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Cineplex CEO says rom-com is due for a theatrical comeback as 'Top Gun' strikes big

Cineplex employees serve customers popcorn and other snacks at a Cineplex theatre in downtown Toronto on Wednesday, Aug. 26, 2020. THE CANADIAN PRESS/Christopher Katsarov

TORONTO — While moviegoers flocked to testosterone epics "Top Gun: Maverick" and the latest "Doctor Strange" over the summer, the head of Cineplex Inc. says he's certain the romantic comedy is due for a comeback on the big screen.

Ellis Jacob, chief executive of Canada's largest film exhibitor, said he predicts a rosier outlook for biopics, Oscar-worthy dramas and word-of-mouth comedies — all genres that are mid-tier-budget movies. That's despite competition from deep-pocketed streaming giants pumping out exactly those sorts of films for TV viewing.

“I've had discussions with studios and a lot of them are saying that's going to be a focus,” he said of mid-tier movies, as Cineplex reported its first quarterly profit since the start of the pandemic.

Jacob referred to the popularity of Baz Luhrmann's "Elvis" as a sign of what he hopes is coming. The film's budget was around $85 million, relatively conservative by today's Hollywood standards for a big release, and it drew older viewers who've been reluctant to venture out in recent months.

So did "Top Gun," a mega-budget blockbuster with mass appeal, which became Cineplex's most popular title of the second quarter. It helped drive profits to $1.3 million, or two cents per share, for the three months ended June 30.

The results compared with a steep shortfall a year earlier when the company was $103.7 million in the red, a loss of $1.64 per share, as it dealt with widespread theatre closures.

In the comparable period a year ago, Ontario and Manitoba did not register any ticket sales because they were closed, while other provinces that had gradually reopened theatres faced patrons who were reluctant to visit.

Moviegoer attitudes have changed since then, Jacob said, which has proven itself in the results. Revenue was also up to $349.9 million from $64.9 million the prior year.

Overall, theatre attendance grew to 11.1 million from 1.1 million in the same quarter last year, propelled by Marvel's "Doctor Strange in the Multiverse of Madness," "Jurassic World Dominion" and "Sonic the Hedgehog 2."

Bigger movies meant more lucrative ticket sales as people upgraded to Imax and VIP theatre experiences, which boosted box-office revenues to $12.29 per patron compared with $10.89 per patron a year ago.

Concession revenues also jumped to $8.84 per visitor compared with $7.86 last year.

Jacob said it wasn't just about throwing the biggest movies on all of the screens. The company found that selectively programming more international fare also sold more tickets than in past years.

"We played a Bollywood movie in Sudbury and it worked," he said.

"But that was because we were able to pinpoint the residents in particular markets and cater the product to them."

Coming out of pandemic shutdowns, it's "hard to speculate" on what lies ahead as new variants continue to emerge, Jacob said. Movie theatres are also at the mercy of film studios which are still playing with shortened theatrical windows and straight-to-streaming rollouts that see muted Canadian theatrical releases.

Up until recently, Wall Street investors were set on streaming companies such as Netflix and Disney Plus being the future of most filmed entertainment, while sentiment suggested movie theatres were on the way out.

But investor attitudes have shifted in recent months as the biggest streaming companies see their growth plateau and production budgets spiral out of control.

Earlier this month, Warner Bros. Discovery CEO David Zaslav made the unusual move of scrapping DC Comics' $90-million film "Batgirl" while it was in post-production, a decision that came as he reined in spending for the U.S. HBO Max streaming service.

In the meantime, Cineplex has been on the hunt for other sources of revenue. A new booking fee was introduced late in the quarter which tacked an extra $1.50 charge onto each ticket purchased through its mobile app and website.

"This is really nothing compared to some of the other charges I'm getting when I buy something online," Jacob reasoned.

He said the money pocketed from the surcharge will go toward building its digital infrastructure, which will eventually offer moviegoers the option of buying snacks before they arrive at the theatre.

This report by The Canadian Press was first published Aug. 11, 2022.

Companies in this story: (TSX:CGX)

David Friend, The Canadian Press

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