Cineplex – Movie Quality, Not Piracy to Blame for Revenue Drop

Today, we take a look at the financial situation for Cineplex in light of the Fairplay Canada allegations.

We’ve been surveying the entertainment landscape to see what the financial reality is for various organizations. This is in response to allegations made by Fairplay Canada and their few supporters. The allegations are that streaming and piracy is killing the film and TV industry. Unless Canadian regulators begin blocking websites without a court order, then the industry will be finished off completely.

Of course, that hinges on the idea that the film and TV industry in Canada is suffering at all. Back in February, we reported on a study that says that the reality is that things have never looked better for film and TV. Revenue and investments are up and employment is soaring. The study put the allegation that the film and TV industry is dying into serious question in and of itself.

Of course, we thought one study may not be enough for critics that still insist that revenue is collapsing and that companies will fold at any time. So, we decided to corroborate the study with other primary sources to confirm whether or not that is the case. So, we looked at the Jim Pattison Group and found out that 2017 is their best year ever in terms of revenue and employment. Next up is Bell who admitted that revenue is up and that they are showering their shareholders with increased dividends. Finally, we tried Rogers who said that revenue is up for them as well.

The question became less and less of who isn’t suffering and more of who isn’t popping the champagne because things have never looked better? Well, after searching high and low for any organization that is experiencing a drop in revenue, we finally found one. It took a lot of searching for that needle in the hay stack, but we have finally shown success. According to Cineplex their fourth quarter of 2017 didn’t go over as well as they had hoped:

Reported third quarter box office revenues of $164.5 million, a decrease of $20.9 million (11.3%) from the $185.4 million reported in the prior year period due to a 12.8% decrease in attendance.

So, naturally, for critics, there’s the smoking gun. That clearly is the result of streaming piracy. Cineplex, naturally, explained this drop in revenue is clearly the result of piracy:

“Total revenue for the third quarter decreased 1.5% to $370.4 million, primarily due to decreased attendance as a result of weaker film product during the period,” said Ellis Jacob, President and CEO, Cineplex. “Despite the proactive cost control measures, the attendance decline coupled with incremental costs related to the opening, ramp-up and integration of our new business initiatives resulted in a 12.6% decrease in Adjusted EBITDA to $58.8 million for the quarter.”

Box office revenues decreased $20.9 million, or 11.3%, to $164.5 million during the period, compared to $185.4 million reported in the strong third quarter in 2016. The decrease was due to a 12.8% decrease in attendance to 16.8 million guests, partially offset by the higher BPP. The attendance decrease was due to the weaker film slate in the third quarter of 2017 compared to the third quarter of 2016 in addition to the impact of auditorium closures during recliner conversions.

Box office revenues for the nine months ended September 30, 2017 were $530.6 million, a decrease of $20.2 million or 3.7% over the prior year. This was due to the 6.7% decrease in attendance period over period as a result of the weaker film slate of in 2017 compared to the prior year which included two films ranked in the top nine highest grossing films of all-time.

… what? So, the reason that revenue is down is because of a decrease in attendance thanks to a weaker film roster? As a matter of fact, streaming and film piracy didn’t even get mentioned throughout the entire report even once. So, they know what the actual culprit is and have no problem mentioning it multiple times throughout the report.

So, it seems that website blocking is once again not justified. This is the case if the crux of the argument that revenue is dropping because of piracy in the first place. With what we’ve found to date, the idea that piracy is killing the film and TV industry in Canada is a borderline farcical comment to make.

Drew Wilson on Twitter: @icecube85 and Google+.

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