Cineplex Entertainment LP

Cineplex Entertainment

Cineplex Entertainment LP (Cineplex Divertissement), based in Toronto, Ontario, is Canada's largest operator of movie theatres, and the dominant chain in virtually all significant markets from British Columbia to Quebec. Cineplex Galaxy Income Fund owns approximately 76% of the company's equity. Onex Corporation is the sole voting partner and owns 27% of the group.

Operations

Cineplex operates 132 locations with at least 1337 screens in locations from British Columbia to Quebec.

Cineplex Odeon Cinemas is the company's most widespread banner, with 53 locations. Virtually all of the company's new constructions in major centres since the merger have been under the Cineplex Odeon banner; the newest locations feature a wide variety of movies and some branded concessions, although most locations (even those built through the late 1990s) have traditional concessions only. Locations run the gamut from small mall multiplexes to large, ultra-modern locations.

Galaxy Cinemas is the predominant brand in mid-sized markets where there has historically been little or no competition, even prior to the Cineplex / Famous Players merger. All have been built since the mid-1990s, although some were renovated from (or replaced) smaller Cineplex Odeon or Famous Players locations. These locations feature six or more screens, branded concessions and stadium-style seating, much like SilverCity. There are 29 Galaxy Cinemas locations.

The Famous Players brand encompasses a number of different banners and theatre designs, many of which were developed during the chain's suburban expansion, including several new locations in power centres, in the late 1990s. The brand's so-called "traditional" theatres, mostly in older downtown or mall locations, have small numbers of screens and traditional concessions; 17 such locations remain, most having been supplanted by larger cinemas.

Twenty-two SilverCity / StarCité cinemas are medium- to large-size locations found in medium-sized cities, suburbs, or secondary neighbourhoods, and are slightly larger than (but otherwise similar to) Galaxy locations.

Four larger suburban Famous Players theatres fall under the Coliseum / Colisée banner, and are notable for their round design. This was the first of the branded concepts introduced by Famous Players. These locations are usually slightly larger than SilverCity theatres and feature additional branded concessions. Coliseums are located in Scarborough and Mississauga, the Montreal suburb of Kirkland, and the west end of Ottawa. (The former Coliseum in Calgary has been acquired by Empire Theatres.)

Three Colossus locations are larger still; this format was developed in direct response to the entry of megaplex operator AMC Theatres into Canada. Locations are in Laval, Vaughan and Langley, which are respectively suburbs of Montreal, Toronto and Vancouver.

Scotiabank Theatres are flagship locations, three of which are in downtown cores (Toronto, Vancouver, and Montreal), with two attached to large malls - West Edmonton Mall in Edmonton and Chinook Centre in Calgary. Aside from the Edmonton location (which was previously a SilverCity), these locations were previously branded as Paramount theatres; however, the Cineplex/Famous Players merger meant that these cinemas could no longer license their name from Viacom's Paramount Pictures. Scotiabank purchased the naming rights to these locations under a five-year agreement; Cineplex Entertainment has replaced Famous Players as the "parent" brand. The Paramount Chinook in Calgary was the last theatre to be renamed Scotiabank on September 21, 2007. Another part of the partnership with Scotiabank was the creation of a loyalty rewards program called SCENE. The program allows patrons to sign-up for a special card that grants them points which can be redeemed for free movies or concession discounts. Customers of Scotiabank also can obtain a SCENE ScotiaCard and a SCENE Scotia VISA.

IMAX screens, currently branded Famous Players IMAX Theatres, are located within eight Scotiabank/Paramount, Colossus, Coliseum, and SilverCity locations.

The Cinema City brand is used at three locations in Winnipeg and Edmonton, which show predominately second-run films.

Cineplex also owns a minority interest in Alliance Atlantis Cinemas, in partnership with the movie distribution unit of Alliance Atlantis Communications. Three locations have been sold or closed; the two other locations have been up for sale since summer 2005.

Cineplex's main competitors are Empire Theatres, which owns most of the theatres divested following the Cineplex/Famous Players merger, and AMC Theatres. However, as Empire is the only major exhibitor in Atlantic Canada, Cineplex and Empire continue to cooperate on select promotions, particularly free or discounted ticket offers on food products. In Quebec, Cinemas Guzzo and Fortune Cinemas are served as competitors.

Suppliers

Since early 2007, Coca-Cola has been the exclusive soft drink supplier to Cineplex theatres, and Hershey candy is available throughout the chain. However, the branding of other concessions presently varies; Cineplex and Galaxy have historically been associated with Pizza Pizza and Yogen Fruz, while Famous Players has served Yum Brands (including KFC, Pizza Hut, and Taco Bell), Burger King, Baskin-Robbins, and TCBY products. Both companies have had New York Fries establishments in their theatres. Cineplex Entertainment is in the process of replacing all Baskin Robbins and stand-alone TCBY locations with Yogen Fruz. TCBY will remain at Famous Players Concession Stands in theaters not served by Yogen Fruz. Cineplex Entertainment has no plans to phase out any of the other branded concessions at this time, although the former Famous Players suppliers are not expected to appear in any new theater installations.

History

Early development

Famous Players Canadian Corporation was founded in 1920 when Paramount Pictures bought Nathan Nathanson's Paramount Theatre chain that was established four years earlier. The Canadian Paramount Theatre chain was not affiliated with the American Paramount Theatres. The Famous Players Theatres chain was always strongly linked with Paramount Pictures and was a wholly owned subsidiary of Paramount Communications by the time that firm was acquired by Viacom in 1994. Some of the most high-profile and popular theatres in the Famous Players chain over the years included the Imperial and the Uptown in Toronto, and the Capitol, the Orpheum, the Stanley and the Strand in Vancouver.

Odeon Theatres of Canada was started by former Famous Players executive Nathan Nathanson and his son Paul in 1941. It was not initially affiliated with the British Odeon Cinemas circuit, but it gained common ownership with that chain following a sale to the Rank Organisation in 1946. Odeon Canada merged with the Canadian Theatres chain in 1978 and became known as Canadian Odeon Theatres from that point on.

On April 19, 1979, Nathan (Nat) Taylor, inventor of the multiscreen theater, and Garth Drabinsky opened the first Cineplex location, an 18-screen complex in the basement of the Toronto Eaton Centre, which was for years, the largest multiplex (in terms of screens) in the world. After successfully challenging the Famous Players/Canadian Odeon duopoly and their exclusive contracts with major studios, they proceeded to purchase Canadian Odeon, having brought on the Bronfman family as a major investor, forming Cineplex Odeon Corporation. There was once again a duopoly, albeit a much more competitive one.

Expansion and competition

In the 1980s, not content with having lept from one location to dozens across the country, Drabinsky began buying up regional circuits throughout the United States, which took the Cineplex Odeon Theatres name as well. Back in Canada, Drabinsky used his new position to aggressively challenge Famous Players Theatres, opening more, ultramodern multiplexes nationwide.

Most famously, Famous Players Theatres allowed the lease on a property containing the entrance of one of its flagship Toronto locations, the Imperial Six, to lapse in 1986. Cineplex immediately took over the lease, denying Famous Players Theatres access to the portion the latter chain already owned outright. Famous eventually sold its property to Cineplex Odeon Cinemas on the condition it never again be used to show filmed entertainment. Cineplex's live theatre division renovated the theatre and, as the Pantages, The Phantom of the Opera ran there for ten years. The theatre is now known as the Canon Theatre.

Cineplex also established a distribution unit, Cineplex Odeon Films, during this period; its assets were largely sold to Alliance Atlantis in 1998.

Throughout the 1990s, Famous Players took the reins of expansion. Under chairman John Bailey, Famous Players re-built its entire infrastructure from 1997 to 2003 with new "megaplex" stadium-seated theatre brands such as SilverCity and Coliseum, which featured extensive food courts and video games. It was also believed to be the first exhibitor in the world to have automated box offices.

Also during this time, AMC Theatres entered the Canadian market, and most of the traditional ties between the existing chains and the major studios began to unwind, putting all three chains in full-on competition in several major markets.

Consolidation

By May 1998, Drabinsky had lost control of Cineplex to the Bronfmans' Seagram, which subsequently merged Cineplex Odeon Theatres with Sony's Loews Theatres. The resulting firm, Loews Cineplex Entertainment, subsequently suffered due to the economic recession of the early 2000s, leading to a buyout led by Onex.

Meanwhile, Galaxy Entertainment Inc. was created in 1999 by Ellis Jacob, a former COO of Cineplex, and Stephen Brown, a former Cineplex CFO. With investments from Onex and Famous Players, the new company focused on smaller markets which were usually served by smaller theatres and old equipment, opening large, major chain-style locations under the Galaxy Cinemas banner.

In October 2003, Loews Cineplex Theatres merged its Canadian operations with Galaxy Cinemas , forming Cineplex Galaxy Cinemas. Mr. Jacob became the chief executive of Cineplex Galaxy Cinemas and Mr. Brown the CFO. Onex was the controllng shareholder of both Loews Cineplex Theatres and Galaxy Cinemas at the time of the merger, but sold its interest in Loews in June 2004. It maintained control of Cineplex Galaxy Cinemas.

In 2004, Famous Players Theatres locations in the Maritimes, none of which were branded-concept theatres, were sold to the region's dominant exhibitor, Empire Theatres. Canadian Odeon locations in the region had been sold to Empire in the late 1970s or early 1980s, prior to the former's acquisition by Cineplex Odeon Cinemas.

On June 13, 2005, Cineplex Galaxy Cinemas announced its acquisition of Famous Players Theatres from Viacom for $500 million or about US$397 million. This deal was completed July 22. To satisfy competition concerns, on August 22 the sale of 27 locations in Ontario and western Canada to Empire Theatres was announced.

On March 31, 2006, Cineplex Entertainment announced it sold 7 more theatres in Quebec to Chelsea based Fortune Cinemas Inc. The assets of Alliance Atlantis Cinemas are still on sale.

Eight days after Cineplex Galaxy Cinemas Announced its Purchase of Famous Players Theatres, Loews Cineplex Theatres and AMC Theatres announced a merger; while AMC Theatres also operates in Canada and will be ranked third behind Cineplex Galaxy Cinemas and the enlarged Empire Theatres, Cineplex Odeon Cinemas and AMC Theatres will remain competitors in Canada, at least for now. The company adopted its current name on October 3, 2005.

On June 29, 2007, Cineplex Entertainment announced its purchase of three Cinema City theatres in western Canada. Two theatres in Winnipeg and one in Edmonton were absorbed into Cineplex Entertainment in mid-July 2007.

Controversy

In an action described as "commercial censorship", Cineplex rejected a cinema ad campaign arranged by Campus Crusade for Christ, tied to the film version of the Da Vinci Code. The 10-second ad, without overt religious content, invited viewers to a CCC-linked website for an alternative point of view to that of the movie. In canceling the campaign on 17 May 2006, Cineplex officials stated that the chain has a policy against such ads, as they are potentially offensive to religious sensibilities.

See also

References

  • "A little more free speech, please", editorial, Montreal Gazette, 31 May 2006

http://www.canada.com/montrealgazette/news/editorial/story.html?id=eaf7a2a8-4526-4d31-a8ef-df6d609a8da5

Cineplex's announcement of its sale to Fortune Cinemas Inc.

  • http://www.thestar.com/Business/article/230888

Cineplex's announcement of its purchase of 3 theatres from Cinema City Inc.

External links

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