People ride an escalator at the Cineplex Entertainment company's annual general meeting in Toronto on May 17, 2017.The Canadian Press
Fewer people went to the movies in Canada last year, but revenue has continued to rise for Cineplex Inc. as it charges higher prices for premium movie tickets, and makes more money at the concession stand.
For the fourth year in a row, attendance declined at Cineplex in 2019. The country’s largest movie theatre chain reported on Wednesday that it saw 66.4 million visitors last year, down from 69.3 million in 2018.
But revenues for Toronto-based Cineplex grew to $1.67-billion in 2019, up from $1.61-billion the year before. While box office revenues declined 2.6 per cent to $705.5-million, Cineplex made more money for each visitor on tickets and saw food-service revenue at its theatres grow by 1.3 per cent to $446.6-million, a record for the company. Cineplex has been expanding alcohol sales, and now serves alcoholic beverages at more than half of its theatres, boosting concession spending further. It has also launched food delivery partnerships with Uber Eats and Skip the Dishes covering more than 100 theatres across the country.
The company reported its earnings the day after investors overwhelmingly approved a sale of the company to Britain-based cinema conglomerate Cineworld Group PLC. At a meeting on Tuesday, 99.92 per cent of Cineplex shares that were represented voted in favour of the $2.2-billion deal, which was first announced in December. Cineworld also held a vote on Tuesday and received 99.95-per-cent support for the acquisition. Cineplex expects the deal to close some time between March 23 and June 30.
Acquisition costs pushed down Cineplex’s net income, which fell to $3.5-million, or 6 cents a share in the three months ended Dec. 31, 2019, down from $29.3-million or 43 cents a share in the same period the year before. For the full year, net income was $28.9-million, down from $77-million in 2018. The declines were partly owing to $11.7-million in costs, including professional fees and some stock-based compensation that was accelerated; as well as $12.1-million in non-cash interest related to hedge accounting changes related to the proposed deal with Cineworld and a debt repayment that is expected when the deal closes. Net income was also impacted by an accounting change to transition to IFRS 16 reporting standards.
“As the entertainment industry continues to transform, the pending transaction ensures that Cineplex is part of the next era of global entertainment. It means that our business, particularly our network of 165 movie theatres across Canada, has access to global opportunities in an evolving entertainment landscape,” chief executive officer Ellis Jacob said on a conference call on Wednesday, during which he thanked shareholders for their support, and Cineplex’s 13,000 employees for their work.
The 2019 results were aided by 20.8-per-cent growth in media revenues in 2019, to $196.8-million, owing to higher advertising revenue in theatres as well as a major increase in installations of digital boards – including menu boards, advertising and other signage – at other businesses, such as at roughly 630 AMC theatres in the United States and MEC stores in Canada. Cineplex’s amusement business, which installs games in both its own venues and other businesses, grew as well and Cineplex opened more entertainment venues such as Rec Room and Playdium. Together, those amusement revenues grew 10.9 per cent in 2019 to $228-million.
In the fourth quarter, the top-grossing movies for Cineplex were Joker, Frozen II, Star Wars: The Rise of Skywalker, Jumanji: The Next Level and Maleficent: Mistress of Evil.
Cineplex’s revenue in the three months ended Dec. 31 was $443.2-million, up from $427.8-million in the same period the year before.
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