Weaker Film Slate Hits Earnings at Canada's Cineplex
Blockbusters like 'Captain America: Civil War' and 'Finding Dory' didn't match Hollywood's record box-office performance in 2015.
Canadian cinema giant Cineplex on Thursday posted lower second-quarter earnings and revenue, citing a weaker Hollywood movie slate than in the year-ago period.
Cineplex said its net income fell 70 percent to CAN$7.2 million ($5.5 million), compared with a year-ago profit of CAN$25.5 million. Revenue dropped 2.2 percent to CAN$338 million ($259 million). Attendance at its multiplexes fell just over 14 percent to 16.9 million as blockbuster releases like Captain America: Civil War, The Jungle Book and Finding Dory did not attract the same crowds as such year-earlier box-office draws as The Avengers: Age of Ultron, Jurassic World and Furious 7.
"In all fairness. Hollywood is still doing fine. It's just this quarter compared to last year was kind of weak," Cineplex CEO Ellis Jacob told the Hollywood Reporter on Thursday. The Canadian company's U.S. peers like Regal Entertainment and Cinemark Holdings similarly posted lower second-quarter earnings and revenue on a weaker Hollywood movie slate causing fewer customers to visit the local multiplex.
That contrasts with 2015 when exhibitors posted higher attendance and earnings due to a stronger release slate. Jacob earlier told analysts during a conference call that Hollywood tentpoles are increasingly hitting highs at the Canadian box office, while lower-budget movies in the $70 million-$100 million range are hitting lows.
"The movies are either the $300-plus million dollar movies or the lower [budget] movies that don't have a huge impact," he said. The Canadian chain depends heavily on Hollywood to draw patrons to the multiplex with studio blockbusters and then sell them drinks and popcorn at the snack bar to turn a profit.
Jacob said the results fit in with a trend that he asserted was more product-driven than evidence that smaller titles were being crowded out of the Canadian market in general. He added that lower-budget movies like The Intern and Bridge of Spies in recent years did "decent business," but that was increasingly a rarity.
Cineplex saw box-office revenue fall 13 percent to CAN$162.1 million ($124 million). Just like U.S. theater chains, such as AMC and Carmike, the Canadian company also continues to pay higher film rental costs to studios.
At the same time, the exhibitor saw box-office revenue per-patron rise 2 percent to CAN$9.62 ($7.37). Cineplex premium movie tickets, including for expanding VIP sections with reclining seats and food and beverage service, represented a record 50.4 percent of box-office revenue at the company. That was helped by 3D movies performing better at the box office than 2D movies during the latest quarter.
"From our focus, we continue to look at diversifying our business model and continue to increase the premium offerings for Canadians," said Jacob.
Aug. 11, 3:30 p.m. Updated with comments by Jacob about the performance of Hollywood movies and diversifying the company.