As other countries begin to reopen, and Hollywood prepares to release a backlog of movies that were delayed by the COVID-19 pandemic, Cineplex Inc.’s leaders are eyeing Canada’s vaccine progress and hoping to capitalize on an unusually packed blockbuster season.
Currently, 27 of Cineplex’s 161 movie theatres across Canada are open. The company’s hope is that 60 or more theatres will be allowed to open by the end of May, when A Quiet Place Part II will kick off a spate of big releases, president and chief executive officer Ellis Jacob said in an interview on Thursday.
“The big challenge is getting open, and then getting open with enough patrons that we can move forward,” Mr. Jacob said. “With very limited attendance, it doesn’t make sense.”
Throughout the pandemic, the movie-theatre industry has emphasized that their businesses are safer for customers than restaurants and retail stores, because they are so large, making physical distancing easier. But with concerns about highly transmissible variants of COVID-19, indoor businesses are likely to face continuing restrictions.
Cineplex is currently looking at its air-intake systems, with the goal to double the airflow through its buildings where possible – something that will differ depending on whether a theatre is located in a mall or in a stand-alone facility.
Where some Cineplex locations are currently open – in Quebec, Saskatchewan, New Brunswick and Prince Edward Island – theatres have cleaning procedures and physical-distancing policies for staff, and greeters at the front doors check whether customers are wearing masks. Mr. Jacob said he is encouraged by the news of millions of vaccine doses that are due to arrive in Canada soon.
Both the summer and holiday seasons are crucial times of the year for Cineplex, but the backlog of releases – such as In the Heights, Top Gun: Maverick, West Side Story, Black Widow and the James Bond instalment, No Time to Die – mean that beginning in June, the usual postsummer lull will be eliminated.
“Because of the delays from last year, you’re pretty well looking at a big movie opening just about every week through to the end of December,” Mr. Jacob said.
When other movies have opened at times when theatres faced restrictions, as with Wonder Woman 1984 and Godzilla vs. Kong, studios have opted for premium-priced video-on-demand rentals concurrent with the theatrical release. While Cineplex’s digital rental platform had access to those rentals, it also competed with other VOD platforms. Mr. Jacob said he is hoping to have enough theatres operating to preserve exclusivity in theatres wherever possible.
“The studios prefer to have us open and releasing the movies at the theatres, because they know, and we know, it’s a different experience,” he said. “I think they would much prefer us to be open in as many places as possible.”
On Thursday, Cineplex reported first-quarter revenue of $41.4-million, down 85.4 per cent compared with the same period last year.
Most of the company’s theatres across Canada remained under mandated closings in the first quarter or faced capacity restrictions where they were able to operate, as provincial governments across the country expanded lockdown measures in an attempt to contain a third wave of the pandemic.
Just 415,000 people went to the movies at a Cineplex theatre in the three months ended March 31, compared with 10.7 million in the same period last year – when audiences first began to decline significantly because of the pandemic.
Cineplex has been working to control costs. The Toronto-based company burned through cash at an average net rate of $26.9-million each month in the quarter. Cineplex received $57-million from the sale of its head office building in Toronto, half of which went to pay down debt. It also received $250-million from a debt offering that the company said was oversubscribed, and which it used to repay $100-million under its credit facilities.
Mr. Jacob said on Thursday these measures will give Cineplex the breathing room to get through the recovery period from the pandemic. The company has obtained relief from some of the covenants under its credit facility, which are set to resume at the end of the year.
Cineplex reported a net loss of $89.7-million, or $1.42 a share, in the three months ended March 31, compared with a net loss of $178.4-million, or $2.82 a share, in the same period last year, when COVID-19 first began to affect Cineplex’s earnings.
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