Regarding the Risks of Being Regal Entertainment Group (RGC)

Regal Entertainment Group (NYSE:RGC) is entirely correct when it says “a material contraction of the current theatrical release window could significantly dilute the consumer appeal of the in-theatre motion picture offering.” Theaters depend on capturing the audience that is anxious to see a new release.

“Deteriorating conditions in the global credit markets could negatively impact our business partners which may impact film production.”

Because I wrote a book titled “Attracting Capital from Angels” I’m from time to time contacted by individuals seeking advice about how to find capital for their ventures. During the credit crunch a few years ago, several of these people were indie film producers, which got me to thinking that apart from the major studios that have lines of credit with major financial institutions and access to equity capital, most producers are in a constant scramble for funds to make their movies. When capital is scarce, film production can decline, making fewer choices available for the theater operators to show. Consider how many popular films in the last 10 years didn’t come out of the major studios.

One reason video stores did not cause theaters to shut down is because for many entertainment consumers, a big screen film experience shared with hundreds of other enthusiastic moviegoers is more exciting and absorbing than sitting on the couch at home.

Yes, we “ought to be in pictures.” Perhaps not as performers or producers but as investors in solid companies like the nation’s largest theater operators. A multi-screen theater operator shows a number of different films at one time. This “diversification” mitigates the risk of one film that bombs. The producer on the other hand has to sweat the opening week box office results.

And of course as an investor you have the opportunity for a much longer career than actors typically enjoy.

The article Regarding the Risks of Being Regal originally appeared on Fool.com.

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