‘It was great newspaper fodder’: Village Roadshow CEO on family bust-up - Financial Review

[TBoy]

I just found this article from the Financial Review from November 2023, that hasn't been shared on Parkz yet. The article mainly talks about the history of the Kirby family's involvement in Village Roadshow and the ups and downs of it, but also talk about the parks near the end, which include some interesting details.

Hidden behind Movie World on the Gold Coast is a low-rise office block painted in a shade of cream that gives a whiff of the 1990s. Inside the boardroom sit Robert and Clark Kirby, father and son, the third and fourth generations of a family who built the most successful entertainment company Australia has ever seen.

Village Roadshow dominated the box office and the TV ratings for decades. Its hits included The Wiggles, Skippy, Mad Max, Bananas in Pyjamas, Brides of Christ, Priscilla: Queen of the Desert and Muriel’s Wedding. The company ran film studios, drives-ins, cinemas and theme parks. It produced VHS tapes, board games and CDs, and was early to bankroll FM radio. With cinemas and video distribution across Asia, Europe and the United States, Village snaked around the globe. It co-produced Hollywood blockbusters like The Matrix and bought theme parks from Hawaii to Hainan.

Clark Kirby at Movie World: “We are by far the dominant force in the theme park industry here in Australia.“. Louie Douvis

That dominance, which traces its origins back to the 1930s, is no more. A family fight turned into one of the nation’s most compelling boardroom battles as John Kirby carried out a sustained campaign against Robert – the company’s chairman and his brother. It sent the once publicly listed Village Roadshow private. Away from the spotlight, it shrugged off its gargantuan international ambitions to focus on Australian cinemas and theme parks such as Movie World on Queensland’s Gold Coast, a destination for ageing tour buses ambling off the Pacific Motorway.

But this is not the Kirbys’ final act. Robert and Clark are speaking for the first time in depth about the family strain and the roller coaster ride that followed. They’re even talking about how the next generation might get involved, which would make the Kirbys unique in the upper echelons of Australian business – a family who’ve held on through five generations.

“Wanna go see a theme park?” asks Clark. With tile-white teeth and voluminous black hair, the CEO of Village Roadshow is animated in real life. As we walk from the office behind film sets and into the park it’s a different world, heaving with school holiday traffic. Teens slurping snow cones dart in front of red-faced parents carrying inflatable carnival prizes. Tiny girls in tutus collapse in giggles after Superman throws a wave. Car revs fill the air from the Hollywood Stunt Driver 2 show running nearby.

 

Clark Kirby on the cover of the December 2023 issue. Louie Douvis

As Clark poses for The Australian Financial Review Magazine’s photographer, it’s clear this is not his first rodeo in front of a camera. Indeed, he seems disappointed at how tame the requested poses are. Not many CEOs want to appear in advertisements for their own company but Clark, 44, isn’t like most CEOs. He’s been made up as a zombie for Movie World’s “fright nights”, has been photographed on roller coasters and at one point was stopped by his own staff, for occupational health and safety reasons, from bungy-jumping for a photo op. His wife, Sara – a former Saturday Disney host and Seven News weather presenter – and three daughters fronted the company’s promos when the parks reopened following COVID.

“He’s our Walt Disney,” says his father, Robert, who’s joined us on the Movie World tour, having just flown up from his Melbourne base. By now we’re standing next to the Looney Tunes Carousel, with Roadrunner, Marvin the Martian and a turban-wearing Bugs Bunny spinning round and round. With his cartoon-like Colgate shine, angular silver eyebrows and gregarious nature, Robert could almost blend in. Aged 72, he is training for his fifth marathon in two years. “He’ll take you through it in great detail, if you’d like,” says Clark, butting in as his dad explains he’s been measuring his heart rate since the mid-80s. He wears two smartwatches and listens to his arteries via a chest strap.

Clark might not be in the same league as America’s most famous animator and entrepreneur, but he has reason to smile. Against the odds, a Kirby comeback is under way. They now own a smaller stake in the business – 22 per cent down from 42 per cent when it was publicly listed – but they say it has turned a corner.

“We have evolved, shaped and steered the development of the entertainment industry in this country,” says the grandson of Village’s founder, Roc Kirby, and potentially the heir to the empire, depending on the next move by BGH, the private equity firm that owns 78 per cent. “[Now] as we come out of COVID, our focus is on the experiential component of entertainment, and it has never been more important.”

Village’s Gold Coast theme parks – Warner Bros. Movie World, Sea World, Paradise Country and Wet’n’Wild – are benefiting from the wave of post-COVID revenge spending as tourists stream in. A day pass costs $105 and earnings are up 50 per cent on pre-COVID years, Clark says. Their resurgence comes as the stock of the company’s major competitor, Ardent Leisure, is down 25 per cent so far this year and shareholders are agitating for change.

Globally, theme parks are enjoying quite the ride. Disneyland has pledged to spend $60 billion over the next 10 years to expand its parks – and so far there are no plans for an Australian park. “We are,” says Clark, “by far the dominant force in the theme park industry here in Australia.” And investors agree – Village Roadshow’s theme parks are in a league of their own.

Says Christopher Mittleman, chief investment officer of former Village shareholder Mittleman, from New York: “Even though it’s not Disney World, it is probably the closest thing you’ve got to it over there. And Disney World itself is probably not a looming threat because the market’s a bit small for them to build one over there.”

If there ever was a Walt Disney of Australia, it’s arguably Robert and John’s father, Roc. He didn’t start the family business – his father, George, had gotten into cinemas in the 1930s after a fire at their dairy farm – but he is central to the Village story.

In the Second World War, he was tasked with becoming a radio operator in Papua New Guinea. Aged 23 at the time, his technical skills learnt from operating projectors in the cinema led him to dip behind enemy lines to report on the positions of the Japanese imperial army as well as intercept enemy transmissions as part of the secretive Australian special wireless group.

“He worked behind the lines . . . and called in the air strikes,” Robert says. “He’d have five to 10 minutes to get out because they would just zero in on the radio contact points, and storm in, and they were never more than 100 to 200 yards away from the Japanese.” Encased in tropical heat and surrounded by malaria-carrying mosquitoes, the allied soldiers dreamed of the movies. Roc came back from New Guinea determined to set up a “drive in” just like his American soldier friends had described during their downtime.

Once back in Melbourne, he set about convincing the local council as well as his father, who derided the plan as “pictures in a paddock”. But Village’s cinemas grew and grew. Robert and John joined the business when they were seven, selling lollies. “Everyone works in the cinema once you get to a certain age,” Robert says. Joining them in the business was Graham Burke, who began working at Village as a ticket collector and cleaner when he was 14. He became so close to the family he was known as the cinema mogul’s adopted son.

In 1971, Village formed what would become one of the company’s most lucrative partnerships: a deal with Warner Brothers to distribute its movies in Australia. Burke, who was known for his frequent trips to Hollywood, was the driving force behind the move, according to Milt Barlow, a former Village executive who counts his time there as a career highlight. “Graham probably spoke to Warner Brothers four times a day,” he says.

After Roc retired in 1988 – when the company listed on the ASX – the brothers and Burke, now CEO, expanded the business into a sprawling entertainment conglomerate, each man taking a different segment. “John was more heavily involved in the radio stations, and Rob more in home entertainment while Graham lived, ate and breathed movies,” says Barlow.

They had uncanny luck in predicting shifts in technology. Roc always thought cinemas would remain king, but Robert was convinced that many would prefer to watch films at home. “The story goes that Robert was given $1 million to lose, sent to Sydney to do this silly thing called Roadshow Home Video and he very quickly made that very successful,” says Barlow.

At times, it felt like Village’s executives had golden fingers. The company took a chance on a hybrid video board game called Nightmare. It was a cult success that went global, selling hundreds of thousands of units a year. Village also got lucky with Darren Hayes and Daniel Jones’ pop duo, Savage Garden. They were the only label to agree to the royalty deal demanded by notoriously tough agent John Woodruff; it was around double the rate record companies were paying at the time. But it paid off when the band pulled in millions of dollars.

 

Robert Kirby: “My grandchildren would love to take over our jobs.” Louie Douvis

“It was a decade where we grew the company into all sorts of areas – it was a glory time,” Barlow says. And everyone wanted a piece. Some of Australia’s wealthiest families bought Village stock; the Libermans and the Packers. Roc vaulted up the Rich List; Burke and his two sons became the highest-paid entertainment executives in Australia. They drove headlines with plans to buy Channel Seven and declarations that they would soon make as much money in Asia as Australia.

Their dress matched the way they talked – Burke was fond of oversized glasses, John wore cowboy boots. They were a vertically integrated behemoth, with the ability to produce a film, shoot it in their part-owned studios and distribute it through their home video outlets and cinemas (and even get a cut of the popcorn).

In 2011, Village Roadshow decided to sell out of its radio assets, which it had owned since the early 1980s when it was an original investor in Sydney’s 2Day FM, one of Australia’s first FM radio stations. “We are just circus folks,” said Burke at the time. “Our focus is on pure entertainment businesses. We’re not interested in anything more high-falutin’ than that.” It was a sign of what was to come.

It was Village Roadshow’s rocky road to privatisation that truly wrote the family into Australian corporate lore. In some ways, the pain started with the horrific accident that killed four people on the Thunder River Rapids Ride at Ardent Leisure’s Dreamworld in October 2016, just up the road from Movie World. The tragedy, and Ardent’s poor handling of the aftermath, became a national scandal, and attendances at theme parks everywhere, including those owned by Village, began to fall. In the next few years, Village’s share price spiralled, and eventually the company paused dividends.

The year 2018 was an exceptionally bad one. The share price dropped to just $1.77 in July, after nudging above $8 four years earlier, and it struggled under a heavy debt load. Village sold Wet’n’Wild Sydney – which it had spent more than $100 million building up – for just $40 million, and conducted a controversial capital raise.

John became fed up. Even though he was a co-founder and had a holding equal to both his brother and Burke, he was no longer a salaried executive, having stepped back after the sale of the radio assets. Since Burke and Robert were aligned on the company’s strategy, John had lost control.

As the company shed hundreds of millions in market capitalisation, John launched an all-out offensive, pointing out high salaries and raising questions over related party transactions such as Village buying wine from Robert’s vineyard, and swimwear from a business owned by Burke’s daughter. John wanted his brother to step down as chair and Burke to step down as CEO, and hired a bevy of corporate advisers, including former Rothschild investment bank boss David Kingston and legal firm Arnold Bloch Leibler. The battle for Village exploded into the public arena. At the company’s 2018 annual general meeting, Kingston described Village as the “dunce of the class”.

The internal feud came as the streaming revolution arrived, displacing Village. “I can remember Graham saying the internet is for email and accountants, people are never going to watch movies on the internet,” says Barlow, hurrying to add that he saw Burke as a “giant” in the industry.

A line was drawn under the affair in 2020 when the business was sold. Several private equity firms were interested, but the disruption of COVID meant that BGH was the last bidder standing and took just over three quarters for $586 million. “I am bitterly disappointed,” Mittleman said at the time, adding that smaller shareholders felt “ripped off” at what he thought amounted to a fire sale in the midst of the pandemic. “[This was a] disgraceful affair for all who facilitated it.”

The rest of the company was left for Burke, Robert and John. Clark, who had been working as an investment banker at UBS, was appointed as CEO. “I don’t think BGH particularly wanted the Kirbys’ involvement but I think it was probably what massaged the deal across the line,” says one person familiar with the events.

 

John Kirby (left), Robert Kirby and Graham Burke at Movie World for an AGM in 1995. Robert Rough

Reflecting on the deal, Robert says BGH was a natural choice, having known the firm’s founding partner, Ben Gray, for more than a decade. “We have a long family history over the years, a long friendly history,” he says. And the Kirbys were never going to sell out entirely from the business that’s their legacy. “The fact is BGH bought in because of our management, we pitched the concept to them, they bought in . . . not immodestly, because of us,” says Clark. “[But] I have hurdles I have to hit as part of my employment, it’s in my contract.”

Robert still rankles at the suggestion that the company was run off the rails and denies Village’s privatisation was inevitable. Instead, he says, it was caused by “dark clouds” generated by the media. “We were never under the threat of banks,” he says. “We still and always did have the alternative to continue as a public company and for the family to have that totality [of control]. Now we share that control with BGH.” Clark concedes the episode put the family under enormous pressure. “I certainly felt it myself, in terms of what is the future direction for this business,” he says.

 

John and Robert Kirby in 1998. Robert Rough

Like his father, Clark is dismissive of claims the company was poorly run. “It was great newspaper fodder at that time because we’re an entertainment company,” he says. Adds Robert: “There was just a lot of misinformation and innuendo and headlines and sensationalism that, I think, was wildly inaccurate.” And what of relations with John, who – along with Burke –  declined to be interviewed for this story? Like an experienced improv performer, Robert weaves and dodges when he’s asked about his relationship with his brother. Eventually conceding to answer, he proclaims the dispute affected everyone else more than it ever affected him.

“John Kirby and I, well before any . . . dispute became public, we do live separate lives. And I have to say, that’s continued,” Robert says, eyebrows resettling. “But right now, John and Graham and I are very contented, happy shareholders in what is the new privatised Village Roadshow.”

Three years on, the Kirbys are still in the process of lowering their heart rates. Before first light on the Gold Coast’s lush hinterland where he lives, Clark submerges daily in an ice bath, identical to the one he bought his father. The two sleep so well these days, they compete via their matching Oura rings. “I certainly have enjoyed being a private company a lot more than a public company,” Clark says.

Talking to father and son, it’s almost as if in the Kirbys’ minds, BGH’s role as owner is one of backstage hands. “Murdoch does not even own 51 per cent of News Corp,” says Robert, who refers to his private equity backers as “partners”. BGH has three directors on the six-person board, one of which is Ben Gray, who sealed the deal and closely follows the company’s moves.

Since the takeover, the company has a new head of its cinema division, a new finance director and a new company lawyer. “There’s been pretty significant changes to the management structure since BGH took over,” a person with knowledge of the company says. And yet still, there are vestiges of what was always a family business. “Whether it be a public company, whether it’s a private equity vehicle, we’re still seen at our heart as a family company,” Clark says.

Village Roadshow is now doing a debt raise and restructure after it was left with an eclectic set of lenders, such as the Bank of India, in the lead-up to the privitisation. Clark tries to stop Robert discussing it, saying it’s confidential, but he’s brushed away. “We have the opportunity to find more debt facilities for both the opportunity to fund our future growth and secondly . . . potentially make a capital distribution to shareholders,” Robert says as Clark looks on, exasperated.

 

Clark Kirby: “It was great newspaper fodder at that time because we’re an entertainment company.” Louie Douvis

The parks have allowed the Kirbys to pull a rabbit out of a hat. Village has just finished a major renovation of Sea World to install The New Atlantis, an extensive precinct with a wooden roller coaster. Tens of millions are now being spent on a vast Wizard of Oz zone at Movie World, which Robert says will have a value of $100 million. It’s due to open in 2024. More hotels will follow, incorporating elements from the theme parks into the rooms and surrounds. They will offer, Clark says, “a truly immersive experience”.

The cinema division, which operates in partnership with Alan Rydge’s Event Cinemas, comes up less in conversation. Rydge and the Kirbys have a long history; Rydge was a shareholder in the private vehicle, which in turn held a majority of the listed Village Roadshow. “There is some alignment between Melbourne people,” one person close to the families says.

Clark says the premiumisation of their cinemas is “incredibly important” and argues streaming services have failed when only releasing movies via their own websites. “The pandemic proved once and for all that it’s far more valuable to release in cinemas than just on a streaming service,” he says. But post-COVID, cinemas are struggling outside of blockbusters such as Barbie. Wang Jianlin, the Chinese entertainment billionaire, has been trying to sell his Hoyts chain in Australia, but turned down a $700 million offer earlier this year and failed to get his $1 billion asking price, according to people familiar.

The deal rumour mill is already swirling about whether BGH has a shorter timeline for hanging onto Village’s cinemas. “The general consensus is that theatres are ... in secular decline,” Mittleman says. Were there to be a sale, he says owners of Village may be thinking that they would have a “better chance of getting a fair value in the public markets when you’re not tainted by a lower-margin, lower-growth type of business” such as the cinemas.

The Kirbys are aware the clock is ticking. “[BGH] want to continue to see growth in the [overall] business,” Clark says. “Yes, they will want to monetise their investment at some point. We expect that within the next three to five years.”

When Packer’s Nine started building a stake in Village back in 1991, the company’s then-general manager, Ieuan Mapperson, moved to squash rumours the Kirby family’s hold over the company would loosen. “I can assure you that these are people who are thinking of their great-grandchildren’s equity in the business,” he says.

Is there any sign of that changing? Robert is steadfast: “You should mention this. My five grandchildren would love to take over our jobs.” Clark, whose daughters are aged seven, 10 and 12, is clear-eyed. “They would all love my job. But their impression of my job is that I ride roller coasters and play with dolphins every day.”

Some interesting notes there:

• Wizard of Oz land will reportedly have a value of $100m
• More hotels will be built that incorporate elements from the parks into them

The wording sounds to me like there will be more hotels than just the one outside Movie World. The question is, where could they be and what style could they be?

 

Edited February 3 by TBoy

[Tricoart]

52 minutes ago, TBoy said:

More hotels will be built that incorporate elements from the parks into them

The fact it says ‘rooms and surrounds’ doesn’t seem to me like they’ll be connected accomodation, as well as there not really being much need/space for another VRTP example of that post-MW’s hotel. Maybe, instead, there’s a plan for something similar to a Paradise Resort, various Disney hotels, things like that, in which it’s a family-oriented hotel/resort, centred around an IP that VRTP has the rights to (Nickelodeon, DC, etc), that’s got enough self-contained activities for park visits to not be a necessity (but, ofc, offering shuttles to & fro). They have experience with similar, though less self-contained, locations with Sea World Resort. Though, granted, they didn’t construct it, experience with it’s operations could mean they have ideas as to how it could be improved if they were to construct one themselves. 

As to if anything comes from it, we’ll have to wait and see, but I’m guessing that’s moreso what’s being eluded towards.

Edited February 3 by Tricoart

[Ashley Jeffery]

TLDR

[Tricoart]

1 hour ago, Ashley Jeffery said:

TLDR

“We’re millionaires who got lucky once, but we also are really smart and make great decisions, except for when we don’t ’cause we have flaws as we’re human just like you. [River Rapids mention]. New company bought most of us, but we’re friends & it’s okay (apart from our cinemas, those suck lol. Also, if we don’t make money in the next 3-5 years, we’re kinda screwed. But that’s fiiiiiiiiine, cause we’re friends!). Anyway, $50m Ghost of New Atlantis Past, $100m Ghost of WoO Present, $??? Ghost of Hotels Future. Also, I have children, as a byproduct of being human, just like you.”

Snippet about hotels:

2 hours ago, TBoy said:

More hotels will follow, incorporating elements from the theme parks into the rooms and surrounds. They will offer, Clark says, “a truly immersive experience”.

Edited February 3 by Tricoart

[Gobbledok]

Its a very good article detailing a lot of history of probably the most influential people in the space

i find it weird anyone claiming to be interested in theme parks would consider it too long to bother reading 

[Tricoart]

37 minutes ago, Gobbledok said:

Its a very good article detailing a lot of history of probably the most influential people in the space

i find it weird anyone claiming to be interested in theme parks would consider it too long to bother reading 

I don’t think most people care about reading the life stories of those who’ve (in recent times) ran MW into the ground, which is what 90% of the article focuses on. Especially when most of the park’s current issues are due to cost cutting & exorbitant prices, both of which are positively referenced in the article due to its focus being on the sole beneficiaries of said tactics.

Edited March 9 by Tricoart

[Gobbledok]

This logic makes no sense. 
the article is about the people who built the place and ran it for its entire life

so at any stage they were/are responsible

my point stands though if you have zero interest in the business then your just a punter with a keyboard

[Tricoart]

37 minutes ago, Gobbledok said:

my point stands though if you have zero interest in the business then your just a punter with a keyboard

Do you think being on Parkz means you’re an active shareholder in VRTP? ‘Cause, no, I believe that (at least, in most cases) users are just people who are very interested in the current goings on at nearby parks, so things like future/past financial plans or how human the CEOs act don’t really matter when all the CEOs/management are doing now is sitting pretty while their parks deteriorate.

Edited March 13 by Tricoart