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Cineplex CEO Ellis Jacob and his team have created a separate division, Cineplex Media, from scratchMoe Doiron/The Globe and Mail

Investment bankers are making the trip to Cineplex's modest Toronto head office these days with the same high expectations that take hold of moviegoers as they line up for the latest instalment of the Star Wars saga.

Bay Street financiers come by to pitch chief executive officer Ellis Jacob on a spinoff of his Cineplex Media division, an unknown extra in a company best known for screening star-driven blockbusters. The fact that a sophisticated financial audience pictures Cineplex Media as a viable independent company, one that's worthy of an initial public offering, speaks to the strength of the digital franchise Mr. Jacob and his team have created from scratch. And the CEO's consistent decision to put off the investment bankers is testimony to the potential that Cineplex sees in expanding its media business.

You may not know it, but you take in Cineplex Media offerings just about every time you leave the house. The screens you see in Tim Hortons and McDonald's outlets, blending a little news and a lot of fast-food advertising, are run by Cineplex. The company is in the process of setting up 4,800 screens across Dairy Queen's North American network. The same goes for what you see on elevators and concourses in Oxford Properties and Brookfield buildings and at RBC and Scotiabank branches.

The company that has a hammerlock on movies in Canada – 1,667 screens in 163 theatres, all selling premium-priced popcorn and some selling premium-priced wine in VIP rooms – has also quietly become a market leader in what Mr. Jacob described in a recent shareholder note as the "digital out-of-home advertising business, which includes digital signage networks both on the path to purchase (shopping malls and office complexes) and at the point of purchase (quick service restaurants, financial institutions and retailers)."

Where traditional media companies – newspapers and conventional television – are seeing a steady decline in ad revenues as advertisers shift marketing budgets to digital products, Cineplex Media generated record revenue of $153.6-million in 2015, up 14.5 per cent from the previous year. The company reports second-quarter financial results on Thursday.

"We expect box-office revenue will represent less than half of Cineplex total revenues as we exit 2016. Digital signage, advertising, Rec Room [a chain of gaming, dining and entertainment complexes] and in time, eSports [electronic gaming events] will become important drivers," said a recent report from BMO Nesbitt Burns analyst Tim Casey, who called the company a "premium stock in the media sector" owing to its strong franchise and growth strategy.

Cineplex built its digital-media business through internal-growth initiatives and small, low-risk acquisitions. The team that runs screens in fast-food outlets joined through the acquisition of tech firm EK3 Technologies in 2013, which cost $39-million up front, and an additional $39-million in performance-based payments.

Last year, Cineplex invested $15-million to launch its eSports division, which stages competitive electronic gaming in theatre settings. If the concept of competitive electronic gaming escapes you, ask a teenager for their views on the top players in League of Legends or StarCraft, and be prepared for a lengthy dissertation. This sector didn't exist five years ago: Competitive gaming is now an industry worth $600-million (U.S.) a year, featuring tournaments that hand out $200,000 in prize money.

Recent acquisitions by U.S. entertainment companies echo the business strategy that's in place at Cineplex – peers are striving to build dominant theatre chains, and add content to tap new sources of revenue. These are big-ticket deals.

AMC Theatres bid a total of $2.4-billion this summer to buy rival North American and European cinema owners. Lions Gate Entertainment and Comcast spent billions in recent months to add to their distribution muscle. Cineplex already has market-leading positions in theatre and digital media and, as BMO's Mr. Casey noted, "an attractive track record of execution, balance-sheet strength, dividend yield and growth potential."

While CEOs never say never when it comes to reworking their corporate structure with initiatives such as the shareholder-friendly spinout of a business, a number of sources close to Cineplex say there are no plans for an IPO of the company's media division. That won't stop investment bankers from pitching. With double-digit revenue growth and an audience that's increasingly addicted to screens of all shapes and sizes, Cineplex Media is a sleeper hit.


Wheeling and dealing

Recent acquisitions show that entertainment companies want to deliver more content through more channels, or bulk up their core business, strategies Cineplex already rolled out.

Comcast buys DreamWorks Animation for $3.8-billion (U.S.), June, 2016

Cable conglomerate adds TV and film production, plus properties for theme parks.

AMC Theatres bids $1.2-billion for Carmike Cinemas and $1.2-billion for Odeon & UCI Cinemas, July, 2016

U.S. theatre chain buys U.S. rival and expands into Europe.

Lions Gate Entertainment buys Starz for $4.4-billion, April, 2016

Movie studio expands into premium cable channels.