Guess I'll Have To Use Up My Gift Cards



The Canadian movie theatre environment has never been what you might call stable. Bankruptcies, consolidations, mergers and hostile takeovers have dotted the landscape for years. And like in all complex systems, entropy is king, and the system becomes more and more simple as time goes on (which in the business world also inevitably produces a monopoly, and those are bad). The largest movie theatre chain in Canada is Cineplex Entertainment. And they are about to get bigger.

But first some history. At the turn of the millennium, there were an assortment of theatre chains operating across Canada, each of various sizes. Chief among them were: Landmark cinemas in the western provinces; Empire Theatres in the Maritimes; Galaxy, Cineplex, and Famous Players operating primarily out of Ontario; and like in most things, Quebec remained largely autonomous. In 2003-05 range, Galaxy was merged with Cineplex, as was Famous Player. The Famous Players locations were split between Cineplex, and Empire, which had decided to expand into the Ontario market (and even further west), and doubled their theatre count in doing so. About this same time, AMC made a push into Canada as well. Last year, AMC announced their bankruptcy and sold 2 of their locations to Empire, while Cineplex acquired 4.

Late last week, it was announced that Empire Company Ltd was selling 46 theatres for $255 million, to focus on their Sobeys brand of grocery stores. Empire president and chief executive Paul Sobey said, "The decision, as difficult as it has been, aligns with the strategic direction of the company to focus our resources on our food-retailing businesses."

$200 million of the deal will be paid by Cineplex Entertainment for all 24 of the Atlantic Canada Empire locations, and 2 Ontario locations, including a former AMC24 located in Kanata near Ottawa. This purchase will elevate Cineplex's ownership of Canadian theatres to 78% of the market, and finally give them a substantial presence in the Eastern market, long dominated by the Empire chain. The remaining 20 Empire locations in Ontario and the Western provinces will be purchased by Landmark Cinemas for $55 million. Landmark had previously been restricted almost entirely to British Columbia and Alberta, with only two Manitoba locations their furthest eastern locations. Two Empire locations on either coast will be sold for real estate, and another two in Ontario will most likely be sold in December, when the leases are up on those locations (it is unknown if a location in Ottawa's much debated Lansdowne area, which is mid construction, is one of these two Ontario locations, or yet a third abnormality).

The move by Empire, which was the second largest theatre chain in the country, was something of a surprise, at least to me. Empire's continued expansion into new markets, investment in new resources and technologies (as recently as last year they were purchasing new IMAX projectors, and building new facilities) had seen their market shares increases, and their stock rise, despite the continued success and dominance of Cineplex (whose Scene points program has increased their brand awareness and loyalty). It seems to me that for Empire there was far less competition in the movie theatre game then in grocery stores, where they have to compete not only with more rivals, but also the Goliath that is the Loblaws Corporation.

So long as there is a place to watch films, then I don't much care where I see them. Except for that one place I really do care a lot about. And in the face of all these millions of dollars being spent to swap out name placards and invalidate my loyalty programs, remember to support your local independent movie theatres. They need it a hell of a lot more then the big guys up there.

And sometimes, they have funnel cake.

Via CP24.
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About MR. Clark

Adopting the descriptor of "successfully unpublished author", MR. Clark began writing things on the internet in 2012, which he believed to be an entirely reputable and civilized place to find and deliver information. He regrets much.

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