Cineplex open to producing original content as movie attendance drops

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."

Risky business

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.

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"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.

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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.