Cineplex sees profit boost as Barbie, Oppenheimer create ‘unprecedented’ demand

10 Aug 2023 | Economy | 177 |
Cineplex sees profit boost as Barbie, Oppenheimer create ‘unprecedented’ demand

Cineplex Inc.’s net income mushroomed to $176.5 million in its second quarter as “The Super Mario Bros. Movie” hit theatres and the cinema chain began preparing for a “Barbie” boost.

The Toronto-based theatre giant said Thursday that its net income for the period ended June 30 towered over the $1.3 million it earned in the same period a year earlier.

Ellis Jacob, Cineplex chief executive, attributed the lift to “the return of strong film product,” which came as the company and other theatre chains continued to rebound from the COVID-19 pandemic, which temporarily closed cinemas and slowed the flow of new releases.

“Our business made tremendous strides during the quarter and that momentum continues,” he said on a Thursday call with analysts.

The biggest hit Cineplex had on offer in the second quarter was “The Super Mario Bros. Movie,” which set a record for the biggest opening for an animated film ever. Music screenings from BTS member Suga, Machine Gun Kelly and Coldplay and Punjabi films “Annhi Dea Mazaak Ae,” “Godday Godday Chaa” and “Jodi” also delivered audiences.

The lineup pushed up Cineplex’s second quarter revenues by 21 per cent to $423.1 million compared with $349.9 million the year before.

However, box office revenues of $164.5 million remained at 79 per cent of 2019 levels, which reached $189.4 million.

More progress may be made in the third quarter, which covers the July 21 releases of “Barbie,” the film starring Margot Robbie and Ryan Gosling about the popular Mattel doll, and “Oppenheimer,” Christopher Nolan’s epic about the creation of the atomic bomb.

The dual releases dubbed “Barbenheimer” were a “cultural phenomenon,” Jacob said, with patrons dressing up and arriving early to take photos in a booth resembling a Barbie box.

“The buzz around these films created an unprecedented box office and cultural event that transcended any streaming service experience by leaps and bounds,” he said.

Along with Tom Cruise’s “Mission: Impossible – Dead Reckoning Part One,” “Barbie” and “Oppenheimer” brought Cineplex its highest July box office and its second-highest month on record, trailing December 2015, when “Star Wars: Episode VII – The Force Awakens” was released.

Some 6.8 million moviegoers visited Cineplex just last month compared with 12.8 million in the second quarter, up from almost 11.1 million a year ago.

They helped the company notch theatre food service revenues of $118.0 million, an increase of $19.9 million or 20.3 per cent compared with the prior year, primarily due to a 15.5 per cent increase in theatre attendance.

On an adjusted basis, Cineplex said its diluted earnings for the quarter hit $1.99 per share versus two cents per share a year prior, beating analyst expectations of 21 cents per share, according to financial markets firm Refinitiv.

The results included expenses related to the failed sale of Cineplex to Cineworld Group PLC transaction. Cineworld walked away from a $2.18-billion deal to buy Cineplex in 2020, sparking a court battle over whether Cineworld had the right to exit the agreement.

An Ontario court ruled in Cineplex’s favour in December 2021, awarding the company $1.24 billion in damages, but Cineworld said it would appeal the judgment, while Cineplex wanted to push for an even higher payout.

Cineworld has since filed a proposed Chapter 11 plan of reorganization and Cineplex has said it does not expect to recover any material amount from its erstwhile suitor.

“We are just as disappointed with the outcome as our shareholders, but I want you to know that we will work tirelessly to explore all options to optimize the value of the litigation judgment,” Jacob said.

“We will now put this chapter behind us.”

Cineplex has also been grappling with a pair of strikes from the Screen Actors Guild-American Federation of Television and Radio Artists and the Writers Guild of America, which have halted film and television productions along with promotional work for completed movies.

The cast of “Oppenheimer” walked out of their premiere in solidarity with striking workers, while Disney sent Mickey and Minnie Mouse, Maleficent and Cruella de Vil down the “Haunted Mansion” red carpet in lieu of stars Tiffany Haddish, Danny DeVito and Rosario Dawson.

“Challengers,” the Zendaya-starring tennis film due to open the Venice Film Festival, has since had its release date pushed back because of the strikes.

Cineplex is monitoring the job action “closely” and working with studio partners to minimize disruptions caused by the strikes, Jacob said.

“I hope it’s a short-term situation, but I can’t really guarantee anything,” he said.

Part of his confidence comes from streaming companies seeing “irreplaceable value” in theatrical releases.

Jacob pointed to Apple’s future releases – Martin’s Scorsese’s “Killers of the Flower Moon” and Ridley Scott’s “Napoleon” – along with Amazon’s past debut of “Creed III” and “Air” as examples of their confidence in the model.

by The Canadian Press