Cineplex Posts Record Revenues Despite Higher Film Rental Costs

Canadian exhibition giant Cineplex on Thursday posted record second-quarter revenues as it received a box office boost from Jurassic World, Avengers: Age of Ultron and Furious 7.

But Cineplex also followed the lead of U.S. chains like AMC and Carmike Cinemas in facing higher film rental costs paid to studios as the latest Avengers, Jurassic and Furious titles accounted for 43.5 percent of the Canadian chain’s ticket sales during the quarter, against 29.2 percent of ticket sales in the same period of 2014. Cineplex said revenue rose 6.8 percent to CAN$345.5 million (US$264.3 million), while earnings for the three months to June 30 rose 10 percent to CAN$25.5 million (US$19.5 million).

The average ticket price rose 0.5 percent to CAN$9.45 (US$7.25), in line with recent quarters. But theater patrons also spent an average CAN$5.50 (US$4.21) on food and beverages, up 8.3 percent from last year’s levels. That concession sales jump was welcome as the Canadian exhibitor during the second quarter paid out CAN$102.1 million (US$78.5 million), or 55 percent of ticket revenue, to the major studios in film rental costs, against a year-earlier CAN$95 million, or 52.5 percent of generated box office.

That hike is significant for Cineplex as the Canadian chain depends heavily on Hollywood and being able to draw patrons to the multiplex with studio blockbusters and then sell them drinks and popcorn at the snack bar to turn a profit. Cineplex CEO Ellis Jacob said the film cost bump was due to the heavy concentration of titles during the latest quarter, which he doesn’t see as an ongoing trend.

That’s despite the Canadian chain launching the anticipated blockbuster Star Wars: The Force Awakens on its screens on Dec. 18, 2015. “To, me what happened was an anomaly,” Jacob said of the second quarter film expense rise.

“It’s the difference between a home run and having three singles. If you hit a home run, you pay a little bit more (to studios). If you have singles, you pay a little bit less,” he added.

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