A new golden age for theatre? 'Oh Yes It Is' says Panto Panter

Even in the tough times, people still want to hear a story, says the Ambassador Theatre Group boss

Howard Panter can't wait until next Tuesday night.

"I'm off to Bristol to watch Barbara Windsor in the Babes in the Wood panto – or should it be Babs in Bristol?" he says, with a big chuckle. "Then it's to Wimbledon to see David Hasselhoff as Captain Hook in Peter Pan – Hoff the Hook, get it? Then there's Cilla as the Fairy Godmother at Aylesbury – our new theatre – and Pamela Anderson as the Genie again but this year she's in Liverpool."

Panter pauses – something he doesn't often do. "So it's 'O Yes I Am' for the next three weeks as I've got another eight pantos to see which we're also producing around the country. Christmas is a fantastic time for us but it's tough too; every panto has a team of about 70 people so it's a big job producing 12."

But it's booming business for Panter's company, the Ambassador Theatre Group, the UK's biggest with 40 theatres and recently crowned the world's largest by venues according to The New York Times. And the public's soaring appetite for hammy panto means he's putting on more of them each year beside his West End musicals and plays. Every week, Panter has 400,000 tickets for sale; that's eight shows times 50,000 seats in 40 venues around Britain.

"We are in a golden age of theatre," he declaims: "London is another planet with masses of tourists and the well-off who are not affected by the downturn. Then you've got those who aren't buying new houses or cars but they do want to treat themselves, have fun, entertainment with their friends and family. Look at the success of our shows like The Lion King, Wicked, Grease and Legally Blonde – a huge hit – and many others to see how strong the business is. The public comes time and time again." Other recent hits include Keira Knightley in The Misanthrope – which he produced – and is banking on another success with her in Lillian Helman's The Children's Hour early next year.

That's why he gets so exasperated when people ask him, shaking their heads as they constantly do, that surely the theatre is bombed out by the recession. "When's the last time you saw a boarded-up theatre?" he asks, his eyebrows arched. "Boarded-up shops, boarded-up factories and boarded-up offices, yes, but no theatres. At the last count, 13 million people a year came to the West End to watch the theatre.

"It's no surprise: since the beginning of mankind, storytelling has been man's way of expressing himself. What can be more enjoyable than you sitting in a darkened room watching people who are lit up, telling you a story – or singing a story – and being surrounded by friends?"

And storytelling makes money too. Panter estimates that turnover this year will be more than £200m while pre-tax profit will be at least 14 per cent higher than this time last year at around £20m. He recently bought 16 venues owned by the US group Live Nation for £90m, giving ATG a valuation of £150m. It was an all-equity deal although the company has taken on some debt financing now. Panter owns about 10 per cent with his wife, Rosemary Squire, who is also joint chief executive, and several of the 3,000 staff own shares too. Other investors include wealthy angels such as ATG's chairman Greg Dyke, the original co-founder and theatre angel Sir Eddie Kulukundis, property tycoon Peter Beckwith, Convent Garden's creator Christine Smith and private equity house Exponent.

It's a good mix of ownership that has given Panter the stability and room to expand. "We'll have massive growth this year. Once the full integration of the deal is finished, profits should be much higher than last year. Even our advisers, when they were doing their due diligence on the deal, were astonished at the resilience of the business, particularly to events like 9/11, 7/7 and now the downturn."

Panter is posing on stage for the photographer when I meet him at the Comedy Theatre in Panton Street where Birdsong is now running. He whisks me off to behind Box C to the "royal retiring room" – a royal loo with a tiny sofa where kings and queens could entertain privately. On the walls are posters of the early plays produced by theatre greats such as Peter Brook and Anthony Quayle and plays that past Lord Chamberlains have banned; Cat on a Hot Tin Roof and A View from the Bridge, censorship which seems absurd now.

It's one of London's oldest, built in 1881 as part of a clean-up of the area behind the Haymarket which was riddled with brothels, and the interior has not been touched since.

As well as running the company, he's also the creative director; a sort of modern-day Shakespeare without the writing skills; producer, manager and owner. He even looks like a burlier version of the bard; right down to his colourful stripy socks and scarf. "Shakespeare was a vertical integrator: it's the best way to run a business like this because it's important to show that you understand and can do everything." He can't bear all the snobbery towards musicals – his own favourites are still West Side Story and Spamalot; suggesting that opera is really only an extension of the genre. He's good friends with London's other great theatre impresario, Andrew Lloyd Webber – "'such a fun man" and says theatre owes much of its recent success to TV programmes such as Lloyd Webber's search for a Maria. "Shows like Andrew's Maria and other celebrity-style programmes are actually helping the West End, not killing it." Another reason theatre is thriving is the rise of the female theatre-goer of a certain age. "Women coming to the theatre with their friends, their daughters, is a growing and new market for us. We reckon about 10 per cent of the rise in ticket sales is because of them. They are coming for a night out, they dress up, have a little champagne and fun. It's great to see, and they are our best adverts as word of mouth is still the way to bring business."

Social networking helps too; Ambassador has 100,000 friends on Facebook where the word spreads about certain shows but the monster network is the five million names and addresses, the demographics, the likes, the dislikes of his audiences stored in his data-base. It's his gold mine, one which he is working on exploiting further. Panter can see big synergies from his latest merger ranging from streamlining the IT systems to printing programmes. "There are economies of scale to be had from this business, and we are still looking at other acquisitions and partnerships." He's not interested in floating the business but could in the long term consider a trade sale to an entertainment group "like a Disney" or even big global private equity players. "But not yet. We've got a lot to do to make this acquisition work," he says, adding swiftly, "if someone were to come along with a great offer, well, we would have to look."

Creating ATG more or less from scratch over 20 years is an achievement for any man, but when you learn that as a teenager Panter struggled to read or write, it's all the more extraordinary. "I was the dumb one of the family and it wasn't until much later in life, after school, that I was diagnosed with dyslexia. I had always fancied my chances as Picasso at school but my art teacher soon put paid to that. Luckily, I did have a wonderful drama teacher and used to muck around with stage productions. I loved it and went to Lamda [London Academy of Music and Dramatic Art] where I did an apprenticeship, learnt a set of skills. Thank God, because then I knew how to do the electrics for a show, the scenery, all that stuff, so I could get a job." It's terrible, he adds, that apprenticeships are still seen as inferior to academia in British culture, something he tries to improve with the theatre's own hiring policy.

His own first job was helping out as a stage manager on the David Essex musical Mutiny on the Bounty, and there's been no turning back. In the 1980s he and Rosemary struck out from a small office in Covent Garden to produce their own West End shows and then decided to buy the theatres too. Ambassador's first deal was rescuing the Duke of York theatre in 1992 which they did with Kulukundis and a bunch of friends; it's their relationship with the Greek shipping heir which helped them set the foundations for today's empire. At the moment, there are more than 60 productions showing in his theatres that include 13 in the West End such as the Lyceum, the Apollo Victoria, the Phoenix, the Piccadilly, the Savoy and the Donmar Warehouse. In the provinces, Ambassador has 27 theatres such as the Royal Brighton, the King's Theatre in Glasgow, the Regent Theatre in Stoke-on-Trent and has just opened the £35m purpose-built Aylesbury Waterside – the first new commercial theatre in Britain for a decade.

Panter is doing what he can to help the unemployed become more involved in the theatre, as well as offering work schemes in deprived areas such as Stoke. "It's heartbreaking to see such deprivation. We do what we can to help the unemployed to work with us. But we can't call it learning a trade; it has to be called creative learning or some such nonsense," he sighs: "It's so sad seeing youngsters leaving school without even the basic skills. Yet triple firsts from Trinity can't even get intern jobs today. Madness."