Saving the summer movie season with Cineplex’s Ellis Jacob, king of Canada’s film industry

Open this photo in gallery:

It is the middle of the movie industry’s biggest event of the year and Dwayne (The Rock) Johnson wants to know the whereabouts of a 69-year-old Canadian businessman.

“Ellis Jacob, where you at?!?” the huge-in-all-ways Johnson demands as he takes the stage inside Las Vegas’s Caesars Palace, about 3,000 Hollywood players and theatre owners roaring in front of him.

Everyone is here for CinemaCon, the annual spring gathering in which movie studios and members of the National Association of Theatre Owners (NATO – yes, that’s really the acronym) gather to convince each other that their ever disrupted business is doing a-okay.

Johnson is making a surprise appearance to promote his pair of hopeful superhero blockbusters, DC League of Super-Pets and Black Adam, productions that have potentially billions of dollars on the line for studio Warner Bros. But The Rock is, for the moment, only interested in praising the president and CEO of Cineplex Entertainment. “Ellis, thank you!” Johnson says.

Jacob, who earlier that morning accepted NATO’s lifetime achievement “Marquee Award,” might at first seem like an odd choice for a super-star shout-out. Until you realize that Ellis Jacob is one of the most powerful people in the Canadian movie business. Not only did he help lead the global exhibition sector through the first stages of the pandemic during his tenure as NATO chairman, but as the head of Cineplex, which operates 1,640 screens representing about 75 per cent of the Canadian market, he is basically running North America’s only true coast-to-coast exhibition giant.

Later that day in Vegas during a private IMAX party at the Palm restaurant, Jacob seems surprised by all the CinemaCon love. Alongside Cineplex board chair Phyllis Yaffe, and with an N95 mask hanging around his neck, Jacob slowly flits around the room. In one corner, there is IMAX’s Richard Gelfond, whose premium-format screens have helped draw crowds to Cineplexes across the country. In another is a gaggle of Warner Bros. execs sporting “ELLIS” hats, modified swag promoting the studio’s new Elvis biopic. And then there’s Cineworld chief Mooky Greidinger, a long-time colleague who is now Jacob’s chief courtroom rival (more on him later). But as a gently smiling Jacob makes the shrimp-cocktail rounds, it is clear that he knows the influence that he wields.

“In any city or town in Canada, if there is a theatre in it,” Jeff Goldstein, president of domestic distribution for Warner Bros., told the CinemaCon crowd, “you will find people who respect Ellis Jacob.” Which makes sense. Because if you want access to the Canadian market – which typically represents 5 to 7 per cent of the weekly North American box office haul – then you have to deal with Jacob.

As the leader of Cineplex for the past 19 years, Jacob has been variously described as an “incredibly loyal” boss who treats his employees like family (according to Cineplex chief financial officer/long-time colleague Gord Nelson); a “fierce competitor” (Landmark Cinema’s Bill Walker, CEO of Canada’s second-largest exhibitor); a “tough negotiator who will beat you down for a dollar” (Warner’s Goldstein); and “one of the cheapest guys you will ever meet, in an almost comical way that he’s proud of” (Guzzo Cinemas boss/Dragons’ Den star Vincenzo Guzzo). But Jacob’s long show-business career doubles as a history of the tumultuous Canadian film industry – and offers marquee-bright clues as to where it might be heading.

Born in Calcutta, India, where his father worked for a typewriter company, Jacob spent his youth watching Hollywood classics such as Lawrence of Arabia alongside Bollywood fare in the city’s massive single-screen theatres, which acted as both movie houses and all-day air-conditioned escapes from the punishing heat. After emigrating to Montreal in 1969 at the age of 16, Jacob found that he had a knack for the art of the deal, and for exploiting market niches (one of his first enterprises, as revealed by Goldstein: Importing bongs from India).

“Growing up in India, you never bought something for what the price was, you always negotiated,” Jacob recalls in an interview with The Globe and Mail. “For me, business is all about having relationships, trust, the handshake deal.”

After finishing his MBA at the Schulich School of Business in Toronto, Jacob worked at Ford and Motorola in the 1980s under mentor Gerry Kishner before the duo moved to Cineplex Odeon Corp., then led by Garth Drabinsky and Myron Gottlieb. When Kishner left Cineplex for Canadian Tire, he again tried to convince Jacob to join him – and if Kishner had succeeded, moviegoing in this country might look very different than it does today.

Open this photo in gallery:

“I was tired of being the bridesmaid, I wanted to be the bride,” Jacob recalls with a laugh. “So I stayed at Odeon. And it was a rude awakening working with Garth and Myron. But they eventually left, and we moved forward from there to turn the company around,”

While the film business is one traditionally built on ego, even in Canada, Jacob led with hard-line numbers first, showmanship second.

“Ellis is the first person I know who brought accounting arguments to the table in movie theatre business deals,” says Guzzo, whose Quebec-based chain has faced its share of battles with Cineplex. “Today, everybody is an accountant in the movie industry. And I sometimes argue that we lost the soul of the business. But that’s not Ellis’s fault.”

For the remainder of the 1990s, Jacob rode the roiling waves of Canada’s exhibition landscape. He stuck with Cineplex Odeon until its merger with U.S.-based Loews in 1998. He then joined Alliance Atlantis Communications as head of integration, before founding – with backing from Onex’s Gerald Schwartz and top Canadian film honchos Robert Lantos, Victor Loewy and Michael MacMillan – upstart exhibitor Galaxy Entertainment. That business was built on the idea that smaller Canadian markets such as Midland, Ont., and Red Deer, Alta., deserved mini versions of the megaplexes dominating large urban centres.

“DVD was big then, and friends asked me who would go to movie theatres in small towns of all places? They thought I was crazy. But we gave them Toronto-style experiences for reasonable prices,” Jacob recalls. “Building it all from scratch was fantastic. The night before the Peterborough location opened, we hadn’t even gotten the staircase concrete poured for people to walk inside. I stayed up all night to make sure the workers were with us to get it done.”

Eventually, Galaxy merged with the Canadian assets of Loews Cineplex, with Jacob becoming CEO of the new entity in 2003. The company acquired rival Famous Players, and then elements of Empire Theatres. Which is how Jacob today rules over a countrywide network run on popcorn, superheroes and Scene points.

“Ellis is the latest in a century-long chain of little Canadian exhibition guys – Nat Taylor, Nathan Nathanson –who made it big by finding an opening to make a new kind of profit, and then end up becoming dominant on a national scale,” says Paul Moore, an associate professor of sociology at Toronto Metropolitan University who specializes in the history of Canadian moviegoing. “Competition in Canada is not always seen as a good thing, either – monopolies or oligopolies are viewed as a way of protecting Canadian ownership.”

Cineplex’s dominance served it well, with Jacob diversifying the company beyond exhibition along the way –to the point that its amusement and media signage divisions accounted for 27.2 per cent of its 2019 revenue.

But then the pandemic hit and movie theatres were, as Jacob puts it, “the first to shut and the last to open.” From March, 2020, through to the spring of 2022, cinemas in Ontario, for instance, were shuttered longer than in any other region in North America – a tragi-comical series of cautious reopenings and sudden closures, capacity restrictions and concession bans. At Cineplex, there were salary reductions of 80 per cent for the senior executive team, significant cuts to senior headcount positions, and a variety of liquidity measures – including the sale and leaseback of its office buildings in Toronto, which netted $57-million.

“I used to joke that my job was to report record profits every quarter,” Cineplex’s CFO Nelson says. “You can plan for ups and downs based on product quality. But to get hit with a total shutdown with zero revenue coming in? That’s something they don’t teach you in business school.”

At the same time, Jacob was in the courtroom fight of his life: Cineplex was seeking damages from Mooky Greidinger’s Cineworld over the British behemoth’s withdrawal from a $2.2-billion deal to buy the Canadian company, which was set to close in the spring of 2020. This past December, a judge for the Ontario Superior Court of Justice awarded Cineplex damages of $1.24-billion, a decision that Cineworld is in the process of appealing, and which will return to court in October.

“Ellis wasn’t trying to sprinkle pixie dust on what was happening,” recalls Dan McGrath, Cineplex’s chief operating officer. “But the line he kept using was, ‘Let’s not waste a good crisis.’ We kept focused on two things: planning for eventual reopening, and getting projects done that we now had the time to focus on.”

In August, 2021, Cineplex launched CineClub, a monthly subscription program that, for $9.99 a month (less than the cost of a single ticket), gives members a free screening every month, plus admission and concession discounts. It is both Cineplex’s answer to the brief but tremulous MoviePass disruption of the pre-pandemic era, and a tacit acknowledgement that theatre-owners need to innovate at all costs. According to Jacob, CineClub was “going gangbusters” last year until the Delta wave slowed everything down.

“It’s starting to pick up again,” Jacob says today, “and we’ll reach our goal by the end of this year for the number of members we’re hoping to sign up.”

Meanwhile, the company sold Cineplex Magazine to Torstar Corporation, which acquired the publishing and exclusive theatre distribution rights in March, 2021. (The new publication, titled Star Cineplex, hasn’t published a new issue since December, 2021. Torstar’s Paul Bodack told The Globe that the company is currently “working through plans for the future” of the “event-led publication.”)

Momentum is of the essence for Jacob. Cineplex is now eight weeks into fully normalized operations across the country, with no vaccine passports or other public-health restrictions. Last month, Cineplex reported that it had narrowed its first-quarter loss to $42.2-million, or 67 cents a share, compared with a loss of $89.7-million, or $1.42 a share, in the prior year.

Even better: Theatre-owners are riding a high of Netflix Schadenfreude, having seen the streamer’s stock nosedive after it revealed subscriber losses the other month. There are also high-profile streaming mea culpas coming from such studios as Warner Bros., whose new chief David Zaslav recently admitted that the company’s 2021 plan to send its movies to streamer HBO Max the same day that they hit theatres was a mistake. Then there are the box-office records being broken by the new Doctor Strange and Top Gun sequels, and the blockbuster promise of this weekend’s Jurassic World Dominion.

Open this photo in gallery:

“I truly believe that nothing will ever replace or threaten the theatre experience,” Jacob said while accepting the NATO Marquee Award. “Not COVID-19. Not economic upheaval. Not streaming. Not VCRs or PVRs. Not surround-sound home theatres. Not Martians landing from space!”

Alien invasion aside, Jacob still recognizes that the movie business ain’t what it used to be. There are approximately 37-per-cent fewer titles being released to theatres this summer compared to pre-pandemic 2019, with the August corridor looking particularly barren. It also takes far less time than it used to for films to move from theatres to home audiences (Doctor Strange in the Multiverse of Madness will stream on Disney+ starting June 22, just 47 days after opening in cinemas). And while Netflix is wounded, it and other streamers are far from dead – this summer’s big movies will be competing for eyeballs with such at-home events as the new season of Stranger Things and new series from the Star Wars and Marvel universes.

Which is why you’ll see Cineplex increasingly relying on more international fare (its Courtney Park multiplex in Mississauga is one of North America’s highest-grossing Bollywood theatres) and concert series (the live screening of BTS Permission to Dance On Stage – Seoul was a hit). It is also a safe bet that Canadians will see more of Cineplex’s “location-based entertainment” Junxion venues, where films are only part of the experience – and fewer movie screens.

“You’re going to see an evolution, but one of the advantages that we have is that our average screen count per location is lower than the U.S.,” Jacob says. (Cineplex locations have an average of 10 screens, while American peers are closer to 15 or 16 a venue.) “We’ll look at all locations and refocus on the use of square footage. It’s maximizing the return and creating entertainment destinations. It’s not just about coming to the movies, but staying there.”

Meanwhile, expect Cineplex and other exhibitors to make nice with Netflix, after the two sides have spent years fighting over the streamer’s preference to open its films in theatres the same day that they’re released digitally. Jacob might have enjoyed a sizable spotlight at CinemaCon, but the most talked-about player in Vegas was someone who didn’t grace the Caesars stage at all: Spencer Klein, Netflix’s director of distribution.

“I’ve known Spencer and his boss [Scott Stuber] for quite a while, and we did have discussions in Vegas and since then,” Jacob says. “It’s a matter of the marketing that’s important to us. We don’t want to make theatres the promotional element for the streaming service. I’m much more optimistic now that exhibitors will come to a deal with the streaming companies.”

Less harmonious is the relationship between Cineplex and Canada’s struggling independent theatres. During the height of CinemaCon, a familiar issue flared up on Twitter when Wendy Huot, owner and operator of the Screening Room in Kingston, accused Cineplex of having a stronghold on Canadian film distribution, essentially blocking indie theatres from getting titles before audience interest has dissipated.

In early 2020, the newly formed Network of Independent Cinema Exhibitors (NICE) went to Canada’s federal Competition Bureau with similar concerns, alleging that Cineplex’s market dominance resulted in a negative impact on consumer choice. The independent agency would not reveal the outcome of that complaint owing to confidentiality, but Corinne Lea, owner of Vancouver’s Rio Theatre and a member of NICE, told The Globe this past fall that the bureau “did not help us at all.”

Huot’s Twitter thread – which alleged that the situation reached “peak absurdity” in April regarding her theatre’s inability to play the indie hit Everything Everywhere All At Once – quickly went viral.

“Look, I respect Canadian independents because I was one of them,” Jacob says. “But the bottom line is that the distribution companies decide where they want to play a film. And they’re looking to enhance their bottom line, which is their focus. We can’t stop distributors or studios from where they give their movies.”

Noah Segal, co-president of Elevation Pictures, which distributes Everything Everywhere All At Once in Canada, said in a statement that distribution is “a negotiation between exhibitors and distributors always, and it’s not uncommon to disagree on where films go. We want to support the little guys, too.”

In the meantime, the big guy who once fashioned himself the little guy is done with theatre-going merely surviving the pandemic. He now wants it to get back to thriving.

“Many have written our industry’s obituary, but the patient keeps bouncing back, healthier and stronger than before,” Jacob told the CinemaCon audience to applause.

Asked whether he views his NATO award as a career capstone – a precursor to retirement, the pandemic and Cineworld woes largely behind him – Jacob won’t admit to anything other than being honoured.

“I’m extremely proud of the things that I’ve been able to accomplish because of my great team,” he says. “We built up this business through our trust in each other. This award represents over 100 countries around the world, and I’m the first Canadian to receive it. That’s meaningful.”

The Rock would surely agree.

Open this photo in gallery: