Local Krikorian Movie Theater Chain Launches Big Expansion
By DEBORAH BELGUM
George Krikorian is convinced there's nothing wrong with the movie theater business. All those bankruptcy filings by the big boys just reflect expansion plans that went too far, too fast.
"One thing I have learned, nothing stays the same," said Krikorian, president and chief executive of Krikorian Premiere Theatres. "There is a cycle of change to everything."
That helps explain why this relatively small chain, with little fanfare, is engaged in a $100 million expansion plan.
By targeting underserved markets, the Redondo Beach company has its sights set on adding as many as 82 more screens by the end of next year to the 54 it already operates.
The volume comes from the development of megaplexes in places like Pico Rivera, Riverside and Buena Park less glitzy redevelopment zones long ignored by the big theater operators. Case in point: Krikorian's planned $22 million, 131,000-square-foot shopping center at the corner of Whittier and Paramount boulevards in Pico Rivera, which will include a 16-screen cinema. The project should be completed late next year.
Krikorian is buying half the land in the 12-acre site and leasing the other half from the city. The city redevelopment agency is picking up $250,000 in development costs and doing the environmental clean-up on the site that once housed a metal recycling plant, according to Pico Rivera City Manager Dennis Courtemarche.
"One of the interesting things about George is that he has put theaters in locales where the major theaters wouldn't go. And they have all been very successful," said Courtemarche. "One of the things we have tried to do in our community is make the corporate retail world aware that there is an untapped gold mine in Southeast Los Angeles County. George has seen that."
'It's a flexible plan'
Krikorian doesn't go for 10-year business plans. He doesn't even have a five-year plan.
"You look at each project," he explained. "The ones you like you try to move forward. And if everything comes together, they go into the pot. It's not like I'm saying I'm doing 10 movie theaters this week. It's a flexible plan. This is not a big public organization. It is just me and a support staff."
It also means he doesn't have to and won't disclose revenues.
"Krikorian is looking at micromarkets that make a lot of sense for new theaters," said Kevin Skislock, an entertainment analyst and president of Laguna Research Partners in Orange County.
He has been able to target those markets, in part, by taking advantage of his competitors' financial woes. Krikorian's 14-screen complex at the Vista Village redevelopment project in San Diego County was made possible when Edwards Theatres Circuit Inc., one of the chains filing Chapter 11, backed out of its plans for the site.
Krikorian took another site from Edwards, an 18-screen megaplex at the Buena Park Mall. And on Dec. 7, Krikorian opened a 12-screen theater at a Rancho Mirage shopping center that Edwards had planned before it filed for bankruptcy protection last year.
Krikorian runs a lean operation from an out-of-the-way location near the upscale South Bay suburb called Hollywood Rivera. His staff numbers under a dozen. There is no receptionist to answer the phone and no fancy public relations staff. He spends much of his time working out of his car using his cell phone.
Krikorian began his career in the late 1960s working in residential real estate and later branched out to developing condos, townhouses and office buildings.
He got into the movie business by accident. Living on the Palos Verdes Peninsula, Krikorian found that if he wanted to take his three children to the movies, he had to drive for miles, to Torrance.
"It was always hard to find parking. I didn't like the condition of the theatres, the sticky floors and the chairs that would break your back," he remembered.
One afternoon, after a particular movie was sold out, he and his daughter stopped off at a relatively new shopping center in Rolling Hills Estates that was half vacant. He looked around and thought it would be the perfect location for a movie house. He introduced himself to the mall manager and ended up opening a theater on what is now called Avenue of the Peninsula at Rolling Hills Estates. That was 1983.
By 1996, the chain reached 100 screens. That's when Regal Cinemas offered $35 million to buy eight of his theaters in small towns like Hemet, Diamond Bar, Lake Elsinore, El Cajon and Whittier.
"I am extremely thankful that I sold those theaters when I did because otherwise I would have been in the same boat as the rest of the movie chains," he said. "I know when someone offers me a fair value for something that I may not make the maximum amount of money I could, but at least I'm walking away with a profit."
Good for Krikorian, bad for Regal, which turned around and closed four of the eight multiplexes it purchased and then filed for bankruptcy protection from its creditors.
Bucking the trend
The cycle, however, is starting to turn for the large chains. Thanks to a heavy investment in the industry by Philip Anschutz's Anschutz Corp. and Oaktree Capital Management, two of the nation's largest exhibitors are poised for a turnaround.
The partnership has taken over Regal Cinemas with 3,898 screen, and acquired a 51 percent stake in Edward Theatres, which is now out of Chapter 11.
With another 1,600 screens under Anschutz's control as a result of bailing out United Artists Theatres this year, the Denver tycoon owns about 20 percent of the movie theater market.
Krikorian says it's unlikely he and Anschutz would go head to head in a place like Pico Rivera. "I guess generally you have to be concerned when someone controls 20 percent of an industry, but in terms of our personal operation I am really not concerned," he said.
For reprint and licensing requests for this article, CLICK HERE.