Philip Anschutz Reaps A Blockbuster Payout
By Andy Serwer

(FORTUNE Magazine) – Philip Anschutz doesn't like to be called a billionaire, though he is one. And he doesn't like to be called secretive, though he's that too. But what Anschutz really is, is a wily operator who has made big money in all manner of businesses--from oil and gas, to railroads, to telecom (he founded Qwest), to sports (he co-owns the L.A. Lakers), and now to movie theaters. Anschutz's MO is hard to define. As one business associate said about the Colorado mogul, Anschutz has an ability to "see around corners." Often his actions don't make sense until a few years down the road, and then--presto!--the payoff.

But lately some of Anschutz's moves have folks scratching their heads because they're so, well, transparent! Let me explain. In 2000, Anschutz went Hollywood and bought the United Artists movie theater chain. Soon after, he picked up the Regal and Edwards chains and molded them into a single company he dubbed Regal Entertainment, which he took public two years ago. Anschutz retained a 58% stake in Regal and controls 78% of its voting stock. So far, so good. The movie theater business was in horrible shape when Anschutz got in--all three of his acquisitions had done time in Chapter 11--so he bought low. The companies had been done in by overbuilding, putting up new 24-theater megaplexes faster than a certain movie studio churns out Harry Potter sequels. Now that the dust has settled, Regal has become the biggest player in the business, with 6,020 screens in 545 theaters in 39 states. It boasts a 17% market share and operates in 46 of the nation's top 50 markets.

Okay, so the theater business appears to be out of the woods and Anschutz is on top, but how does he take Regal to the next level? There's been speculation that the company would capitalize on new forms of advertising by using lower-end digital projectors that would show ads before showtime. For now Anschutz has been unlocking Regal's value in a much more obvious way: He has been receiving huge dividend checks from the company--which, with the now lowered tax rates on dividends, is a not a bad line of work.

It began in the summer of 2003, when Regal announced it was paying shareholders a special "one-time" dividend of $5.05 per share. Anschutz's haul from his shares? A cool $372 million. And in early June of this year, Regal distributed another special one-time dividend of $5 a share, which will render $368 million to Casa Anschutz. The company says it is paying the dividend with "internally generated funds and the net proceeds of the successful completion of its previously announced $1.75 billion recapitalization transaction." In other words, the dividend will be paid for in part by taking on more debt. In May the Teachers' Retirement System of Louisiana pension fund asked for a preliminary injunction to block the $5 dividend, arguing it would enrich Anschutz at the expense of the company's financial position, but the typically management-friendly Delaware Chancery Court denied the motion. Regal co-CEO Kurt Hall says the idea for the dividends came not from Anschutz but from the company's investment bankers--and that the company was under-leveraged anyway.

In any case, Philip Anschutz has taken nearly three-quarters of a billion dollars out of Regal in less than 12 months. Does he need the cash? Well, Qwest's stock price has plunged from $60 in 2000 to $3.50 today, dropping the value of his stake from more than $18 billion to just over $1 billion. That would leave him relatively depleted. (I guess the telecom meltdown was one event he didn't see coming.) Or maybe it's that Anschutz sees no buyer for Regal down the road and wants to get what he can out of it now? With Anschutz, it's hard to say. If we ever understand his strategy, it will be only at some point down the road--or to be more precise, around a corner.

ANDY SERWER, editor at large of FORTUNE, can be reached at Read him online in Street Life on and watch him on CNN's American Morning and In the Money.