Cineplex Swings to First-Quarter Loss, Blames "Soft" Hollywood Slate

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CEO & President of Cineplex Inc. Ellis Jacob

Canada's largest movie theater chain saw fourth-quarter theater attendance and earnings slide.

Canadian exhibition giant Cineplex on Thursday swung to a first-quarter loss on lower theater attendance and cited an "anticipated soft box office product" for the earnings hit.

Cineplex posted a first-quarter loss of $7.4 million, against a year-earlier profit of $15.2 million, as it faced a tough box office comparison with the same quarter of 2018 when Black Panther and Star Wars: The Last Jedi played on its screens.

Overall revenue fell 6.6 percent to $364.9 million, with theater attendance during the latest quarter sliding 15.6 percent to 15 million patrons.

The biggest Hollywood performers for Cineplex during the latest quarter were led by the blockbuster Captain Marvel, followed by How to Train Your Dragon: The Hidden World and Aquaman. With Cineplex's top five drawing movies during the first quarter all playing on 3D screens, including The Lego Movie 2 and Spider-Man: In the Spider-Verse, the exhibitor was able to post a record first-quarter box office per patron of $10.44.

"As we look to Q2 and beyond, we are encouraged by the recent record-breaking performance of Avengers: Endgame, which had the largest global opening weekend ever, and are confident in the strong film product scheduled for the remainder of the year," Cineplex CEO Ellis Jacob said in a statement.

The first-quarter earnings were also impacted by the adoption of new financial reporting standards on theater leases.

Cineplex in recent years has diversified into media, amusement and leisure businesses to reduce its reliance on the fluctuating Hollywood box office. 

Jacob told The Hollywood Reporter that, while Cineplex remains product-driven and dependent on its Hollywood slate, allowing Canadians to view hit tentpoles via premium offerings like 3D and Imax, as well as VIP theaters, enables the chain to outperform the exhibition industry as a whole.

He added that, during recent presales of Avengers: Endgame before its stellar debut, Marvel fans paid more for premium auditoriums. "You want to see [Avengers] in the best formats," Jacob said.

During the latest quarter, Cineplex secured 40.9 percent of its box office from premium-priced screen offerings, against 41.1 percent in the year-ago period. Jacob added his company's diversification, including into premium auditoriums, had turned Cineplex into more of an "entertainment destination" than a pure-play exhibitor.

"All those things are not only a diversification but have created one Cineplex ecosystem to connect with people all over," he said.