Cineplex open to producing original content as movie attendance drops 12%
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TORONTO — Canada's largest movie theatre chain is open to the idea of producing original content like Netflix and Amazon do, the head of Cineplex said Wednesday.
CEO Ellis Jacob said the Toronto-based company isn't signing up to produce Hollywood blockbusters but he would consider smaller productions.
"It's a matter of being opportunistic in certain circumstances," Jacob said Wednesday following the company's latest earnings release.
"For example, if there is a particular movie that a distributor has that we feel comfortable with, we may join venture with them. But as far as getting into large productions of movies, that's not a business that we're going to head down."
Producing content can be financially risky. Companies generally need a large amount of capital up front in the hopes that a film would take off with audiences in order to generate a healthy return.
"To say, OK, by making our own movies, (we're) diversifying in that degree, the risk of how they do is still there," Jacob said.
"I'm not saying it's a bad business. I'm saying it's not a business that we're focused on to look at from a big numbers perspective."
Cineplex said the idea came up earlier this month during a panel in Ottawa featuring Michael Kennedy, its executive vice-president.
Adam Shine, a media and telecom analyst at National Bank Financial, said he doesn't see moviemaking becoming a core focus for Cineplex, especially as it has already dipped into other businesses such as gaming.
Earlier in the day, Cineplex reported a 12 per cent decline in attendance in its fourth quarter compared to the same period last year. It attributed that to a stronger movie lineup in the fourth quarter of 2015 that included some of the highest-grossing films of all time, such as "Star Wars: The Force Awakens" and "The Hunger Games: Mockingjay Part 2."
The drop in attendance to 17.9 million visits from 20.4 million was partly offset by higher per-patron spending on tickets and concessions.
Cineplex's net income was down 69.6 per cent, falling to $23.3 million or 37 cents per diluted share in the quarter ended Dec. 31 from $76.8 million or $1.20 per diluted share a year before.
Its 2015 fourth quarter profit included an unusual gain related to the acquisition of CSI and a favourable change in the value of a financial instrument linked to a 2013 acquisition.
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