A tragedy, a horror show, some pantomime villains. It's what gets him through the night

The chief of the Ambassador Theatre Group has enjoyed dramatic success but one Christmas tradition still mystifies him. Jason Nissé sets the scene

Howard Panter is mystified about panto. Not worried, so much as confused. The chief executive of the Ambassador Theatre Group may be one of the most influential men in British theatre, he may be reinventing the stage as a business proposition, and he may be about to export his brand of venue management to the world, but he can't fathom one of Britain's oldest theatrical traditions.

"We have six pantos on at the moment, but none in the West End," he explains. "I can't explain why, but panto works in the regions but not in London."

By regions, Panter draws the line quite close to the heart of the capital, pointing out that the annual panto at ATG's Richmond Theatre is a roaring success despite Richmond being a mere half dozen miles from Shaftesbury Avenue. "It could be to do with the availability of sites at a fixed point in the year or it could be cost: we sell seven seats on average for a panto, what with mum, dad, the kids, grandma and the nanny, and that's a lot of money in the West End."

Panter shrugs. After 30-odd years in the theatre business, quite a lot is still a mystery. Shows fail, despite big stars and great scripts. Shows succeed, despite no stars and cerebral, understated scripts (The Weir, which ran for three years in London, and Vincent in Brixton, which is about to transfer to Broadway, are examples). Trends come and go. Audiences come and go. But what has been a constant factor has been the success of ATG.

Founded 10 years ago when a consortium took over the struggling Duke of York's Theatre on St Martin's Lane, the group now has 10 theatres in the West End (where it is second only to Lord Lloyd Webber's Really Useful) and 10 in the regions (where it is also the second largest, behind US giant Clear Channel Entertainment). It is also possibly the biggest producer of plays in the UK. This month, for example, it has Gillian Anderson, star of The X-Files, making her West End debut in a production of Michael Weller's What the Night is For. It also has screen star Sean Bean playing the lead in Macbeth and Matthew Bourne's interpretation of Nutcracker. And that's ignoring all the pantos.

Panter himself started in the theatre in the early 1970s. He was drawn to drama at school, where it struck him that he "was more likely to have fun with the opposite sex than if I did my chemistry prep". He studied production at the London Academy of Music and Dramatic Art and then did every job in the theatre apart from professional acting.

His first West End production, in 1980, gave little indication of the glorious career ahead. He put on Patricia Routledge – best known these days for her portrayal of Hyacinth Bucket in Keeping Up Appearances – in a musical review called And a Nightingale Sang. "We lost every single penny invested," Panter recalls.

He recovered from that to become a successful play producer, running a company called Turnstile whose backers were Sir Eddie Kulukundis, the theatrical impresario, and Peter Beckwith, the property developer. In 1992 they saved the Duke of York's Theatre and Beckwith then brought Panter in to run a theatre that he and his brother, John, were developing in Woking, Surrey. By the time Beckwith and Panter bought another struggling West End theatre, the New Ambassadors, the alliance was becoming a proper business.

It now boasts a portfolio of 20 theatres, productions as diverse as The Rocky Horror Show and The Vagina Monologues, investors including Carlton Communications and the US real estate fund Apollo, and turnover that exceeded £65m in its last accounts.

Before ATG came along, owners of theatres rarely put on productions and producers rarely owned the theatres. "I always felt that the 'them and us' attitude that preceded us was not very good; it created a feast or famine scenario," Panter argues. "There was either a glut of shows or there were not enough and theatres were dark. We have developed a company with a more balanced approach."

The benefit of being both a producer and a theatre owner is that you can juggle your portfolio of productions to keep the theatres busy. Plays can be developed in regional theatres and come to the West End when they are honed to perfection, or trailed in small theatres in the West End, moved to a larger venue when they are successful and afterwards taken to Broadway or to the regions.

Its wide spread of theatres and productions has helped ATG avoid too much fall-out from the absence of tourists in London following the 9/11 atrocities. Although, as Panter points out, "the tide went down 20 per cent because of tourists staying away" last summer, ATG was not as dependent on West End musicals as its big rival, Really Useful, so it was less badly hit. Add in a good domestic season this autumn and things looks promising. "The big uncertainty is next summer," says Panter.

The uncertainty has not stopped ATG from growing ambitiously. It is in talks about taking over a site in London that will be "a young funky space" along the lines of Covent Garden's Donmar Warehouse. It is considering, too, buying in to at least three more regional theatres in the UK, as well as one in Vienna. Panter has also been scouring New York for a site for ATG's first US venture. "We want something 'Off Broadway'. I've been looking at disused piers, a former porn cinema, an old supermarket. I'm sure we'll find something that suits us."

Meanwhile ATG is continuing to upgrade the crumbling Victorian buildings that its West End theatres inhabit. "We've spent millions on air conditioning, reseating, building bigger bar areas." But the restrictions on what it can do with the buildings is frustrating Panter. "They can't be museums; they need to be comfortable, accessible theatres. We are talking about redeveloping four out of our 10 West End sites but it needs some imagination to be shown by the planners and by English Heritage."

But this is not Panter's biggest bugbear. That is the state of the West End itself. "I think London is more creative and vibrant than it has ever been; the problem is the infrastructure of the city," he argues, going on to moan about traffic, the closure of Trafalgar Square, the Mayor, Ken Livingstone, as well as licensing, cleanliness and crime. "It's quite clear New York transformed itself," he says. "Why can't London?"