In a quarterly earnings call held last week, Cineplex CEO Ellis Jacob shared some insight on the efforts of his chain–Canada’s largest–to recover from the Covid-induced shutdown that has ground theater attendance in Canada to a halt.
Cineplex has seen a 95 percent drop in total revenues in 2020 compared to 2019—from $438.9 million to $22.0 million this year so far. The chain has reported a net loss of income of $98.9 million. Still, Jacob was hopeful about the prospects of the chain through the remainder of 2020, noting that over 80 percent of Cineplex’s 137 theaters had already opened their doors.
Those newly-opened theaters were able to show their first major new releases in months over the weekend, as a trio of new films—The SpongeBob Movie: Sponge on the Run, Unhinged (out in the U.S. on August 21), and local Quebec film Mon cirque à moi—made their Canadian big-screen debut. SpongeBob earned an estimated $900 thousand on 300 screens in Canada; in the United States, Paramount forewent a theatrical release in favor of releasing the film on PVOD.
In addition to getting Unhinged a week before its U.S. release, Canada will also see an advanced release date for Warner Bros.’ Tenet. The film will be released in Canada on August 27, putting it a day behind some 70 international markets and approximately a week ahead of the film’s release in select U.S. markets. The separation of Canadian and U.S. release dates “isn’t something that would have happened pre-Covid,” noted Jacob, “and is a testament to the strength of our reopening plans and the studio’s beliefs in our business and the theatrical model.”
Moving forward, with regard to the possibility of Canada continuing to get films before the U.S., Jacob noted: “It’s largely going to depend on how the U.S. states open as a result of their COVID-19 challenges, and whether that would make a difference as to releasing it first internationally and in Canada at the same time. If we continue to perform and we are able to deliver, I would think that the studios would work very closely with us as we move forward.”
Jacob highlighted Cineplex’s efforts to look beyond first-run films, looking at “new ways to attract different audiences.” These include bringing sporting events—including select NHL games and Toronto Raptor NBA playoff games—to Cineplex screens. Attendance at games already screened has been “encouraging,” Jacob notes. Attendance is free with a $5 donation to the Boys and Girls Club of Canada. In addition, Cineplex has grown the non-screen side of their business by expanding food delivery services.
Cineplex’s partnership with Topgolf, which gave the chain exclusive rights to Canadian locations, has been terminated, with Jacob noting that “the current environment is simply not an opportune time for us to invest in these large development projects.”
In the context of Cineplex’s development and operation of entertainment centers—including the Playdium and Rec Room concepts—CFO Gord Nelson concluded that it’s “probably prudent to actually pause a little bit in the short term” due to the “evolving retail landscape.” However, changing business realities do not “diminish our belief in the opportunity for Rec Room and Playdiums.” A Cineplex entertainment center is planned to open this year, and another one in the first quarter of 2021.
Also expected in 2021 is a trial between Cineplex and Cineworld, tentatively scheduled for September of next year. U.K.-based exhibitor Cineworld announced plans to acquire Cineplex in December 2019; had the deal gone through, Cineworld (which also owns Regal) would have surpassed AMC as the largest exhibitor in North America. Instead, the deal was terminated in June, with Cineworld alleging “certain breaches” to the acquisition agreements. Cineplex refutes the allegations. Said Jacob to Cineplex investors, “We are diligently working to advance the legal process and seek to recover all damages as outlined in the claim.”
Jacob also commented on the AMC/Universal deal that would see the window for Universal titles potentially shrink to as little as 17 days. “Speaking with our partners, they have assured me that the theatrical run is still important to them. They know that the global theatrical box office for a film often represents 50 percent or more of its overall revenue, which means that significantly shortening the theatrical window but have a serious impact on the latter part of a film’s life,” he said, adding: “As exhibitors, we are the engine that drives the train and sets the stage for additional downstream revenues for a film, from the creation of sequels to merchandising opportunities to theme parks attractions and other offshoots. We create great brand awareness and loyalty for distribution partners, not to mention providing the social and audio visual experience that guests love and crave, especially right now.”
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