TORONTO — Cineplex Inc. says it will continue adding a fee to some online ticket purchases but will adjust how the charge is communicated to moviegoers.
The move comes in response to a record $38.9 million penalty Cineplex has been handed by the Competition Tribunal in a case alleging the way the company presented online booking fees to consumers constituted deceptive marketing.
"They were not really questioning the absolute fee. What they were questioning is how it was on the website," Cineplex chief executive Ellis Jacob said in an interview Wednesday.
"It was all about the presentation and they've asked us to make some modifications which we are co-operating with them (on) and moving forward."
He expects the modifications to be complete by early next year. They will make it more obvious to customers that Cineplex has been charging a $1.50 online booking fee since June 2022 to customers not enrolled in its CineClub subscription and Scene Plus loyalty programs, which see the fee waived and dropped to $1, respectively.
The Competition Bureau, which triggered a battle with Cineplex before the tribunal, has long maintained the charge misleads theatregoers because they are not immediately provided with the full price of a movie ticket when they purchased seats online.
Cineplex, however, disagrees and is now appealing the penalty, saying moviegoers are promptly told about fees they may face and can avoid them all together by purchasing seats in-person at a theatre.
The Federal Court of Appeal has yet to announce when Cineplex's rebuttal will be heard, but Jacob is confident his company will be successful.
"We didn't think our presentation was at all deceptive to the consumer and I've gotten a lot of people who basically told me we are surprised they've even brought this up," he said.
His remarks followed a Wednesday call with analysts where Cineplex discussed its third quarter financial results, which included a $39.2-million provision related to the Competition Tribunal decision.
The quarter ended Sept. 30 left Cineplex with a loss of $24.7 million or 39 cents per diluted share compared with a profit of $29.7 million or 40 cents per diluted share a year earlier.
The dramatic difference between last and this year's third quarter showed "Deadpool & Wolverine" was no match for "Barbie" and "Oppenheimer."
The superhero flick starring Ryan Reynolds and Hugh Jackman debuted this summer and quickly became the highest grossing R-rated film ever with $637 million in domestic box office revenues.
However, "Barbie" and "Oppenheimer," which sent droves to theatres last year for a double-bill, had previously pushed Cineplex to a record third quarter and its highest July box office of all time, when they were released that month.
"Last year was one of our strongest quarters and it was largely driven by 'Barbie' and 'Oppenheimer' that did a significant amount of the business," Jacob said.
"This year, you had a strong product, but it was more movies that were part of the overall top 10."
Aside from "Deadpool & Wolverine," other movies released in the quarter included "Despicable Me 4," "Beetlejuice Beetlejuice" and "Twisters."
The performance of such releases caused Drew McReynolds, an analyst with RBC Dominion Securities, to conclude Cineplex had "a decent quarter" at the box office, despite the "tough" year-over-year comparisons.
Cineplex's revenue for the quarter totalled $395.6 million, down from $414.5 million in the same quarter last year.
Theatre attendance amounted to 13.3 million for the quarter compared with nearly 15.7 million a year earlier.
But there were some bright spots.
Box office revenue per patron in the quarter climbed to $13.19 compared with $12 in the same quarter last year, while concession revenue per patron amounted to $9.85, up from $8.44 a year ago.
"What we found is that there's a lot of enthusiasm to buying at the concession stand and the basket sizes increase," he said.
"There's higher visitation that we're seeing and also the product offering, we've improved."
The increases in spending from Cineplex customers have come despite many economists warning there has been a pullback in consumer spending, even as inflation has cooled and mortgage and interest rates have been reduced.
Jacob attributed his customer's willingness to spend on new features in the company's mobile app, which now allow you to order snacks online that you can walk into a theatre and pick up. The company has also offered popcorn and concession stand deliveries for several years.
This report by The Canadian Press was first published Nov. 6, 2024.
Companies in this story: (TSX:CGX)
Tara Deschamps, The Canadian Press
