International -- Asian Business: AUSTRALIA
VILLAGE ROADSHOW: AUSTRALIA'S MULTIPLEX MONSTER (int'l edition)
Can it be to cinema what Murdoch is to print?
When Roc Kirby started a small cinema chain in the suburbs of Melbourne, Australia, in the 1950s, it was a family affair. His two sons, John and Robert, worked as ushers and janitors and sold candy at the concession stand. The elder Kirby taught his boys how to make glue for hanging movie posters. His budget was so tight he even monitored how long the lights were on.
Since then, the frugal Kirby has created one of the world's giants in multiplex theaters, the $1.1 billion Village Roadshow, through a series of overseas acquisitions. The company now boasts 774 screens worldwide, including 400 in Asia, and plans a total of 3,000 by the end of the decade. The group has also expanded into television production, theme parks, amusement centers, and radio. Roc Kirby, 79, only dabbles in the business now, but he's left a legacy of hands-on management. "We are good at our business because we know every corner of it," says Graham W. Burke, the company's long-serving managing director, who started working at a Kirby cinema at age 14. "We would like to think of ourselves as being to cinemas what Rupert Murdoch has been to print media."
QUICK DECISIONS. The key to the company's success has been finding the right foreign partners and properties. The group targets both developing countries with prospects for growth and more advanced nations such as Taiwan and Italy, where there's little experience with multiplex cinemas.
In India, for example, Village Roadshow linked up with the New Delhi-based Bijli family, owners of Priya Cinemas, to form Priya Village Roadshow Ltd. The Bijli's flagship business was a trucking company, but they also owned a cinema. They signed a 60-40 partnership with the Australians in 1995. Then Village flew Indian managers to Australia and Singapore for training. The joint venture--which opened to roaring business in June--now boasts a multiplex in New Delhi with high-tech equipment, four spacious theaters, and popcorn. Construction on three more cinemas elsewhere in India is under way. "They have dynamic personnel, and decision-making is very quick," says company director Ajay Bijli of his partners.
The Kirbys made their aggressive push into the entertainment business in 1988 when they bought the debt-ridden movie studio of U.S. film magnate Dino de Laurentiis in Queensland, Australia's Gold Coast. Then the company went public and began acquiring assets. In the same year, Village made what it calls a "strategic move" by acquiring a 50% stake in Warner Bros. theaters in Britain and Germany, where Warner had a strong presence.
The group has been aggressive in other areas, too. Earlier this year, Village's movie-production unit signed a $60 million deal to finance six movies by Punch Productions, film star Dustin Hoffman's company. The first, House of Mirth, adapted from Edith Wharton's 1905 novel, is being filmed in Montreal with Hoffman in the lead role. Recently, the company purchased Australian resort property from Japanese owners who invested $186 million and later went bust. The property, near the famed Great Barrier Reef, is expected to provide $75 million in tax write-offs for Village because it can offset profits against the losses from the resort.
In the past year and a half, Village Roadshow has raised $260 million from the financial markets. It is due to return to the stock market a third time this year, seeking another $145 million to continue expanding. But some analysts worry it is stretching too far too fast--particularly in Asia, where currency devaluations may cut into consumer spending. "There are political and currency risks in some of the new markets Village is pursuing," says Craig Connelly, media analyst for J.B. Were & Son. But he also thinks those risks "are offset by the enormous growth we expect to see in these markets."
When it comes to movie theaters, Village seems unstoppable. The group recently opened multiplexes in Greece, Hungary, and Argentina, with new sites planned in France, Italy, and South Korea. So watch for Village Roadshow at a theater near you.By Tracey Aubin in Canberra, with Manjeet Kripalani in New Delhi