Cineplex Inc. (TSX:CGX) recently announced that its fourth quarter and full-year 2017 results will be released on February 22, 2018. The stock has declined 13.6% in 2018 and was down 0.77% towards the end of the noon hour on January 26. Investor sentiment has waned after its third quarter results and broader trends have emerged that show traditional cinema may be in crisis.
According to the National Association of Theatre Owners (NATO), about 1.24 billion tickets were sold in 2017 in the United States and Canada. Ticket prices rose 4% on average, which was enough to keep box office revenue flat as more releases are offered in 3D and large screen formats. However, this represents the lowest theatre attendance since 1993, when Jurassic Park was the number one movie in the world.
The meteoric rise of streaming services has compounded this crisis. Netflix, Inc. released its fourth quarter and full-year 2017 report on January 22. Domestic subscribers rose 10.7% year over year to a total of 54.75 million. International subscribers jumped 41.6% to 62.83 million. Tech giants like Amazon.com, Inc. and Facebook Inc. are also beginning to enter the fray and pledging billions to produce original content.
Cineplex announced a dividend of $0.14 per share on January 19, representing a 5.2% dividend yield. An uptick for the box office in the fall and early winter should yield better results for the fourth quarter, but Cineplex is increasingly becoming a strictly income play going forward. Expect the cinema to continue its steady decline as streaming continues to pry away consumers.
