Cineplex says it will make online purchase fee more obvious following penalty
Company appealing penalty it received in September for alleged deceptive marketing
Cineplex Inc. says it will continue adding a fee to some online ticket purchases but will adjust how the charge is communicated to moviegoers.
The move comes in response to a record $38.9-million penalty Cineplex was handed in September by Canada's Competition Tribunal in a case alleging the way the company presented online booking fees to consumers constituted deceptive marketing.
"They were not really questioning the absolute fee. What they were questioning is how it was on the website," Cineplex chief executive Ellis Jacob said in an interview on Wednesday.
"It was all about the presentation, and they've asked us to make some modifications, which we are co-operating with them [on] and moving forward."
Jacob said he expects the modifications to be complete by early next year. They will make it more obvious to customers that Cineplex has been charging a $1.50 online booking fee since June 2022 to customers not enrolled in its CineClub subscription and Scene Plus loyalty programs, which see the fee waived and dropped to $1, respectively.
The Competition Bureau, which triggered a battle with Cineplex before the tribunal, has long maintained the charge misleads theatregoers because they are not immediately provided with the full price of a movie ticket when they purchase seats online.
Cineplex, however, disagrees and announced in October it's appealing the penalty, saying moviegoers are promptly told about fees they may face and can avoid them altogether by purchasing seats in-person at a theatre.
Company confident appeal will be successful
The Federal Court of Appeal has yet to announce when Cineplex's challenge will be heard, but Jacob said he's confident his company will be successful.
"We didn't think our presentation was at all deceptive to the consumer, and I've gotten a lot of people who basically told me we are surprised they've even brought this up," he said.
His remarks followed a Wednesday call with analysts where Cineplex discussed its third-quarter financial results, which included a $39.2-million provision related to the Competition Tribunal decision.
The quarter that ended Sept. 30 left Cineplex with a loss of $24.7 million, or 39 cents per diluted share, compared with a profit of $29.7 million, or 40 cents per diluted share, a year earlier. The dramatic difference between last and this year's third quarter showed Deadpool & Wolverine was no match for Barbie and Oppenheimer.
The superhero flick starring Ryan Reynolds and Hugh Jackman debuted this summer and quickly became the highest-grossing R-rated film ever with $637 million in domestic box office revenues.
However, Barbie and Oppenheimer, which sent droves to theatres last year for a double-bill, had previously pushed Cineplex to a record third quarter and its highest July box office of all time, when they were released that month.
"Last year was one of our strongest quarters, and it was largely driven by Barbie and Oppenheimer that did a significant amount of the business," Jacob said.
"This year, you had a strong product, but it was more movies that were part of the overall top 10."
Aside from Deadpool & Wolverine, other movies released in the quarter included Despicable Me 4, Beetlejuice Beetlejuice and Twisters.
The performance of such releases caused Drew McReynolds, an analyst with RBC Dominion Securities, to conclude that Cineplex had "a decent quarter" at the box office, despite the "tough" year-over-year comparisons.
Cineplex's revenue for the quarter totalled $395.6 million, down from $414.5 million in the same quarter last year.
Theatre attendance amounted to 13.3 million for the quarter compared with nearly 15.7 million a year earlier.
But there were some bright spots.
Box office revenue per patron in the quarter climbed to $13.19 compared with $12 in the same quarter last year, while concession revenue per patron amounted to $9.85, up from $8.44 a year ago.
"What we found is that there's a lot of enthusiasm to buying at the concession stand and the basket sizes increase," he said.
"There's higher visitation that we're seeing and also the product offering, we've improved."
The increases in spending from Cineplex customers have come despite many economists warning there has been a pullback in consumer spending, even as inflation has cooled and mortgage and interest rates have been reduced.
Jacob attributed his customers' willingness to spend on new features in the company's mobile app, which now allow them to order snacks online that they can walk into a theatre and pick up. The company has also offered popcorn and concession stand deliveries for several years.
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