougher patches. "We have a very seasoned management team. Not only the people who we've had for 32 years, but also the successors. That's probably [our] greatest achievement."

The executive roster at National Amusements, in fact, not only represents an array of individuals who have spent decades with the circuit itself, but each member carries a unique background that helps bring a diversity of perspectives to the business.

Redstone, before taking over for her father as topper of the company several years ago, worked as an attorney. Although born into the world of exhibition, filled with the excitement and drama of theatre grand openings and what she then considered an endless 45-minute drive to Worcester, Mass. (nothing, she laughs, compared to the trips she now takes to the South American sites), Redstone says she remembers thinking, "This is a business I will never be in!"

She muses, "When I grew up, I never thought I'd work in the family business. I wanted to be independent, so I went out and got a law degree and practiced law for a while. But, to be honest, I thought, 'Business is boring' -- which only goes to show how wrong we can be in our youth!

"I started to see some of the things that were going on in our industry and got a little bit involved with the world of entertainment through Viacom, and I began to say, 'Boy, business is not boring. It can actually be really exciting and challenging.' That was when, probably six or seven years ago, I decided to give it a shot and test the waters. But testing the waters went to marathon swimming before I knew it!"

S haring a similar background to Redstone -- in terms of preparing for a career as an attorney, as opposed to marathon swimming -- is Jankowski, who actually met Sumner Redstone while still a law student. "Mr. Redstone was teaching 'The Law of the Entertainment Industry,' and I was asked to assist him in preparing the course as a teacher's assistant," he explains. Jankowski also happens to share a profession with the elder Redstone, having himself worked as a teacher prior to studying law. "I had come from years of travel and teaching English as a foreign language in Japan and Iran," he says -- a background that has proven useful in his international dealings at National Amusements.

As for the 32-year company vets, who have shared a number of anniversaries throughout their careers, they each say that their backgrounds seemed to almost naturally lead them to the movie theatre business. Now the treasurer of an international chain of movie theatres, Magner worked for a retail chain of stores and a real estate company that owned a chain of shopping centers prior to joining National. Towey, however, has an even more direct link to the business, starting in the ultimate of starting positions as an usher, eventually working his way up through the different levels of theatre management. Remembering one of his earlier jobs, he notes, "The circuit I worked for was out of Des Moines, Iowa. We went from 105 theatres at the time down to 15. I first of all became experienced at closing theatres rather than opening them. I'm not too sure if that speaks too well of my career or not!"

Although theatre closures certainly aren't a favorite aspect of any theatre manager's professional experiences, they are indicative of a career that has witnessed the ups and downs of an industry that has historically been, and will continue to be, full of such changes. Redstone says memories of early childhood include her father "always dealing with industry issues," such as the exhibition heartaches of "blind bidding, clearances and booking movies in theatres." Magner, too, remembers great difficulties, noting that "back in the '70s, film companies actually were not making enough product to put on the limited number of screens we had then." To make matter worse, he recalls that "exhibitors tried to start making our own pictures! That's where we made a mistake. We learned a lesson there about not trying to go into a business you really don't know."

T he ability for exhibitors to learn from their mistakes is also a quality that the business vets at National Amusements hope will help guide the industry back to stable economic grounds. Years at the company have taught them not only what they need to know to survive as a circuit, but what exhibitors in general need to do to survive as an industry.

"We need to get rid of older theatres; we need to strengthen our core business; we need to ensure that, when digital cinema does roll out, it's an economic model that works for us, and it's not something forced upon us," theorizes Redstone. "I don't think people are going to pay more for a ticket because it's [a] digital [screening]. We have to be very careful as to how it rolls out and the timing of the rollout. It takes a lot of time and energy to make sure that it's done right, and I think, right now, [exhibitors] should be focusing on other parts of our business."

Some of those other parts, according to Magner, should be whether or not a circuit is capable of realistically functioning in an oversaturated market. "The first thing you should look at, as you would in any industry, is if you can't operate profitably you shouldn't be operating," he says. "You shouldn't make decisions without the economics being feasible."

Towey reiterates this idea by noting that National Amusements' recipe for survival really is quite simple: "We build a location for only one reason, and that's to be successful. It really works. If a location is not viable, we don't build it, even if we feel that a competitor might build it.... We have no magic formula that gave us better pictures or better attendance than our competitors had."

The ultimate road to recovery, however, appears to be what many outsiders have seen as the exhibition industry's demise: Chapter 11 filings. "I think that exhibitors now, in their declarations of bankruptcy, are taking positive steps," insists Jankowski. "But as an industry, not so much as individual exhibitors.

"There will be losses, of course, and there will be repercussions throughout the economy. But that's one step. I think what they have to do is take much more of a long-term view on building the business."

One way to think of the future instead of the immediate present, says Magner, is to be aware of the downside of such innovations as stadium seating, which hasn't turned out to be the problem-free jewel of the modern multiplex as originally thought. "I don't think anybody in any industry should come up with a product that can obsolete his or her own product developed three or four years before," he says. "People were building beautiful theatres with what I considered good sightlines, and, by opening a stadium-seating theatre, we're obsoleting that theatre in a matter of years."

While this hard business of theatre closures and major circuit bankruptcies can paint a rather bleak picture of the exhibition industry, neither National Amusements nor its group of devoted executives could have lasted as long as they have if they weren't absolutely passionate about the business. And, despite these troubled times, each veteran insists that it's actually the volatility of the industry that keeps their jobs interesting.

"My favorite aspect of the industry is that it's always changing," says Shari Redstone. "It's really exciting. There are always new challenges and new opportunities. I also get to work with great people, both at National Amusements and in the industry. I think it's filled with very interesting, smart, creative people -- and that's what makes it fun to go to work every day."

"There are many things that have been really a pleasure for me to become involved in here," says Jankowski about his own reasons for loving the business. "It's ranged from everything imaginable: We've had major antitrust lawsuits; our acquisition of Viacom; the development of theatres in the U.K.; litigation against distribution for blind bidding -- it's been a wild ride. A lot of it has been fueled by Sumner Redstone as he saw business developing, and it's really been an exciting time."

For Towey, his sense of achievement comes from the fact that he's responsible for helping to extend this excitement to the moviegoing public. "As an industry we provide something that I feel is essentially important to people," he explains. "That's the escapism of entertainment. I really think in the long run that's what our industry is about, and, the more we can achieve those goals, [the more] it parallels the things I like about the industry, personally."

T he show will definitely go on as National Amusements enters its 65th year in operation, and Redstone says there's plenty in store. In addition to the company's recent partnering with hollywood.com and Kansas City-based AMC Theatres to form movietickets.com, an Internet site that allows moviegoers to purchase tickets online, the company also is developing a project entitled "Cine-Bridge," which Redstone says "combines new media and old media, creating a different experience for our patrons."

Redstone adds, however, that -- unlike at its theatres -- there's one thing you will absolutely not see at National Amusements' corporate offices in conjunction with its milestone. "No senior-citizen cards!" she exclaims. "I laughed when I saw '65.' No individuals in my family ever own up to getting too old.... As a company, I think we'll follow the same path and forever be in our youth. So, it's only a chronological age, not anything else.

"Nothing to do with our spirit or sense of adventure!"