As publicly funded organisations, the artistic directors of subsidised theatres are heavily scrutinised by the boards that elect them, the arts funding bodies that fund them, not to mention the critics (and audiences) who judge their work. But the commercial theatre plays by different rules, and no one seems to know quite who's accountable for what we see there. Is it the producers who put on the shows? The theatre owners that give them house room? Who, if anyone, sets the artistic agenda of the West End?

And who is therefore to blame - or praise - for the state of its theatres, on stage as well as off? A lot of noise is made about lousy shows, expensive tickets, ageing audiences and crumbling buildings (the Theatres Trust recently suggested it would take some £250 million to put them right). But instead of offering complaints or excuses, Howard Panter - who's in charge of the West End's second largest theatre chain, the Ambassador Theatre Group, and whose business therefore depends on its health - takes responsibility and offers solutions.

Heatwaves & challenging fare

In the midst of a summer that saw theatreland decimated by the lack of foreign tourists and a heatwave that kept punters outdoors instead of inside hot, sweaty theatres (most of which have hitherto lacked air-conditioning), Panter kept three ATG playhouses open with challenging fare that raised the game and tone of the West End - and then offered an inspired promotion to encourage people to come to see After Mrs Rochester, A Midsummer Night's Dream and, back from Broadway, the National's production of Vincent in Brixton.

"People thought we were mad," Panter recalls. "But we discovered that we could bring a new audience to them. We did the Summer in the City promotion, offering £10 seats for three shows that brought in some 38,000 new London theatregoers. That's not to say we don't want people from Cincinnati - of course we want them, too. But it's much more sound long-term at the theatre to find a local audience, and what we tried to do with this promotion was promote London theatre for London people unashamedly."

It's something he aims to repeat next year (not to mention upgrading the theatres in his charge with air-conditioning). The Propeller company's Dream also played to 282 school parties. "And as the only commercial company that has its own education department in London - funded by us, not by the Department of Education, though we wish it might be - we are looking to build the audiences of the future. With this incredibly inventive company doing Shakespeare, the testimony to its success was seeing school children standing and applauding."

A much more interesting canvas

This autumn, meanwhile, has seen ATG offer new productions of a previously little seen Stephen Poliakoff play, Sweet Panic (starring Jane Horrocks and Victoria Hamilton at the Duke of York's) and Les Liaisons Dangereuses (with a cast led by Polly Walker, Jared Harris and Emilia Fox, opening this month at the Playhouse), as well as the recent transfer of Tom Stoppard's Jumpers from the National to the Piccadilly. "What we're doing in the West End is trying to offer a much more interesting canvas than a lot of people are giving it credit for," says Panter.

The physical environment is also finally getting better: "I've been very involved in the last 18 months in helping to improve the infrastructure of the West End, working with Westminster and Camden Councils and the Mayor to clean up the streets. We've got to improve the fabric of the buildings and improve the excitement on the stage. But I can take you around London and show you lots of empty offices that are boarded up, while all the theatres are open."

Panter has been in the business for some 34 years - "I just look older," he quips instantly, as he shares this statistic - so has seen the ebb and flow at first hand. He's a canny, combative man, as sharp as he is smart. And if the commercial theatre may no longer be the heart at the centre of our theatrical landscape, it's still often the life and soul of the party: the showcase in which hit shows from the subsidised theatres seek to prolong their lives - and where the real - or in fact only - profits can be made.

Michael Frayn's Democracy will also be transferring to Wyndham's in April 2004, and says Panter of its author and its director Michael Blakemore, "They both love the West End, for two very good reasons. One, many more people come to their ventures there and they think that's a good thing. Two, they make some money there!"

Partnerships & not mugging Ian Rickson

It's also, Panter insists, false to see the West End and the subsidised sector in separate compartments, and certainly false to categorise them in opposition to each other. "There's an artificial sense that everything in the public sector is wonderful and everything in the private one is bad and stupid. We all work together all the time on things. All sides want it, too - I don't have to mug (artistic director) Ian Rickson from the Royal Court, he wants to do it."

However, the subsidised institutions do increasingly present commercial managements with a distinct challenge: most good new plays and the playwrights that write them now go to places like the National first. "Clearly," Panter patiently replies, "the National has lots of subsidy and support so it can do a variety of things in a variety of ways."

ATG, on the other hand, has to work within different parameters. The bottom line is that they have to make money to pay bills and staff. "We employ some two to three thousand people, depending on what we've got on, and that's quite a big company," notes Panter. "It's a business, and we have to run it as one. But that doesn't mean it has to be dull, and it doesn't mean we don't take risks, like bringing Shared Experience's After Mrs Rochester to the West End, and it doesn't mean we don't have an education department that we don't necessarily have to have ... As far as I know, they don't have education departments in Odeon Cinemas!

"But what we deal with is a different kind of experience: it's the uniqueness of the live interaction between human beings that makes the theatre what it is. People are forever saying that theatre is finished, but it's been going for a few thousand years, and I have a slight feeling that there's something in the human psyche that quite likes this theatre lark, and I think that it might be around for a bit longer!"

The death of the corner shop

Maybe, Panter goes on, you could say, "the corner shop is over. Maybe manufacturing industry in London is over." But the theatre, he insists, isn't - and he goes on producing to prove it. It used to be that a theatre owner would simply sit back and collect the rent, but Panter is of a new, more proactive breed of combined owner-producers.

"I call it controlling both the hardware and the software. And yes, of course, it makes the whole process of producing generally more coherent if you can plan knowing where it's going. But that doesn't mean we can't do Hitchcock Blonde at the Lyric (which isn't one of ours), as we did, or Matthew Bourne's Nutcracker! at Sadler's Wells, so obviously we don't just produce for ourselves alone."

That said, shows like Nutcracker! will go on tour to ATG regional houses. "The reason we're doing this is partly that one has striven to make greater sense of it all - that by doing so, we might have better work, better audiences, more excitement, more activity and more vigour rather than this scattergun approach. That's why we've got this critical mass now of theatres and shows, in order to be more effective across them."

Stopping the grey

Amongst Panter's other concerted efforts are those to stop theatre audiences greying too fast. It's a truism for a reason: the theatregoers of tomorrow are the youngsters of today. And the right product can lure them in. When Eddie Izzard took over in ATG's revival of Peter Nichols' A Day in the Death of Joe Egg, it helped draw a new generation to the play.

Panter witnessed the effect in his own household: "Our 15-year-old and all his mates went along to see it, and they loved it. It was fantastic - they were suddenly moved by this extraordinary, wonderful, great play, and Izzard was the gateway for that new audience. We have a much younger audience profile than the National does, for instance - Jerry Springer or no Jerry Springer. I often think that, with the bashing the West End sometimes gets, rather unfairly, some of these real statistics aren't looked at."

Likewise, ATG confounded sceptics with Blakemore's production of Three Sisters at the Playhouse. "People said you can't possibly make money doing Chekhov in the West End, but it ran for 15 weeks, recouped its money and made 20% profit. I'm not sure I know of many other businesses of that quality that make that kind of return."

A new lease of life

Of course, it helped Three Sisters to have a major movie star in it - Kristin Scott Thomas - who was also well reviewed. "But we had no stars in Vincent in Brixton and made that work, too." The revival of Sweet Panic - originally seen briefly at Hampstead seven years ago - is now reaching a much wider audience as well.

"Within a week and a half of previews at the Duke of York's, it played to more people than saw the whole six-week run at the old Hampstead Theatre originally! Why should a great play like that not be seen by more people?" Next, Panter is giving a second chance to an extensively revised version of an old Simon Gray play. Melon, originally seen at the Haymarket with Alan Bates, has been reworked as Holy Terror, and will now star Simon Callow under Laurence Boswell's direction in the new year (See The Goss, 4 Nov 2003).

Meanwhile, ATG's expanding portfolio of theatre interests has seen it this year acquire the lease on the King's Theatre in Glasgow, and in February next year, it will re-open the Wimbledon Theatre in south London. The theatres in Panter's stewardship are also improving all the time. "We spend several million pounds every year on the infrastructure of our theatres around the country, with a rolling plan of refurbishment and upgrading of the facilities, from health and safety which naturally has to be constantly and rightly improved, to getting more legroom into Brighton and Richmond and more ladies loos into all the theatres."