Cineplex CEO ‘most excited I’ve been in the last four years’ as Q1 loss narrows
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TORONTO – An onslaught of high-profile films set to hit movie theatres this summer has the chief executive of Canada’s largest cinema chain confident that his business is charting a successful rebound from its pandemic woes.
“It’s probably the most excited I’ve been in the last four years,” said Ellis Jacob, Cineplex Inc.’s chief executive, in a Friday interview.
While he says there are still fewer upcoming films than there were before COVID-19, he believes the buzzy, recent releases of “The Super Mario Bros. Movie” and “John Wick: Chapter 4” have helped the industry overcome its pandemic-related content supply challenges.
He sees even more reasons for film exhibitors to be optimistic about the near future with “Barbie,” “Indiana Jones and the Dial of Destiny,” “Spider-Man: Across the Spider-Verse,” “Oppenheimer” and “the Flash” due to hit theatres the summer, before the fall brings “Napoleon” from Ridley Scott and “Killers of the Flower Moon” from Martin Scorsese.
The busy film slate is more reminiscent of pre-pandemic years and signals a departure from the health crisis, when film studios and distributors delayed the release of big flicks and sent others straight to streaming services, bypassing theatres altogether.
The slowdown in offerings, along with forced temporary closures of cinemas to quell the virus, hampered Cineplex’s business, which has been in recovery mode ever since.
On Friday, the Toronto-based company reported its first-quarter loss narrowed to $30.2 million or 48 cents per diluted share compared with a loss of $42.2 million or 67 cents per diluted share a year ago.
Revenue for the quarter ended March 31 totalled $341.0 million, up from $228.7 million in the first three months of 2022.
The increase in revenue came as theatre attendance totalled nearly 9.8 million, up from nearly 6.7 million in the same quarter last year.
Box office revenue per patron was $12.63, up from $12 a year earlier, while concession revenue per patron also rose to $8.85, up from $8.82 a year ago.
The results come as Jacob feels “a promising era in the exhibition industry” is on its way.
That feeling started building for Jacob at Cinemacon, an annual convention that brought film studio executives, theatre giants and stars to Las Vegas in April for sneak peeks at the forthcoming film slate.
“Everybody was on their feet and everybody was excited when one studio after the other talked about the fact that the theatrical release was very important to the future of the business,” said Jacob.
While streaming platforms have long resisted theatrical releases for their films, some appear to be coming around.
Amazon plans to release 12 to 15 movies in theatres, Bloomberg reported in November, pushing cinema chain stocks up.
“Killers of the Flower Moon,” which is being produced by Apple TV+, is also due to screen in cinemas.
Jacob is pleased with the shift he long pushed for, even going so far as to block the Toronto International Film Festival from using his Scotiabank Theatre to screen Netflix films because the streamer often eschewed traditional theatrical windows.
However, the rebounding theatrical release rate that has cinemas excited could slow in the future as a strike from the Writers Guild of America stretches on.
The union represents some 11,500 film and television writers, who walked out after failing to reach a new contract with the Alliance of Motion Picture and Television Producers at the start of the month.
Cineplex is monitoring the situation, but Jacob said on a Friday call with analysts that the company doesn’t expect the strike to have a material impact on its business.
Such strikes typically have a greater impact on network TV and streamers, whose content is completed shortly before it is released, he said.
When the strike began, late-night shows immediately went off air with no one to write monologues, and began showing reruns. A slew of TV shows, including “Cobra Kai,” “Abbott Elementary” and “Stranger Things,” have reportedly closed their writers’ rooms or stopped production since.
“I always say to people yes, it will impact us, but it’ll take a long time to impact us,” Jacob said, in an interview.
“We’re talking three years from now because a lot of the movies are already in process of being produced.”
When the Writers Guild of America was on strike for about 100 days in 2007 and 2008 and earlier for 152 days in 1988, box office revenues were higher in the three years after the strike than in the three years prior, Jacob added on the analyst call.
Asked what he’d do if the strike begins to impact the film slate, he said in an interview “there’s a lot of things that we can do, but I’m not thinking that far down the road because that’s at least two to three years away.”
If that situation arises, Cineplex will have to rely on its digital movie streaming platform, signage business and array of entenment and dining venues.
The company has long run RecRoom arcade and dining venues, but recently added theatre, dining and entertainment complexes called the Junxion to its portfolio.
The Junxion’s first location opened at Winnipeg’s Kildonan Place in December with reclining seats, an arcade area with more than 50 games, a party room, live entertainment space and dining options.
A second Junxion location will open at the Erin Mills Town Centre mall in Mississauga, Ont. this spring.
While the company would like to open more Junxion locations, Jacob said, “we have first got to get our balance sheet in a positive position and then we will look at the opportunities as they become available.”
This report by The Canadian Press was first published May 12, 2023.
Companies in this story: (TSX:CGX)