Cineplex CEO Says a Gaming and Media Spinoff Is PossibleBy
‘People don’t realize how diversified we are,’ Jacob says
Cineplex shares down 39% over past year amid weak box office
The chief executive officer of beaten-down cinema operator Cineplex Inc. says he wouldn’t rule out a spinoff of the company’s media and gaming businesses to fully realize their value.
“Definitely, technically, in three to five years we could have three distinct businesses,” CEO Ellis Jacob said in a phone interview Thursday, referring to the company’s film, media and amusement units. “People don’t realize how diversified we are as a company. Everybody’s treating us like the rest of the exhibitors.”
Jacob said he would first want the businesses to grow and take advantage of being under the same umbrella before he’d consider a spinoff. The media and amusement businesses each generated about 11 percent of Cineplex’s total 2017 revenue of C$1.56 billion ($1.23 billion), but he believes each unit will account for about one-third of revenue in five years.
Like most movie-theater companies, Toronto-based Cineplex has seen its stock price slump over the past year on weak box-office results and concerns of competition from stay-at-home options like Netflix Inc. Cineplex’s shares are down 38 percent in the past 12 months compared with a 2 percent decline for the S&P/TSX Composite Index.
Jacob said his box-office outlook for 2018 got a significant boost from the Marvel film “Black Panther,” which opened last weekend and generated Cineplex’s fourth-best weekend ever. He’s also optimistic about the prospects for other movies, including “Red Sparrow” with Jennifer Lawrence and “A Wrinkle in Time” with Oprah Winfrey, both opening in March.
But Jacob wants investors to look beyond the quarterly box office results to ‘‘the growth potential for Cineplex compared to a movie theater company that’s totally reliant on the product coming out of Hollywood.”
“We made a conscious decision to use our infrastructure and human capital to move from a cinema company to an entertainment and media company,” he said. “But people still think of us as a movie company.”