Ambassador Theatre Group Changes Course

With the news that the bosses of Ambassador Theatre Group, the world’s largest live theatre company, are stepping down from the business they founded after 25 years has sent mixed messages out across the industry. Anyone that has experience of the cutthroat world of investment knows that there are only two criteria for success, a bottom line (profit) that is sufficient to significantly drive the valuation of the company up (what it can be sold for) and the valuation of the assets on the company’s books (the theatres). None of which has anything to do with artistic merit, just a paying public and bricks and mortar.


With Ambassador Theatre Group co-founders, Howard Panter and Rosemary Squire, being replaced as joint chief executives by a corporate business leader, Mark Cornell, the die is cast. The BBC’s former director-general Greg Dyke will stay on as chairman. The industry sees some positives from this move with the expectation that the company may focus less on the production of shows, giving the independents more of an opportunity. But this I doubt – remember profit is the driver and if you produce your own shows you retain a larger share of the wallet and ATG has its own production company and significant investments in others.

ATG first engaged with the world of investment in the early days, when there were many opportunities to acquire prime theatres. In 2000 investment from UK companies AREA Property Partners and Carlton Television facilitated the purchase of a number of West End houses, a more significant investment partner came on board in 2009, British company Exponent provided funds for expansion including the £90m acquisition of the UK property portfolio of Live Nation.

Exponent sold a significant portion of their holding in ATG, when In October 2013 a record-breaking deal for a UK theatre when the company was valued at £350m, by American private equity firm, Rhode Island’s Providence Equity who became the majority stakeholder in the company while leaving Exponent with an 18% stake.

trafalgar studios

So what about Howard Panter and Rosemary Squire? Well there are a number of messages that can be read into the statements issued by the various parties – they will remain a part of ATG – yes, as non-executive directors, they will attend board meetings, but with their limited  number of shares and no executive roles will have little impact: a corporate attempt at ensuring continuity and convincing all that there is total harmony. They have also been given the opportunity to buy the worst performing asset on ATG’s books, the Trafalgar Studios in London’s Whitehall and run it independently.

In their place, corporate itinerant Mark Cornell has taken over as chief executive, while theatre marketer Adam Kenwright has been appointed as executive vice president, having been CEO of AKA acquired by Providence in December 2015.

Since the initial involvement of Exponent there has been a switch of focus from the UK to the international market, something that is likely to accelerate under the new corporate ownership and management. This is probably another reason that the money people decided it was time for a change in the management of the company. Both Providence Equity and their ATG CEO have experience in the Asia/Pacific region where they both believe there is a huge untapped market for their brand, experience and productions.

So who are these people that have taken control of Britain’s most significant theatre company? What is it that they have bought? What happens should it go wrong?

Let’s look at the money; Providence Equity are a US investment company founded in Rhode Island by billionaire media mogul, Jonathan M. Nelson. In 2000, Providence oversaw just $3.6 billion. A single fund raised in 2005 amassed $4.26 billion. Two years later, it raised $12 billion more — in just three months. By 2007, the firm had nearly $21 billion in private equity assets under management. It also started a credit arm, which quickly attracted billions to invest in fixed-income securities.


The money catapulted Providence from a boutique into a megafund, allowing it to compete for deals with larger firms. Providence charged into the fray, investing half of the $12 billion fund in just two years. Providence delved into areas like health care, Internet retailing and child care, often paying hefty sums for companies in sectors in which it had scant experience.

“The risk during this time wasn’t just style drift, it was quality drift,” said Peter Keehn, the head of private equity at Allstate Investments, who wasn’t speaking specifically about Providence. “After raising these big funds, if you couldn’t find assets that were exactly what you were dying to own, then you started to look at assets that were close to what you’d like to own.”

As Providence grew, Mr. Nelson looked to expand the firm’s Manhattan offices where they are based. The firm was outgrowing its space in the Lever House, a glass-box skyscraper on Park Avenue. (It’s nicknamed “the leverage house” for the numerous private equity and hedge funds housed there.).


Mr. Nelson moved the firm to the swooping tower at 9 West 57th Street, among the world’s most prestigious business addresses. The firm leased the entire 47th floor, placing it several floors above its rival. In the summer of 2007, Providence struck what would have been the largest buyout deal in history, the $51 billion takeover of BCE, parent of the phone giant Bell Canada. Not long afterward, Mr. Nelson appeared on the cover of Fortune magazine alongside the headline “The Biggest Deal Ever.”

That Fortune issue became a collector’s item — because the deal never happened. The BCE buyout fell apart in the ensuing credit crisis. Still, during the height of the frothy markets, Providence completed a number of deals, and none was worse than Altegrity

In 2007, Providence paid $1.5 billion for U.S. Investigations Services, a former branch of the federal government. Privatized in the 1990s, it provided background checks for government employees requiring security clearances. Providence began adding related businesses onto USIS to create a bigger, more diverse entity it renamed Altegrity. First came the commercial background-checking firm HireRight. Next, in 2010, it bought the investigative firm Kroll for $1.1 billion. The three business entities coexisted, albeit not always peacefully. Several Altegrity managers have said they butted heads with Providence partners over everything from strategy, to acquisitions, to sales of business lines.

Altegrity took a major public relations hit after revelations that it had performed the background checks on Edward J. Snowden, the former National Security Agency contractor who leaked documents to journalists, and Aaron Alexis, the Washington Navy Yard shooter who killed 12 people in 2013. USIS said the background checks were conducted in strict accordance with a government-dictated contract. The final straw was a hacking attack on USIS, which led the government to withdraw its contracts. With the loss of that business, and buckling under $1.8 billion in debt, Altegrity filed for bankruptcy protecti

Providence executives blame events largely outside their control for Altegrity’s failure. But they also all agree the firm shouldn’t have made the deal in the first place. “We didn’t have a particular expertise in that area,” Mr. Nelson acknowledged. Providence and its investors are still paying for the firm’s overreaching into areas outside media and technology. The performance of the 2005 fund is abysmal. With an annual return of 3.5 percent after fees, it sits near the bottom of its peer group.

The 2007 $12 billion vehicle is also struggling, returning about 6 percent annually. For now, those two funds rank in the bottom quartile of other similarly sized global funds from the same year, according to an analysis by the research firm PitchBook. But some investors expect that performance to improve on potential gains on several investments including Asurion, a cellphone insurer; ZeniMax Media, a video gaming company; and wireless tower companies in India and Latin America.

For a lesser private equity player, back-to-back bottom-quartile funds would have spelled a firm’s demise. Providence survived, though raising a new fund was a slog. Several past investors declined, including the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, which had a total of $1 billion invested in the 2005 and 2007 funds, according to the online fund-raising firm Palico.

But others, including pension funds in Washington, Florida and Illinois, increased their investments in the new fund. A handful of others, including Florida and the State Teachers Retirement System of Ohio, went a step further, taking an ownership stake in Providence itself. Mr. Nelson sounds energized when discussing the future of media. The firm has been betting on demand for premium sports content, leading to investments in Major League Soccer, the company that runs the Ironman triathlon races, and Learfield Sports, which owns rights to college sports programming. While still in its early days, Providence’s 2013 fund has posted annual returns of 20 percent on paper.

Like many of the world’s largest private equity companies that started in the 1980s and 1990s, Providence is also dealing with succession issues. A nagging problem it has faced is how to retain top talent when its leaders show no signs of moving on. In recent years, the firm saw talented people leave, some for new jobs, others because they specialized in areas Providence was no longer focusing on. Still others were frustrated that the firm’s leaders continued to reap much of the profits in the 2013 fund.

In 2013 the US buyout house entered London’s West End theatre stage with the acquisition of Ambassador Theatre Group, and plans to boost its presence on Broadway and in Asia. The deal values the company at about £350m including debt. Providence’s swift move highlights the intense competition among private equity groups for assets in Europe, where about 60 per cent of new buyouts in value are companies sold by other private equity groups in so-called secondary deals. As with all buyout fund managers, with the ATG property portfolio Providence were able to secure a debt package from Banks to fund a significant portion of the acquisition.

Providence’s focus on the sector was viewed by the company’s management as an advantage. The private equity group invests a $5bn buyout fund targeting media and telecommunications assets. At the time,” ATG’s joint chief executives, Sir Howard Panter and Rosemary Squire were quoted as saying “Providence’s extensive global reach and its existing investments in media, digital and entertainment companies around the world offer an unparalleled opportunity for ATG to realise its international ambitions”.

Let’s look at the people; the new CEO, Mark Cornell seems to have a chequered track record. He started his career patrolling the streets in Northern Ireland as a British Army Captain engaged in counter-terrorist operations, went on to lead newspaper distribution in London for WHSmith, then took aim at an MBA to launch into luxury goods. In 1999 Mark Cornell gained an MBA from IMD having convinced the Admissions Director to take him on even though he lacked a university degree.

mark cornell

Upon graduating at the age of 32, he gained employment with luxury goods leader LVMH. He started in strategy and business development but soon distinguished himself by being part of the team that turned around Hine Cognac, a product then in difficulty. In 2002, he went on to become an executive of one of the world’s finest champagnes, Krug. Mark’s decade with LVMH was capped by five years as President and CEO of New York-based Moet Hennessy USA.

Mark left LVMH to seek new challenges and in May 2011 the right opportunity came from Monaco-based Edmiston & Company, the privately-held company is recognised as a global leader in the sale, charter and management of super yachts. Attracted by the prospect of rapid growth and future potential in the industry, Mark became CEO in May 2011. The challenges included building a strong commercial team to expand into Asia, Russia and the Middle East. After just one year in  May 2012, Mark Cornell left his position as Chief Executive Officer of Edmiston & Company. At the time the company said, “Mark Cornell has decided to leave the business”, although they would not expand on the reasoning behind the decision.

It was in July 2013 that Cornell gained his next position as managing director of Sotheby’s Europe, which he left in March 2015. His appointment as CEO of ATG in May 2016 seems strange to many. It is difficult to see what he brings to the business, his business expertise being the management of a “brand” or a division of a company, no industry expertise and possibly of greatest concern what looks like a shaky past 5 years.


New Executive Vice-President Adam Kenwright makes the transition from determined marketer to the number two position and business guru in the world’s largest theatre company. He has built up a global entertainment agency over two decades, from a single borrowed desk in a friend’s London office to branches in New York, Sydney, Melbourne, Manchester and Edinburgh, soon to be joined by Berlin and Cologne. At the time of the Providence acquisition Adam Kenwright Associates’ workforce numbered 380.


A far cry from the days when he hoped to become a professional footballer. He played in goal for England schoolboys and had trials with Arsenal, Everton and other teams, but he could not cut the mustard. “I loved it, but now I am glad that I was not good enough to make it, because it meant that I followed the career I have today,” he said.

While his main focus has been concerned with putting more bums on seats, in recent years he turned his attentions to attracting clients such as the British Museum, OnBlackheath Music Festival, the National Gallery and the Imperial War Museum. Kenwright sees diversification as a means of pooling resources. “The people visiting the British Museum aren’t a million miles from the audience seeing a show at the National, or in the West End,” he says. “If we’re all working together towards a mutual goal, we can be more efficient with our marketing spend.” The comment perfectly encapsulates the Kenwright vision of art and commerce cosily co-existing to their mutual benefit. Music to an institutional investors ears.

Upon securing investment from Providence Equity they said Kenwright would remain both AKA’s chief executive and chairman, adding “AKA will continue to operate as a third-party marketing agency, retaining its brand identity.”

However, the deal has been questioned by some within the sector, who claim marketing should be completely independent of theatre companies. Many did not think the sale was good news for producers or ticket agents. At the time the thinking was that as the owners of ATG, there is concern that Providence are also now taking a controlling interest in AKA. You really want your marketing agency to be independent, and to operate on a level playing field, and that has just changed.” Something that is likely to be further underscored by Kenwright’s ATG appointment.

Kenwright’s career has meant rubbing shoulders with the stars at awards nights, commuting to New York each month and running a global entertainment agency with an annual turnover of more than £40m. But it all began with an after-school job at his uncle’s business, Bill Kenwright’s production company and developed into a long term career opportunity giving him an insight into practically every aspect of the business. It all came to an acrimonious end when Adam wanted more independence and an opportunity to exploit his creative ambitions. At that time he was in charge of publicity and marketing for Joseph and the Amazing Technicolor Dreamcoat all over the UK, focusing on investment for marketing and advertising in the regions. His decision to break away from the mighty Kenwright production factory did not find favour with his uncle. Bill Kenwright was reported as saying “If you get a job in the theatre I’ll never speak to you as long as you live. I’ll do everything to stop you.”

Now, the current situation could be interesting as ATG are the biggest takers of Bill Kenwright Productions; let’s hope that Uncle and Nephew are both man enough to let bygones be bygones or there could be more changes on the domestic theatre front.

woking-new victoria

How the Ambassador Theatre Group looks today; from their beginnings in a development site in Woking Surrey, Howard Panter and Rosemary Squire have built a company that has continued to grow and weather whatever storms the UK economy has hit us with. It was around 1990 when they were engaged to work on a development in Woking, Surrey, that was to include an arts and entertainment complex, which they would plan and manage. The Woking development was completed in 1992 and Panter and Squire set up an organisation to run the New Victoria Theatre, Rhoda McGraw Theatre and the Ambassador Cinemas (hence the name Ambassador Theatre Group being adopted). The foundations of the ATG company was established with founding investors including Eddie Kulukundis.

In the same year ATG bought the Duke of York’s Theatre from Capital Radio, with significant support from Kulukundis. In 1995, ATG bought its second London theatre, the Ambassadors. The company also bid successfully for contracts to manage new theatres being launched in Milton Keynes and Stoke-on-Trent.

ATG underwent major expansion in 2000 through the acquisition of seven West End theatres from Associated Capital Theatres (ACT): the Albery (now named the Noël Coward), the Comedy (now named the Harold Pinter), Donmar Warehouse, Phoenix, Piccadilly, Whitehall (now Trafalgar Studios) and Wyndham’s theatres. Expansion required the involvement of larger corporate investors. Subsequent deals included taking on the running of theatres in Bromley, Richmond and Glasgow.

manchester palace

In November 2009, ATG consolidated its position as the major UK theatre owner by purchasing the Live Nation UK theatre portfolio of 16 venues in England and Scotland in a £90 million acquisition. Live Nation sold the theatres as part of a business decision of “selling off assets that are not core to our live music strategy”. At that time UK investment firm Exponent Private Equity became the new majority owner of ATG by financing the theatre takeover. Exponent provided at least £75m of financing for the deal, which valued ATG at £150m. Coinciding with the expansion, former BBC director general Greg Dyke joined ATG in a new role of executive chairman.

Potential competition concerns led to an investigation by the UK Office of Fair Trading (OFT). Its conclusion was that it did not believe that it had or may be expected to result in a substantial lessening of competition within a market or markets in the UK.

In 2012, ATG indicated an intention to expand into international theatre ownership, possibly in Australia and China. This included the appointment of Tim McFarlane as CEO for ATG Asia/Pacific. In November 2012 it was announced ATG would be establishing a regional headquarters in Sydney.


ATG’s acquisition of Broadway’s Foxwoods Theatre in May 2013 heralded the group’s US debut, with Panter commenting, “Ownership of The Foxwoods Theatre within the group will provide a catalyst to expand in the North American market.”  (In March 2014, ATG renamed Foxwoods the Lyric Theatre, following the end of a sponsorship deal between the Foxwoods casino and the theatre’s previous landlord, Live Nation.).

In August 2015, ATG became leaseholder and took over the management of the Theatre Royal, Sydney’s oldest theatrical institution – marking ATG’s first theatre in Asia Pacific. [In September of the same year, ATG acquired ACE Theatrical Group (ACE), a company which specialises in the operation, design, development and construction of world-class, live performance venues throughout North America, comprising of the King’s Theatre in Brooklyn, New York; the Saenger Theatre in New Orleans, Louisiana; the Mahalia Jackson Theater for the Performing Arts in New Orleans, Louisiana; the Majestic Theatre in San Antonio, Texas; and the Charline McCombs Empire Theatre in San Antonio, Texas.

In December 2015, ATG announced that it was to reopen and operate Broadway’s historic Hudson Theatre. Through its subsidiary, Hudson Theatre LLC, ATG has entered a long-term lease for The Hudson Theatre, its second theatre on Broadway, from a subsidiary of Millennium & Copthorne Hotels plc group of companies (M&C). M&C and ATG will be, in a multi-million dollar project, restoring the landmark venue to its former glory as a Broadway playhouse. The once-derelict Kings Theatre, in Brooklyn’s Flatbush neighbourhood, reopened in February after an extensive restoration.

In terms of ownership, it is often unclear whether ATG own the freehold to a theatre or a leasehold: reports use terms such as buy, purchase and own, but rarely specify whether they are referring to the freehold or to a leasehold.

The introduction of an external investment company has changed the nature of the business. ATG’s business model involves the combination of theatre ownership with production management, marketing and ticket operations. ATG manage (and in some cases own) venues, mainly theatres, which host shows for paying audiences, including but not exclusively limited to shows created by its production functions; ATG’s production functions create shows, which are hired out for performance at theatres including but not exclusively limited to theatres managed by ATG; and ATG’s ticketing and marketing function sells and charges fees for selling the more than 11 million tickets a year, for venues, including but not exclusively limited to venues owned by ATG.

In the 2014-15 Broadway season, Ambassador was a co-producer with Lincoln Center Theater of “The King and I,” just one show of about 35 each year that it produces or coproduces. With numerous affiliate partner companies and their subsidiary Sonia Friedman Productions, ATG has supported hit shows on Broadway and in the West End, such as the U.K. premiere of “The Book of Mormon.”.

sonia friedman

Sonia Friedman Productions, was formed in 2002 and is a subsidiary of the Ambassador Theatre Group. A West End and Broadway production company responsible for some of the most successful theatre productions in London and on Broadway over the past few years. Led by Sonia Friedman who is regularly credited in the media as one of the most powerful, innovative and influential producers working in British theatre and since 1990 has produced over 130 new productions that have won numerous Olivier and Tony Awards.

ATG has its own producing arm, ATG Productions. ATG ’s production activities expanded with the launch of Theatre Royal Brighton Productions and the formation of producing partnerships with directors Jerry Mitchell and Jamie Lloyd in 2011 and 2012. ATG has a number of major production company initiatives / partnerships including Jerry Mitchell Productions, Theatre Royal Brighton Productions and Jaime Lloyd Productions. ATG also owns a major national family entertainment and pantomime company, First Family Entertainment

ATG is the majority shareholder of BB Group, one of the leading producers and promoters of premium live entertainment in Europe, with a particular strength in touring musicals and dance productions throughout Germany, Austria and Switzerland. BB Group productions include West Side Story, We Will Rock You, The Rocky Horror Show, Cats, The Lion King, The Bodyguard and Alvin Ailey American Dance Theater and Ballet Revolución,: Also, BB Group has won the tender to re-develop the Staatenhaus in Cologne as a 1700-seat theatre.

But it is by producing tours of shows like the Broadway musical “Jersey Boys” that the company can send live entertainment to its venues, and others, throughout the U.K. Similarly, by acquiring stages in the U.S. that are large enough to present Broadway tours, Ambassador can send out work that it backed, such as “The King and I.”

“The objective, long term, is to produce more work in the U.S.”. While several of their new American venues can host Broadway shows, the mix will be broad, ranging from ballet and opera to pop and comedy.

ATG has demonstrated a commitment to the (often historic) buildings that it manages. In 2009, the Theatres Trust, the National Advisory Public Body for theatres in the UK, stated that it “works regularly with ATG, advising them on their plans for maintenance and care of their theatres. As well as having a good record of looking after its theatres, the company has also been a leader in promoting environmental best practice and reducing their theatres’ carbon emissions.” ATG also uses a “restoration levy” on tickets to raise funds to upgrade the theatres that they manage.

ATG have won awards for staff training including the 2005 Excellence in Workforce Development Award from the Learning and Skills Council. The company has displayed commitment to innovation, with examples including the pioneering of ergonomically improved seats, adapted theatre performances for children with autism disorders and the ‘ATG Theatre Card’ loyalty program.

It will be interesting to see if such inward investments continue under the new management who will, no doubt, be incentivised on short term financial objectives and new market achievements.

Since the American money arrived a few years back the largest theatre company in the UK has been accused of exploiting audiences, charging “ramped up” booking fees. The business model includes levying an additional per minute service fee on all telephone bookings and pre-sales enquiries through the use of 0844 numbers, with a total call cost to customers of up to 52p per minute. This includes the helpline for disabled customers seeking information of accessibility issues. They have even billed performers for water drunk on stage.

ATG were quick to adopt the Broadway habit of holding back the best seats from general sale and labelling them as premium at a significantly higher price than the supposedly “best seats”. Something that has infuriated the public and the industry in general.

One independent producer infuriated by an ATG manager’s request for free tickets to an Edinburgh show rejected the request, writing: “Why the hell should I?” before expressing his exasperation at the theatre giant’s drive to squeeze higher profits out of their venues. “No-one gets a free ride at an ATG theatre,” he wrote. “Nowadays, no aspect of the ATG experience as audience member/performer/producer is not monetised, priced-up and charged for.”

The producer continued by saying that private equity companies tended to look to short term returns and “that’s not really how it works in the theatre industry”. He pointed to Andrew Lloyd Webber, Cameron Mackintosh and Nica Burns as examples of theatre owners who “understand the theatre and take the view that it is a long-term project”.

ATG has come under fire in the past few years from performers over the booking fees, some saying they would never play at a venue run by the company again. Other complaints pointed to performers being charged £15 a day for dressing room Wi-Fi and the charging for the water taken on stage during a performance. “It’s not about the £15 or the £1.80, the resentment that dwells in our breast is a lot deeper than that,” he added.

As we look to the future we need to be cautious. Big isn’t always best and expansion into new and untried territories can be fraught with dangers and takes time, unfortunately ATG does not appear to have the appropriate leadership to maximise success, although they do have an investor with deep pockets they won’t have a lot of time. As with the involvement of most investment firms focus shifts away from the product and looks to minimise inward investment whilst attempting to expand and diversify – building on a brand. In doing so they are prepared to sacrifice the heart and soul of a company replacing the inspiration with hard nosed “marketing” and “numbers” people to continuously drive the bottom line and asset value; because one day and that day might be soon they will need to sell the company and that is not always for the right reasons. It could be that because of poor performance in other parts of the investment portfolio they need to realise their assets or they are unable to service their bank loans and the bank could call in the debt and take control of the property portfolio which would have to be sold, probably piecemeal and quite likely to developers in order to get the best price. Not a good outcome but something that could have a disastrous impact on every aspect of Britain’s theatre scene.

bristol hippodrome

As far as the UK operation is concerned it is probable that the West End theatres, Apollo Victoria, Donmar Warehouse, Duke Of Yorks, Fortune, Harold Pinter, Lyceum, Phoenix, Piccadilly, Playhouse, Savoy and Wyndhams would all find buyers, singly or in groups. The problem will be in the provinces where ATG have a dominant presence – Aylesbury, Brighton, Bristol, Bromley, Folkestone, Liverpool, Milton Keynes, Oxford, Richmond, Southport, Stoke, Sunderland, Torquay, Wimbledon, Woking and York could lose their only touring theatres, in Birmingham the New Alexandra would be threatened as would the Playhouse in Edinburgh whilst in Manchester and Glasgow the two main theatres in each city could be lost.

What leads to this conclusion is that the development value of these city centre properties is dramatically higher than if they were to be sold as on-going businesses. Local authorities and independent groups may be outraged, but in today’s era of austerity they don’t have the necessary funds and organisations such as the Heritage Lottery Fund don’t have the ability to bail out every situation.

The short term impact on touring productions would be significant as it is doubtful whether the remaining No1 houses in Plymouth, Southampton, Cardiff, Eastbourne, Canterbury, Newcastle, Northampton, Nottingham, Blackpool, Belfast and Dublin could sustain the costs of major productions. Let’s hope that Providence Equity have made the right choices and the right decisions in taking this very important business forward, because if they haven’t, the face of British theatre-going could change forever and not for the good.