A string of early summer box-office flops put the squeeze on second-quarter profits at Cineplex Galaxy Income Fund.
The operator of Canada’s largest theatre chain said yesterday that its profits slipped 12.5% to $17.4 million, down from $19.9 million a year ago.
The impact was both a sign of how volatile the movie business can be and how Cineplex Galaxy manages to endure the tougher times with its diversified operations, which include an advertising business that showed growth even in the difficult quarter.
“Our business is really driven by a lot of what Hollywood brings to the table,” said chief executive Ellis Jacob. “I always tell people ‘We set the table, we don’t serve the steak.”’
In the three months ended June 30, it seemed like what Hollywood served up wasn’t enough to keep audiences salivating.
“Movies like Robin Hood, Prince of Persia and Sex and the City 2 really underperformed what we had thought and anticipated they were going to do,” Jacob said.
“Those were the three movies I would’ve expected to have done more business.”
Add to that many other box-office bombs that peppered the second quarter, like the romantic comedy Killers and a reboot of the ’80s TV series The A-Team.
None of those films pulled Canadians into theatres in droves, and attendance fell to 16.7 million patrons, compared to 18.2 million a year earlier when blockbusters like Star Trek and Pixar’s Up were playing on screens.
With fewer people in theatres there were also weaker concession sales, down 2.2%, though the company managed to boost concession revenue per patron helped by some higher food prices.
Overall, Cineplex revenues were off 2% to $243.7 million from a year ago.
However, the company said its media division–which handles on-screen and lobby advertising–showed strength with the assistance of the economic recovery.
Media revenues were up 18.6% to $19.4 million, helped by increased advertising buys from the automotive industry and wireless providers.
Jacob said he has confidence the third quarter will show some improvement over the latest results.
“This quarter Inception is doing extremely well, Toy Story 3 is doing really well,” he said.
Other movies, still expected to open to strong numbers, include Eat Pray Love and The Expendables.
