TORONTO — Cineplex Inc.'s chief executive says he doesn't see the recent Los Angeles wildfires nor tariffs U.S. President Donald Trump has threatened on Canadian goods as spelling major trouble in his business.
Ellis Jacob said the year's film releases are on track because studios were largely unscathed when flames roared through Hollywood last month.
The Toronto-based cinema chain is similarly expecting little impact from 25 per cent tariffs on Canadian goods Trump put a month-long pause on in early February.
"I've lived through a number of recessions in our business and our business actually does better when economic times are tougher because people and guests travel less, they stay closer to home, and we become one of the cheaper forms of having a good time outside their place of residence," Jacob said in an interview on Tuesday, noting how much cheaper it is to go to a movie than see live sports.
"We've seen that happen a number of times over the last 25 years."
His remarks come as the wider business community is staring down several economic headwinds, while the film sector works to bounce back from the 2023 U.S. writers and actors guild strikes, which dimmed movie sets for months and upended the 2024 release schedule.
As the industry rebounded, last year ended with a steady stream of film releases including highly anticipated sequels and plenty of Oscar bait.
"The three big ones that made a difference were 'Wicked,' 'Gladiator II' and 'Moana 2,'" Jacob said. "They were all the drivers of the U.S. Thanksgiving period, and that worked out really, really well for us."
The trio of films helped Cineplex deliver fourth-quarter earnings of $3.3 million or five cents per share. The result for the period ended Dec. 31 compared with a loss of $9.0 million or 14 cents per share a year earlier.
The company's revenue also rose during the quarter to $362.7 million, up from $315.1 million in the last three months of 2023, while theatre attendance totalled 11.1 million, a jump from 9.6 million a year earlier.
Box office revenue per patron followed a similar pattern, reaching $13.26, up from $12.90 in the same quarter last year, while concession revenue per patron was $9.41, up from $9.28.
Analysts are now watching to see whether that momentum will be threatened by either the California fires or the recent trade drama, which could raise prices on consumer goods and cause Canadians to rethink discretionary purchases like movie tickets.
Cineplex executives, however, are confident their business won't face much upheaval.
Gord Nelson, the company's chief financial officer, reminded analysts on a Tuesday call that Cineplex is fairly insulated from the recent tariff threats because it doesn't transfer physical goods across borders.
About 99 per cent of the company's revenue is generated in Canada through operations and facilities in the country, he said.
Film rentals, labour and occupancy costs make up the bulk of the company's expenses and are "not caught by any current tariff discussions," Nelson said.
Cineplex will watch out for potential impacts and "sourcing opportunities" for items ensnared by tariffs, like food, but Nelson doesn't foresee any material impacts.
Jacob has a similar outlook.
"Most of our costs are not impacted by the tariffs, maybe popcorn would be one, but it's not a significant impact," Jacob said.
While Canadians have recently rushed to patronize homegrown brands to fight the U.S. tariff threats, he said Cineplex hasn't been facing questions about where it gets its concession stand snacks.
Audiences also don't seem to be factoring in a film's origins to their viewing decisions and he doesn't make much of chatter about whether the country's film sector will land in Trump's crosshairs as he works to repatriate American industries.
"Some are concerned about whether the movies will be made in Canada," Jacob said.
"If they're not made in Canada they have to be made somewhere, and we'll still be playing those movies."
Canada's film sector has been growing steadily for decades with the country hosting sets for "Deadpool," "Interstellar," "Suicide Squad" and the upcoming "Tron: Ares."
The wide swath of countries supporting film production helped the industry weather the California wildfires.
"Superman was filmed in Atlanta," Jacob said of the upcoming superhero flick starring David Corenswet as the Man of Steel.
"Almost 95 per cent of the stuff is done outside of California."
This report by The Canadian Press was first published Feb. 11, 2025.
Companies in this story: (TSX:CGX)
Tara Deschamps, The Canadian Press
