Cineplex posts record profit thanks to blockbusters and popcorn

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A dream team of Marvel super heroes didn't just save New York City this spring, they also pushed the Canadian cinema operator Cineplex Inc. to record high adjusted profit in the second quarter, as the blockbuster movie The Avengers accounted for a whopping 22.6 per cent of total box office revenue.

Cineplex reported $47.3-million in adjusted profit, or 34 cents per share, a new high for the company's second quarter, up 6.5 per cent from the same 2011 period.

The higher earnings were squeezed out of a smaller audience, as attendance dipped 0.2 per cent to 17.1 million, demonstrating the value of the company' s increasing emphasis on digital technology and selling premium theatre experiences.

While adult general admission tickets in one downtown Toronto theatre cost $12.99, the price is $15.99 for either a 3D or UltraAVX showing (reserved seating and a bone-rattling sound system), and $19.99 for IMAX showings. VIP seats at a Coquitlam, B.C. theatre go for $19.50, a $7 premium above general admission.

Premium tickets comprised 36 per cent of Cineplex's box office, far outpacing the 20-25 per cent range that is common in the U.S.

The company's conversion to digital projectors – 97 per cent of the chain's screens are now equipped with the technology – also make it easy to respond to spikes in demand for popular films. "You don't have to worry about loading film on a platter," said CEO Ellis Jacob in an interview. "With The Dark Knight Rises, if it's selling out, you've got six auditoriums at midnight and you want to add another three, you just keep clicking the buttons."

The second-quarter performance was especially dependent on those sorts of blockbusters: the top five films accounted for 45.5 per cent of box office, up from 38.5 per cent in the same period in 2011. (Besides The Avengers, they were The Hunger Games (7.7 per cent), Men in Black III (5.5 per cent), Madagascar 3 (5 per cent), and Prometheus (4.7 per cent). Still, Mr. Ellis isn't concerned about the dependence on Hollywood. "We have the luxury, when the screens are empty, to play Bollywood films, Canadian films, films from different parts of the world."

Cineplex also improved its performance at the concession stand, increasing its margins there by 5.7 per cent, to $3.69 per patron. "That is huge," said Mr. Jacob. "If we can get an extra dime a year from 70 million guests, that's seven million bucks. On an 80-per-cent margin, that's close to $5.7-million. So it does move the needle."