Cineplex reports another loss, but things are improving

Audiences and advertiser revenue are beginning to return to the company's theatres.

Cineplex is still grappling with the impacts of COVID-19 on its business, but the reopening of theatres and a marked improvement in advertiser activity is showing positive signs.

Revenues totalled $250.4 million for the three months ended Sept. 30, a 310.3% increase compared to the depths of pandemic theatre closures in the same quarter last year. It’s also another quarter of improvement from the $60.4 million it reported in Q2.

The company still reported a $33.6 million loss for the quarter, but that is lower than the $121.1 million it reported in the same quarter last year, as well as an improvement from the $103.7 million loss last quarter.

A major area of improvement was in the Cineplex Media segment. Advertising revenue from in-cinema ads nearly doubled to $6.6 million year-over-year, though that was offset by a 21.8% dip in revenue from digital place-based ads. The company attributes that to lower hardware sales, as well as dips in creative and digital media revenues. In the media segment more broadly, the company said uncertainty around the timing of theatre reopenings and changes to film release schedules also constrained the return of advertiser activity slightly.

Overall, the company was optimistic about the future, helped by the fact that the company had 8.3 million people attend its theatres in the quarter.

Ellis Jacob, president and CEO of Cineplex, cited the launch of the “Where Escape Begins” platform as helping to welcome audiences back to theatres, as well as the CineClub subscription program. Launched during the last quarter, CineClub gives members access to benefits like free movie tickets and concession discounts, an offering Jacob said has been well-received so far.

This is also the first earnings report Cineplex has provided since the trial between the company and U.K.’s Cineworld Group began in September and had closing arguments presented last week. At issue is the cancelled acquisition of Cineplex by Cineworld: Cineplex contends that Cineworld did not have the right to terminate the deal, despite pandemic-related downturns in business, while Cineworld claimed it was within its rights as Cineplex “strayed from ordinary course” with actions like deferring payments, reducing spending and not paying landlords. Cineplex countered that those actions were “ordinary course” for the industry during the pandemic and that it had fulfilled its obligations.

The result of the trial will have a major impact on both companies’ bottom line: Cineworld is asking for $54.8 million in damages, while Cineplex is seeking the $2.18 billion it would have received had the deal not been terminated.