An investment group led international theater entrepreneur Paul Heth has acquired a controlling stake in Karo Film, one of Russia's leading cinema chains.
The consortium, which includes Baring Vostok Private Equity, UFG Private Equity and the government-backed Russian Direct Investment Fund, also said it would commit $100 million to open new multiplex venues. The group also named Heth as Karo's chief executive officer, according to a statement. Financial terms were not disclosed.
The deal highlights the rapid growth of Russia's theater business, which is expected to exceed $1.3 billion in ticket sales this year, and its emergence as a major market for Hollywood films.
Founded in 1997, Karo is one of the top three theater chains in Russia, operating 197 screens in the 31 locations in Moscow, St. Petersburg, Nizhniy Novgorod and other cities.
Heth, a native of Woodland Hills who helped build the former Bridge theatre in Los Angeles, has played a key role in the growth of Russia's movie industry over the last two decades.
In 1996, Heth co-founded Kodak Kinomir, one of the highest grossing cinemas in the world, and later partnered with American media conglomerate National Amusements (parent of Viacom and CBS) and Shari Redstone, daughter of media mogul and Viacom Inc. Chairman Sumner Redstone, to launch Kinostar Deluxe cinemas in Russia. The chain was sold in June 2011.
Heth said the new investment in Karo will help the circuit expand in Russia, which has emerged as one of the top 10 film markets in the world and a lucrative source of revenue for the major Hollywood studios. Fox's "Ice Age: Continental Drift" generated $50 million, while Marvel Studios' "The Avengers" pulled in $43.7 million this year in Russia.
The number of theater screens in the country has more than doubled in the last decade to 3,000."When I first started my career in Russia I had to go to L.A. and buy films from independent producers and take them back on my lap in the plane,'' Heth said in an interview from Moscow. "Now, every major studio has an office here. It's very exciting."