Cineplex CEO says weak Q3 attendance was due to one month, Q4 looks better
Cineplex says attendance fell to 16.8 million compared with 19.2 million in the same quarter last year
Despite Cineplex's lowest third-quarter attendance numbers in more than a decade, the head of Canada's largest movie theatre chain says 2017 will probably end up on a par with last year thanks to a strong roster of new titles in the final months.
Cineplex CEO Ellis Jacob told analysts Tuesday that members of the investment community have asked in recent weeks if Cineplex is facing a "systemic" or a "cyclical" decline in attendance.
Jacob's answer: this year's poor third-quarter box-office performance was due to a weak August and "one month does not equate to a systemic decline.
"We categorically believe this to be a cyclical, content-related scenario and look forward to a strong film slate for the fourth quarter that will continue into 2018," Jacob said during the Cineplex quarterly conference call.
He said the third film in the Thor super-hero series recently had the fourth-largest opening weekend of 2017. It will be followed by the latest Justice League movie, opening Nov. 17, and Star Wars: The Last Jedi opening on Dec. 15.
There are also five films opening on Dec. 22 including the third Pitch Perfect movie, the latest Jumanji starring Dwayne Johnson, and The Greatest Showman — an original musical starring Hugh Jackman.
"We'll probably balance out for the year compared to 2016," Jacob said.
Nevertheless, Cineplex had fewer than 16.8 million patron visits for the three months ended Sept. 30 — down 12.8 per cent from last year and the first time since 2008 that fewer than 18 million patrons visited during the summer quarter.
Revenue totalled $370.4 million, down from $376.0 million, while net income fell to $17.2 million or 27 cents per diluted share from $26.0 million or 41 cents per diluted share a year ago.
Part of the reason for Cineplex's reduced earnings was its investment in reclining seats for more theatres, as well as other capital spending.
On the positive side, moviegoers paid more per person — with box office revenue per patron rising 1.7 per cent to a Cineplex record $9.81 and concession revenue per patron rising 5.6 per cent to a record $6.01.
Cineplex has been working for several years to reduce its dependence on Hollywood films by diversifying into alternative types of programming in its theatres, more technologically sophisticated theatres, sales and rentals of movies for viewing outside the theatres through the Cineplex Store and non-theatre entertainment.
"Today, our company encompasses many, many facets and we will continue to diversify and grow those businesses," Jacob said in an interview after the conference call.
The company is reviving the Playdium brand as a place for teens and families to play and dine, following the success of The Rec Room — considered more of a party place for adults in the millennial age group.
But Jacob also said that age group will also come out in force to see movies — if they're good — despite a perception that millennials don't want to go to theatres.
The horror film It — based on a Stephen King story — had record-breaking attendance for that genre in September — with millennials making up 60 per cent of the audience, he said.
"Guests loved the movie and the word-of-mouth was excellent and that's the difference. Today, with social media, people are so aware of something when it's good that they're out there in droves."
Cineplex shares slipped $1.46 on Tuesday, closing at $37 on the TSX.