Entrepreneurial Vue: Tim Richards reflects on early days and moving forward
“I come from a third generation of entrepreneurs in my family. So I had always wanted to do something entrepreneurial,” Tim Richards says of his departure from his executive position at the international cinema division of Warner Bros. in August 1998. Never mind that “our company was described as a ‘non-core asset’ in Time Warner’s annual report,” he can add with a laugh today. “That’s never a good thing to hear for any company or any corporate division.”
That decision was a good one, however, and led him to founding SBC International Cinemas in late 1998 and—in a later turn of exhibition history that brought him back into business with his former employer—guided Richards in the creation of Vue Entertainment. While most entrepreneurs “speak about their ‘Eureka’ moment,” going out into the global exhibition business was for Richards “a combination of a number of different factors” instead.
One was his belief that “I could build the same quality or better cinema for a fraction of the price. I looked at what was being spent on overhead and on the cinemas and thought I could do it for [much less].” At the same time, he also had a “hard look at what was being built around the world. I thought too many cinemas were designed to cater to one very specific age group at the time…typically for a much younger audience.” The multiplexes of that era had more of a “nightclub feel with loud music and flashing lights,” he observed. “We were alienating a large part of our potential market.” Richards goes on to name the aging baby boomers in particular. “We wanted to try and build cinemas that were a lot more accessible to a much broader demographic group.” Thirdly, from a personal perspective, it felt like the right time to move on as well. “After six years of living in Los Angeles,” he says, “my wife’s bags were packed to move back to London!”
For the time being, the Richards family did stay put, however. “I moved into our garage in L.A. and spent the next year and a half setting up the new company. All I had for SBC International Cinemas was a business plan that I was shopping around.” Within that first year after leaving Warner Bros., Richards not only managed to receive “our first funding from Boston Ventures in early 1999,” but also brought on as his partner today’s deputy CEO and chief financial officer, Alan McNair. “The two of us set out hiring the top executives from the industry to build the strongest and best team in the business.” McNair, for example, had spent over 25 years at Paramount and Universal, from home entertainment to CIC and ultimately UCI Cinemas (see sidebar bio). “Alan was one of the key executives responsible for forming United Cinemas International in the late 1980s. So Alan goes back a long way in the industry…even before we first met after I joined UCI.”
As a former New York-based lawyer specializing in international mergers and acquisitions who “has always been passionate about movies,” Richards confirms, getting “the dream job” was joining United Cinemas International in 1990. “I answered a very small ad in the Financial Times for a senior business development position with one of the studios. It didn’t even say which one or what it was. It turned out to be Paramount and Universal with UCI and I went through eleven interviews with absolutely everyone in the U.K. and L.A.”
How many hundreds of phone calls and meetings it took for SBC to take shape, we did not ask Richards. In the process of leaving Warner Bros and starting up, “you learn who your friends are very quickly,” he notes. “I started out with a lot of friends. Warner Bros. opens a huge number of doors because it is such an iconic name and brand. When I left, half the people who I thought were my friends wouldn’t return my calls,” he only half-jokes. “Probably another 25% returned my calls but didn’t want to have anything to do with us. The remaining 25% believed in what we were trying to achieve with SBC and gave us a chance. Those are the people that we are still working with today.”
The first SBC Cinema opened in late 2000 in Livingston, Scotland, followed by five additional sites over the course of the following three years—one each in Taipei, Taiwan ROC (Metro Walk Mall), and in Faro, Portugal (Forum Algarve); and three more in the United Kingdom. All of them are still up and running today, the first two locations even under the SBC International Cinemas banner. Calling his growth strategy an “opportunistic” one, Richards says “our plan from the beginning was always to build the company organically with new sites and supplement that growth through strategic acquisitions.”
That said, the number-one goal in those early days “was to live for another day,” Richards chuckles today. “We had one executive whose only job was to delay payables. We had virtually no money coming in and we were just living day-to-day, by the seat of our pants,” he admits. “As the company gets larger, your goals and aspirations change a little bit, but our goal has always been—and will always be—to be the best international cinema operator in the world. We want to lead the consolidation of cinemas in Europe that we have already started. Our goal is to export our best practices, areas of the business that we believe work really well, and take it to other markets.
“Whenever high-quality cinema companies have come on the market, we have looked at them very seriously,” he continues. “Our story is a qualitative one, not a quantitative one,” Richards assures. “The quality of our estate is hugely important to us… 99% of our screens have stadium seating, which is one of the few category killers in our business. So we would only look at purchasing cinemas of equivalent quality that did not dilute our story. Starting with Warner Village, over the years we also acquired two of Cinemark’s U.K. cinemas, six cinemas each from Village Roadshow and Ster-Century, one from Hoyts. Then we purchased the Apollo circuit in the U.K. before branching out further into Europe with the CinemaxX chain in Germany and Denmark. Most recently, Vue acquired Multikino in Poland, Latvia and Lithuania. We are now in nine markets,” Richards proudly summarizes.
“The one thing that all of those circuits have in common is that they were developed, built and operated by top companies and passionate executives who love and built great cinemas. But, for one reason or another, they wanted to leave the market. Poland, for example, is a former UCI circuit in a joint venture with ITI—with stadium seating throughout, 100% digital and well-maintained state-of-the-art cinemas. The CinemaxX cinemas were originally a labor of love built by Joachim Flebbe in incredible locations in virtually every major city in Germany. We acquired all of these cinema chains because they were complementary to our portfolio.”
Starting as far back as 2000, “we set our sights on the Warner Village circuit in the U.K.,” Richards says, returning to the origins of Vue. “Because, hands-down, it was the best cinema chain in the country, with the youngest assets and the best-maintained cinemas. I spent two-and-a-half years of my life trying to get that deal done,” he says with an audible sigh. “I was shuttling back and forth between the joint-venture partners, Village Roadshow in Melbourne and Warner Bros. in L.A., trying to find some way to get the deal done. A large part of why it took such a long time was a credibility issue. In those days, we were only a couple of executives with a handful of cinemas. Although we had deep pockets behind us, nobody really knew that, so we didn’t have a huge amount of financial credibility.”
With five cinemas operating by late 2002, “we hit cash flow break-even.” Which Richards calls “a major turning point in any young company’s life.” At the same time, “the problem was that our professional fees from working on the Warner Village deal were almost going to tank the company.” He pauses. “We were right on the edge of the abyss. We came really close to going under…” Being entrepreneurs, Richards and the team “had to keep working and thinking laterally on the deal to try and find a way to make it work. Fortunately, I had some really fantastic executives at Warner Bros. and Village Roadshow who helped us immeasurably.” He names Graham Burke and Greg Basser from Village Roadshow, together with Ed Romano, Richard Fox and Gary Meisel at Warner Bros. “We owe them everything because they believed in us and believed that we could and would get the deal done,” he gratefully acknowledges. “When we finally closed on the 13th of May 2003, it was transformational… We knew then that we were going to be around for a while.”
While that deal was certainly the standout moment, Richards also names the exit of the founding financier, Boston Ventures, in 2006 as another. “This was the first time that our team was rewarded financially and made a meaningful amount of money. To be able to recompense the team that had been with us for that long, and after they had left high-paying positions, was probably the most personally rewarding moment. It is interesting how your priorities and concerns change over time. When you are an entrepreneur with a grass-roots start-up, the early days are all about you…because there isn’t anybody else,” he elaborates. “If it doesn’t work and you fail, you will still ultimately survive. However, once you start to build a team, you suddenly have others that believe in you and join you on the journey… Failure very quickly starts not being about you but becomes about all of them. The team and their families who believed in what Alan and I wanted to do…that’s what caused a loss of sleep. At that point, you have this incredible responsibility to so many people. Being able to reward that group in 2006 and then again in 2010 was hugely personally satisfying.”
Richards is referring to the September 2006 £350 million (US$659.7 mil., €518.3 mil.) management buyout of the company giving management a 51% stake in Vue Entertainment. “Boston Ventures were the hugely supportive venture capitalist and private-equity firm that backed our start-up in 1999,” he elaborates. “They were joined in 2003 by Clarity Partners from Los Angeles and Legal & General from London. In 2010, [we] sold a controlling stake of the company to Doughty Hanson & Co. valuing the company at £450 million whilst retaining a 28% stake in Vue.” As private-equity firms typically work on a three- to five-year time frame, he attests that changing financiers is “the nature of the game if you want to build, develop and grow your business…if you want to be aggressive and accomplish what we have done. We have been involved with private-equity players from day one. Our financial partners and supporters were extremely clever and talented groups that have also been a genuine pleasure to work with. They have without exception added a huge amount of strategic value to the company. So, I am a big fan of private equity…it is an important part of what we are.”
While the articles on the subsequent pages provide insightful details from key company executives, we wanted to hear from the chief entrepreneur as well about some of the other parts that make up Vue. “It’s a look and feel. Very simply put, it’s the quality of the cinema itself.” Richards says he would be “disappointed if a customer objectively were to go into other cinemas and not notice the difference. We try and do things a little bit differently. Sometimes it may just be as simple as a mood that we are looking to capture, it’s changing the color of light with music and carpets…to make our cinema more accommodating, more relaxing and more welcoming.”
In creating that Vue feeling, “branding was a big, big part of our strategy and it took us quite a while to hit a landing on it,” he confirms. “We intentionally did not call ourselves Vue Cinemas but chose Vue Entertainment. Even in those days we saw the opportunity for alternative programming with music, sporting events, live theatre, and live comedy. We were some of the early pioneers anywhere that were engaged in alternative programming,” Richards states. “Mark de Quervain, who is a really creative marketing executive, did a lot of the groundwork and foundation for the brand, coming up with all kinds of manifestations of what we wanted to be, what we wanted to represent and what we wanted to be thought of as a group. We wrapped up all of those qualities and ended up with a short list of about a hundred company names.” He adds that the clock had really started ticking, leading up to the closing of the Warner Village deal. “We sat down over one weekend in May…and we locked the door after agreeing not to come out until we had a new name. We batted names around for the entire weekend before finally hitting a landing on Vue,” he recalls. “It just felt right in its tone, in terms of its look and feel... Mark deserves a lot of the credit for that. He was the one who really drove that process.”
Looking back at the journey so far, would Tim Richards do it all over again? “There is a time in your life when you roll the dice,” he attests. “I don’t think I could ever do a full start-up all over again. When I moved to London…my work permit, my entire net worth and our house were all on the line. There aren’t many times in your life when you can put absolutely everything at risk like that.” With those cautionary words in mind and “turning the clock back, I would absolutely do what I did again because it was just so much fun. I still have these incredible memories of five or six of us sitting around in one of our living rooms—bouncing ideas around about how we were going to build this company…and then how we were going to get through the week! Laying the foundation for Vue with nothing but a number of strategic and creative ideas was really an exciting time.”
The same can be said about his earliest movie memory, growing up in Rio de Jañeiro. “I watched To Kill a Mockingbird starring Gregory Peck when I was really young,” Richards recalls. “I still have scenes from that film that are permanently branded into my brain. I don’t think I slept for a week. My father was a Canadian diplomat and because we traveled, I was exposed to and watched movies from a number of different countries. But when it comes right down to it, I just love movies…of all kinds and all genres, everything from the black-and-white, subtitled foreign films right on through to a Hostel-type horror movie.”
When asked about favorite movie theatres, “one tends to romanticize the really big single-screen cinemas that we all grew up with,” he muses. “When you go back and actually see them again, you realize that the auditoriums had sticky sloped floors with poor sound acoustics. That brings back the real memories of a young kid not being able to see half the screen because someone taller sat in front of you,” Richards laughs. “I think many movie theatre memories that I appreciate aren’t all that realistic looking back. Because the theatres I thought were really incredible aren’t really all that good compared to what is being built today.” Keeping that in mind, he does mention attending the first “huge and iconic” IMAX screens when his family lived in Toronto. “These days one of my favorite cinemas—and I am trying hard to be objective—is the Vue Westfield London, which I think stands up to anything in the world. It just has such an incredible look and feel to it. Our large-format VueXtreme screens there are as good as they get.”
Speaking of presentation technology getting better, the amount of light on the screen is “absolutely critical” and of chief concern for Richards. “I worry sometimes when I see a presentation that I don’t think is as good as it should be. Particularly in 3D we need to provide our customers with as much vibrancy of color, brightness and quality as possible.” So laser-illuminated projection and higher frame rates look to be part of the theatrical experience of the future with “holographic imagery still probably 10 to 15 years away.”
For now, “certainly, 3D is here to stay,” he believes. “Our audiences worldwide are starting to settle down a bit.” Depending on the genre of the film, there is a core 3D audience across all of Vue’s markets, he says, averaging approximately 60 to 65% that prefer to see a film that way. “What is really interesting is that young directors, who are now all embracing 3D, and a few seasoned veterans are starting to use the technology differently.” Filming in what he calls “a more immersive way that is an integral part of the artistic process of filmmaking, as opposed to an afterthought,” has Richards very excited. “I believe 3D will be used a lot more effectively and in different ways in the future.”
What is here is digital, of course, “which we have all been waiting for forever and ever.” Richards notes, “We are going to find new ways of using digital that we haven’t even thought of yet. There will be new and additional business models, whether it is gaming or interactive films or something else.” Without any doubt, he knows, “the future of our business is staying one step ahead in creating something that’s exciting and dynamic for our customers.” Moving right along, “we are just switching gears right now at Vue,” Tim Richards promises in closing. “This is our tenth anniversary, that is really exciting, and we still have the core team here. But we have also got a lot more that we want to do. We are very, very excited about the future and it’s definitely not ‘mission accomplished’ yet. So stay tuned because we are around for a while.”