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With theaters shuttered for nearly the entire second quarter amid the coronavirus pandemic, Cineplex has posted a revenue collapse and swung to a loss on Friday.
The Canadian exhibition giant for the three months ending June 30 recorded a loss of CAN$98.9 million ($74.2 million), compared to a year-earlier profit of $19.4 million. Cineplex saw revenues fall 95 percent to CAN$22 million (US$16.6 million), against a year-earlier $438.9 million, as it reopened six theaters on June 15 with reduced capacity and ticket pricing near the end of the second quarter.
The release of the Canadian exhibitor’s latest financial results, which details the unfolding impact of the pandemic on its balance sheet, came as Cineplex this weekend begins showing first-run movies like The Spongebob Movie: Sponge On The Run and Unhinged in its theaters countrywide.
Cineplex president and CEO Ellis Jacob on a morning analyst call talked about the major studios and domestic exhibitors on a number of fronts effectively shortening theatrical release windows, a trend that has accelerated amid the pandemic. “Cineplex is not changing its release windows at this time,” he announced, while adding his company was in constant discussions with its studio movie supply partners about evolving theatrical release patterns industry-wide.
“We will continue to have these discussions moving forward,” Jacob added. He was also coy about addressing directly the reduced 17-day theatrical window that fellow exhibitor AMC Theatres and Universal Pictures recently agreed and what that might become an industry model.
“We will continue to have discussions, but I’m not making comments on where we expect things to end up, because each studio has a different thought process and we are talking to all of them,” he said. The historic Universal-AMC agreement will allow the studio’s movies to be made available on premium video-on-demand after just 17 days of play in cinemas, including three weekends.
That shatters the traditional theatrical window of nearly three months before studios can make movies available in the home. AMC, the world’s largest theater chain, will share in the revenue from PVOD, but the two sides haven’t disclosed financial details.
Jacob also expressed surprised at Disney choosing to offer Mulan to Disney+ customers in the U.S. and other select markets at a premium price of $29.99 beginning Sept. 4, rather than press ahead with a planned theatrical release. “Disney is a valued partner and, while we’re disappointed, we respect their decision. That said, Disney has assured us that the decision was a one-off as a result of the pandemic environment and that they are very committed to the theatrical window.”
After the analyst call, Jacob told The Hollywood Reporter that decisions like Mulan going to PVOD, Paramount Canada opening The Spongebob Movie: Sponge on the Run theatrically in Canada this weekend ahead of ViacomCBS streaming the movie on CBS All Access stateside next year, and Christopher Nolan’s Tenet opening a week earlier in Canada and Europe on Aug. 27, ahead of the U.S. market, amounted more to short-term responses to efforts to tackle the pandemic and open theaters in the U.S. market, rather than longer-term industry trends and models.
“I feel the studios, who are our partners, have focused on the business they still value — the theatrical experience — and the ability of the theatrical experience to be the engine that drives the train and the future values of their companies going forward. And I think that will continue,” Jacob argued.
He added the major studios preferred traditional simultaneous global releases to continue post-pandemic, even as they shift their release dates later on the calendar in the short term. “They would rather have everything open right across the world, but due to the pandemic, they’ve had to make exceptions and changes,” Jacob said.
During the second quarter and after closing its Canadian circuit on March 16, Cineplex burned through CAN$54 million (US$40.7 million) to maintain operations during the second quarter, and only now is reopening its Canadian circuit with limited seating to comply with pandemic-era safety precautions and guidelines.
During the second quarter, Cineplex also saw the UK-based Cineworld Group, which owns the Regal Entertainment chain stateside, back out of a $2.1 billion deal to acquire Cineplex. The Canadian company has launched a lawsuit against Cineworld over the abandoned deal, which would have created one of the world’s largest cinema companies with more than 11,200 screens globally.
To save its business with its theaters shuttered during the second quarter, Cineplex imposed temporary employee layoffs, cut capital expenditures and renegotiated lower rent terms with landlords. The company also said it has mutually agreed to terminate an agreement with U.S.-based Topgolf to open Topgolf entertainment complexes across Canada to further reduce capital spending.
Like its U.S. peers, the Canadian exhibitor has been impacted by major Hollywood studios delaying tentpole releases or digitally sending them direct to consumers.
9 a.m. Updated with comments by Cineplex president and CEO Ellis Jacob made on an analyst call and to THR.
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