Box office bonanza helps Cineplex buck recession
Last Updated: Tuesday, November 10, 2009 | 10:51 AM ET
CBC News
Cineplex Galaxy Income Fund posted higher revenue and profits based on heightened demand for movies in the third quarter.
Cineplex Galaxy Income Fund saw record attendance at its cinemas in the third quarter of 2009. (Canadian Press) Revenue totalled $257.5 million, up 7.7 per cent or $18.4 million from $239.1 million in the same period last year.
Attendance at movies in Canada hit 18.8 million, up four per cent from 18 million last year.
Cineplex said its box office sales for the quarter, reported at $155.9 million, was the highest-ever box office revenue for any given quarter.
"From a box office perspective, [the recession] has been fantastic," Cineplex Entertainment CEO Ellis Jacob said.
The Toronto-based income trust also reported higher net income of $20.4 million for the third quarter, up from year-ago profit of $18.4 million.
Revenue met a consensus estimate of four analysts compiled by Thomson Reuters.
That a screener of movies would fare well during a recession even as other businesses dependent on discretionary income have suffered is not necessarily surprising, economists note.
"People still spend money during recessions; they just spend it on different things," TD Economist Derek Burleton said.
"The entertainment sector has done well in general, and for people who are used to going to restaurants and spending $100 or $150, [movies] are a cheaper alternative."
The company attributed the box office bonanza to screening a wider variety of films.
Cineplex said the quarter was boosted by films catering to a wider range of audiences, including premium-priced 3D features like Ice Age: Dawn of the Dinosaurs and IMAX products like Harry Potter and the Half Blood Prince.
The company was buoyed by a strong lineup of family films, because such films often lead to increased purchases of concessions. But the company is well positioned to keep customers even if the calibre of releases slip, Jacob said.
'We set the table; we don't serve the steak.'— Cineplex CEO Ellis Jacob
"I always tell people, we set the table; we don't serve the steak," he said.
For comparison's sake, the third quarter of 2008 included the release of The Dark Knight, the second-highest-grossing movie of all time in North America.
The company earned an average of $4.15 worth of concessions from every paying customer during the quarter. That was up 4.5 per cent over last year and set a new record, but it wasn't achieved by jacking up prices, Jacob said.
"One thing we've been very conscious of during the past year is we have not raised any of the prices on concessions," Jacob said.
Cineplex is the largest motion picture exhibitor in Canada with about 10,000 employees at 1,328 screens and annual attendance of 63.5 million.
With files from The Canadian Press
