Cineplex CEO sees ‘significant changes’ after Hollywood strike leads to Q2 losses

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TORONTO – Cineplex Inc. continued to feel the impact of Hollywood’s twin attacks in the second quarter, but the end of the period marked a turning point.

Ellis Jacob, chief executive of the Toronto-based movie theater chain, said Friday that the box office took off in June and July as “Inside Out 2,” “Deadpool & Wolverine,” “Twisters,” and “Despicable Me 4” hit theaters.

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But the lead up to this hot blockbuster was hampered by the film slate running out – the fallout from the action of the month-long project by the Writers Guild of America and the Screen Actors Guild-American Federation of Television and Radio Artists’. The attack canceled the release of highly anticipated films including “Avatar 3″ and Dune: Part Two”

The writers’ strike wrapped up in September and the actors left the picket line in November.

“After being in this industry for more than 35 years, I have seen the ups and downs of movies, but what is always true is that when there is interesting content, moviegoers go to their local theaters to escape and immerse themselves in movies of all genres,” Jacob said on a conference call with financial analysts.

Cineplex said there was a loss of $ 21.4 million or 33 cents per diluted share for the period spanning April 1 to June 30. Second quarter results compared to a profit of $176.5 million or $1.99 per diluted share a year earlier.

Revenue for the quarter totaled $277.3 million, down from $367.9 million in the same quarter last year, as theater attendance totaled 8.7 million people for the quarter, down from 12.8 million last year.

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The performance mirrored the results of other global theater chains such as AMC Entertainment, which also reported losses and a decline in revenue in its most recent quarter.

“We are all feeling the impact of the Hollywood strike in the first half of 2024,” Jacob said, admitting that the industry has always felt that business will have a “slow start” in the quarter.

But he also found “significant changes” during the quarter, when bigger film releases hit cinemas and Cineplex pushed up its program roster including the Metropolitan Opera’s Madama Butterfly and the Twenty20 International cricket tournament.

Madama Butterfly is the strongest opera title Cineplex has seen since 2019 and the India-Pakistan cricket match is the most attended sporting event since 2016, Jacob said.

By the time July ends, Jacob estimates Cineplex entertained 5.5 million guests — its highest month of the year.

Although audience numbers fell in the second quarter, moviegoers spent more. Cineplex box office revenue per patron was $13.11 in the quarter, from $12.84 last year, while concession revenue per person was $9.56, up from $9.21 in the same quarter last year.

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The increase contrasts with some retailers seeing consumer spending decline as Canadians continue to struggle with high interest rates, inflation and mortgages.

During seven of the last nine recessionary periods, Cineplex’s chief financial officer has seen box office increases.

“(Customers) are looking to indulge and downsize out of their home entertainment experience from things like concerts and professional sporting events to movie going,” Gord Nelson said.

Cineplex is preparing to meet the demand of these downsizers by opening two Rec Room arcades and dining venues in Montreal and Vancouver and Playdium in Toronto adjacent to the Fairview Mall location.

A new theater will also open in the Royalmount Montreal shopping complex in Montreal. All locations will open in the fourth quarter of 2024.

By the end of the year, “Beetlejuice Beetlejuice,” “Wicked,” “Moana 2,” “Mufasa: The Lion King,” and “Joker 2” will all hit theaters.

Next year will also bring sequels to Jurassic World, Mission Impossible, Captain America, Avatar and the Wicked franchise, and Jacob feels the slate beyond 2025 is looking brighter.

“The pipeline of blockbusters over the next few years is incredible,” he said.

This report by The Canadian Press was first published on August 9, 2024.

Company in this story: (TSX:CGX)

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