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Cineplex swung to a fourth quarter profit as overall revenues rose 16.7 percent to $350.1 million, against its 2021 performance.
For the three months to Dec. 31, 2022, the Canadian exhibitor saw net income rise to $10.2 million, compared to a net loss of $21.8 million in the fourth quarter of 2021. Cineplex also saw its investment in premium movie viewing experiences like 3D, UltraAVX, VIP seating and Imax pay off as the company set a record of 50 per cent of box office revenues coming from reserved seating and big screen formats.
At the same time, theater attendance during the fourth quarter fell just over 10 percent to 9.2 million patrons. Cineplex president and CEO Ellis Jacob told analysts during a morning call that the drop in theater attendance was due in part to COVID 19-related production delays shifting the theatrical releases like Shazam: Fury of the Gods and Aquaman and the Lost Kingdom from Warner Bros. Discovery to 2023.
Despite those “content supply challenges,” as Jacob called the industry disruption, the latest fourth quarter revenue gains for Cineplex came from quarterly record box office revenues per patron at $13.06, and a new record for concession revenues per patron of $8.93.
“Our performance over the last year demonstrates that we can successfully manage the turbulent environment caused by content and other supply chain disruptions, inflationary pressures, and labor shortages,” Jacob said in a statement that accompanied his latest financial results.
The Cineplex head also told THR that the exhibition industry had moved beyond the summer 2022 doldrums that led to a box office dip due to a lack of big-name blockbusters, and that consumer demand for Hollywood movies at the local cinema would rise through 2023.
“We’re not there on content, but we’re getting there,” Jacob said of upcoming Hollywood titles like Ant Man, John Wick 4, Guardians of the Galaxy 4 and Mission: Impossible – Dead Reckoning Part One.
Asked during the analyst call about how Cineplex may be looking to rethink its pricing strategies for its cinemas with dynamic pricing, as an example, Jacob said the company’s diversification into a host of entertainment venues and offerings offered some scope for price hikes.
“We will continue to look at pricing, with different age groups, with different times of day and all kinds of opportunities that are available,” he told analysts. In late 2022, Cineplex introduced a $1.50 booking fee for movie tickets purchased online or via its mobile app and announced its Cineplex Pictures division will handle the Canadian distribution of Lionsgate’s 2023 film slate, which promises a distribution fee for the exhibitor for additional overall revenues.
Cineplex also reported another $900,000 in expenses related to recovering a $1.24 billion legal judgement award from UK rival Cineworld, with that collection thwarted by a Chapter 11 Bankruptcy filing in the U.S. for the parent of Regal Entertainment.
“Cineworld remains under Chapter 11 bankruptcy, and we continue to work closely with our advisors to consider any value optimization opportunity,” Jacob told analysts. Cineplex execs also downplayed concerns about the impact of recessionary threats to its overall business.
They argued the movie exhibition business is historically resilient during recessions, and Cineplex corporately was partially insulated from any economic downturn due to ongoing cost and capital expenditure disciplines.
“We feel even with the recessionary periods, we feel quite strongly that our business will continue to move forward,” Jacob told analysts.
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