Interview with CEO, Vue cinemas: expanding despite ‘threat’ of VOD

Interview with CEO, Vue cinemas: expanding despite ‘threat’ of VOD

Tim Richards, founder and boss of Vue cinemas, reckons he knows what the nation wants to watch and when. Families in northern England want early film times to allow an early dinner. In Islington, north London, the local Turkish community wants films in its own language.

“There’s one part of London, I don’t want to name it, that has one of the highest number of car thefts per capita in the country, and they love Fast & Furious,” laughs the Canadian-born entrepreneur, referring to the multibillion-dollar film franchise starring Vin Diesel.

Until three years ago, choosing which films to show in each cinema was the job of an eight-strong team of experts. Today, Vue employs artificial intelligence. “We brought in some of the top people from San Francisco who had designed the algorithmic models for the hedge funds in New York,” says Richards proudly. “They crunched 10 years of data and came up with a model.”

The use of AI speaks to the modernisation of an industry that has been transformed during Richards’ 30-year career in it. Today, the seats recline, there is surround sound and tickets can be booked online. The studios plan their movies years ahead — allowing big cinema chains, such as Vue, to plan how much to invest.

“Disney is committed to releasing a Star Wars or an Avatar each year for the next five years alternating, and for us, that is brilliant,” says Richards, lounging in a plush seat at Vue’s flagship cinema in London’s Leicester Square.

“When you put in all the tent-pole dates, other studios come in and fill in the rest. Everyone now has their dates planned for the next three or four years. That’s never happened before.”

Being able to show investors a pipeline of blockbusters is helpful for Vue, which is expected to be put up for sale in the next couple of months. Its majority owners, Alberta Investment Management Corporation and pension fund Omers, reportedly want a £2bn deal for the cinema empire, in which Richards and other managers retain a 27% stake. The Canadian funds have been shareholders since 2013, when the company changed hands in a deal worth £935m.

For the chief executive, who founded Vue 20 years ago, the change of control is unlikely to mean retirement. His entrepreneur father is still working at the age of 85, and 60-year-old Richards insists he is “more excited than ever” about the business. His mother, now 80, has run 20 marathons and is a competitive golfer.

Vue and larger rivals Odeon and Cineworld are celebrating a record summer. Box-office takings rose 7.8% on last year to £474m, according to the UK Cinema Association, thanks to family-friendly hits such as The Lion King and Aladdin. The impressive season came after a blockbuster 2018, when Avengers: Infinity War and Mamma Mia! Here We Go Again helped push admissions to their highest level since 1970, according to the British Film Institute.

For Richards, who is close to completing the purchase of Germany’s CineStar chain, it is evidence to support his argument that the industry will shrug off the rise of online streaming giants such as Netflix, Amazon and Hulu.

“I have been through VHS, Blu-ray and DVDs,” he says. “Every time a new product comes out, people predict the demise of cinema. We have been resilient with straight-line growth, certainly internationally, since the mid-1980s.”

Richards founded Vue after working for film studios. Today, he presides over 229 cinemas in 10 countries, with 57 CineStar sites soon to join them. The London-based chain expects to sell 100m tickets this year. It posted turnover of £799.9m last year, although hefty finance costs pushed it to a pre-tax loss of £96.3m.

Richards is sharply dressed in an open-necked shirt and a dark-blue suit, with a smooth complexion that would put an ageing Hollywood star to shame. He works out every morning.

Once a competitive skier, he dropped out of school at 16 to pursue a place in the Canadian Olympic team, working on oil rigs in the summer to pay for his training. When he failed to make the team, he went back to university as a mature student. He was twice rejected by McGill University in Montreal, but decided to attend classes there anyway. “It was on my third appeal and after two weeks of classes that I managed to get in,” he says with a wrinkle-free smile.

Richards trained as a lawyer and worked in New York before moving to London to join the mergers and acquisitions team at the magic circle firm Freshfields. However, he arrived during the early 1990s recession, when deals dried up. “I spent a year at Freshfields before the real recession hit hard. I was literally winding things down,” he says.

Richards joined UCI, the cinema joint venture between Paramount Pictures and Universal Studios, then became a vice-president at Warner Brothers, working in business development. It was his job to roll out new cinemas.

“You could not build them fast enough,” he remembers of the international expansion. “Everywhere you put them down, people were blown away. They were used to old, classic, single-screen fleapits, and suddenly they had a modern multiplex where they could see more than one movie.”

The travel that went with the job took its toll, though. Richards, a father of three, was newly married and had a young family. He decided to give up the trappings of a studio executive — valet parking, a hairstylist and first-class travel — to launch his own cinema chain. “They [the studios] made your life really easy, but I never cared about any of that,” he says of the extravagance. He also wondered when the shareholders would “wake up and see what was being spent”.

Richards gave up his corner office, remortgaged his house and convinced a group of venture capitalists in Boston to back his venture. He scraped together enough to buy six cinemas, the first of which opened in Livingston, West Lothian, in 2000.

The chief executive says Vue punches above its weight compared with Odeon and Cineworld. “We are by far the smallest in terms of sites and screens, but we’re doing things more efficiently,” Richards says. “There’s a big difference if you’re an owner-manager, or a salaried employee.”

He gives the seat beneath him a squeeze. “This is leather, and our biggest competitor puts in plastic. We would never do that.”

Richards has used his position to speak out on industry issues. He has also been willing to take a stance on international issues — Vue suspended plans to expand into Saudi Arabia after the journalist Jamal Khashoggi was murdered in the Saudi consulate in Istanbul last year.

This weekend, Vue expects big things from the release of the Downton Abbey film. Even in London’s Romford and Ilford, which Moneysupermarket says is top of the national list for car theft, Richards’ algorithm says it will be a hit.

The life of Tim Richards

Vital statistics
Born: February 10, 1959
Status: married to Sylvie, 59, with three children, aged 24, 21 and 17
School: University of Toronto Schools
University: McGill and Windsor, Ontario — read political science and economics, then law
First job: worked on oil rigs between school and university
Pay: Vue’s highest-paid director got £1.2m last year
Homes: East Sheen, southwest London, and Chamonix, France
Car: his “go-to car” is a BMW i8 Roadster, a hybrid. “I have filled it up with petrol just once in the past year”
Favourite book: The Glass Bead Game, by Hermann Hesse
Film: Apocalypse Now
Music: “anything at Ronnie Scott’s”, the Soho jazz club. He saw George Benson there recently
Gadget: iPhone
Charity: Hope and Homes for Children
Last holiday: Mallorca

Working day
The chief executive and founder of Vue wakes at 6am and exercises before taking his teenage son to school. Richards is in the company headquarters in Chiswick by 8.15am, then spends the day in meetings and on calls with colleagues.

He usually has a couple of business lunches a week, and attends film screenings and premieres in the evenings. If he doesn’t have to work late, he is home by 7.30pm to have dinner with his family.

Downtime
Richards, a self-confessed “speed freak”, enjoys doing a “lot of crazy sports”, including kitesurfing, skiing and car racing.

Source: The Times

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