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Cineplex takes a hit on sparse blockbusters in second-quarter results

TORONTO - Several box-office flops and a lack of family movies left Cineplex Inc. (TSX:CGX) suffering the fallout during the first few months of the summer movie season.

"One or two titles can really change things," chief executive Ellis Jacob said in an interview on Wednesday, after the company reported that profits dropped 19 per cent in the second quarter.

While it was difficult to pinpoint exactly why moviegoers stayed away from theatres Jacob said it mostly had to do with a weak variety of films and a World Cup whose popularity eclipsed even the most lofty expectations.

The quarter was crowded with major studio titles like "The Amazing Spider-Man 2" and "Godzilla," but none of them attracted the kinds of crowds that packed theatres beyond the opening weekend.

Profits for the quarter dropped to $23.2 million, or 37 cents per share, below the $28.5 million or 45 cents per share reported in the comparable period ended June 30 a year ago.

Same-store attendance, a key industry measure that provides a clearer idea of performance, showed that the number of moviegoers dropped five per cent.

"The market may have been crowded, but it wasn't crowded with the movies that were spread across the right demographics," Jacob said.

What was missing were movies that you could take the kids to see, he said.

Aside from "Rio 2" in April and "How to Train Your Dragon 2" in June, the only other title aimed at families was the Angelina Jolie movie "Maleficent," which was too dark for most young children.

And for every hit like "X-Men: Days of Future Past" there were flops like the raunchy western-comedy "A Million Ways to Die in the West" and Tom Cruise action film "Edge of Tomorrow."

One of the factors that affected the quarter was the World Cup, which began mid-June and stretched past the end of the quarter and into July, keeping many moviegoers at home or in their local bars.

"We had studios that were holding back films because of the World Cup," Jacob said.

Revenues grew 7.2 per cent to $323.5 million mainly from the recent acquisition of 24 Empire theatres in the Atlantic provinces and digital media company EK3 Technologies Inc., which has been renamed Cineplex Digital Networks.

Cineplex says attendance also got a boost from the Empire theatres, rising 3.6 per cent to 19.3 million tickets sold in the period.

Box-office revenues inched up 0.4 per cent to $9.40 per patron on the back of premium ticket prices that included Imax titles, 3-D movies and Cineplex's VIP theatres.

In its food services, which is primarily concession stand sales, revenue increased 5.6 per cent to $98 million, with an average of $5.08 being spent per person.

Cineplex said its media and advertising business faced some pressure, with revenues falling 10.5 per cent to $21.2 million.

While there are still several weeks left, the rest of the summer movie season isn't providing much optimism.

Despite the performance of "Guardians of the Galaxy" last weekend, which opened to US$94 million at the North American box-office, there have been few other blockbusters in the third quarter.

"July was a tough month, for sure," Jacob said.

The remainder of August will see several high-profile releases that could surprise box-office pundits.

A reboot of the "Teenage Mutant Ninja Turtles" franchise arrives this weekend while dystopian teen novel "The Giver" and Sylvester Stallone action ensemble "The Expendables" both hit theatres Aug. 15.

Cineplex shares closed at $39.73, up $1.19 or 3.08 per cent Wednesday on the Toronto Stock Exchange.

The Canadian Press


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