#Cineplex Narrows First Quarter Loss as Box Office Revenue Soars

Canadian exhibition giant Cineplex saw its first quarter loss narrow and its overall revenues climb by nearly half as the Hollywood box office recovery continues north of the U.S. border.

Toronto-based Cineplex posted a loss of CAN$30.4 million dollars (US$22.4 million), or CAN$.48 per-share (US$0.35), compared with a loss of CAN$42.2 million, or CAN$0.67-per-share in the same period of 2022.

The narrowing loss came as overall revenue jumped 49 percent to CAN$341 million ($252.8 million), compared to a year-earlier CAN$228.7 million, as families and older audiences, a demographic wary of the multiplex during the pandemic, increasingly join teens in Canadian theaters as the health emergency ends.

“I’m encouraged by the positive momentum our industry and company have realized with strong consumer demand for moving-going, content volume returning to pre-pandemic levels, the commitment to exhibition from our studio partners and the record results for our diversified businesses,” Cineplex CEO Ellis Jacob told analysts during a morning call after the release of the company’s first quarter earnings.

Theater attendance during the latest quarter jumped to 9.8 million patrons, up nearly 47 percent on the year-earlier 6.6 million theatergoers, which coincided with backing for the theatrical window from major studio bosses returning as industry disruption from the pandemic ebbs away.

“We are excited by the amazing lineup of films for 2023 and believe we have overcome pandemic-related content supply challenges,” Jacob told analysts after box office performers like The Super Mario Bros. Movie, Avatar: The Way of Water and John Wick: Chapter 4 played on his screens during the latest three month period.

During the fourth quarter of 2022, Cineplex saw theater attendance fall, due in part to COVID 19-related production delays shifting the theatrical releases like Shazam: Fury of the Gods and Aquaman and the Lost Kingdom from Warner Bros. Discovery to 2023.  

After the earnings call, Jacob told The Hollywood Reporter that the number of tentpole hits at the multiplex had returned to pre-pandemic levels and the movie shortage for cinema chains in recent years had greatly eased.

Key to the continuing Hollywood box office recovery is the current movie supply on Cineplex screens into 2023 having been as much about the volume of tentpoles hitting Canadian screens as the appeal of individual titles.

“You have a movie-a-week that’s opening,” Ellis said. “You have Fast X, you have Spider-Man (Across the Spider-Verse). You’ve got Transformers. So from a content perspective, things are very good.”

Jacob also pointed to foreign-language films performing well on his screens, including the Punjabi historical drama Jodi, which has done nearly $1 million in box office at Cineplex theaters to date.

Cineplex also saw its investment in premium movie viewing experiences like 3D, UltraAVX, VIP seating and Imax continue to pay off as the company set a first quarter record of 47 percent of box office revenues coming from reserved seating and big screen formats.

Jacob addressed the potential impact of the writers strike on the pipeline of Hollywood product into his theaters. “We don’t expect the strike to have a material impact on our business … Given the long lead times in making theatrical films, such strikes have historically not had an impact on our industry,” he argued.  

Cineplex CFO Gord Nelson during the analyst call added Cineplex did not anticipate receiving a “material” recovery of its $1.24 billion claim from Regal-owner Cineworld that was awarded in 2021 after the UK exhibitor backed out of a merger deal.

Cineworld’s current Chapter 11 reorganization plan stipulates that all unsecured claims, which includes Cineplex’s $1.24 billion claim, will receive a share of a $10 million recovery pool to settle all litigation. “While at this time we don’t know the expected distribution of our claim, we do not anticipate that will be material and no amount has been accrued in Cineplex’s financial statements,” Nelson said.

The proposed Cineworld restructuring, which must get approved by the bankruptcy court, is designed to reduce the firm’s debt by about $4.53 billion, mainly through lenders getting equity in the reorganized group in exchange for releasing their claims.