Cineplex Entertainment CEO Ellis Jacob forges ahead while competitors falter

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Cineplex Entertainment president and CEO Ellis Jacob likes to tell the story about the time he met Aishwarya Rai Bachchan, one of India’s most glamorous movie stars, in Toronto.

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Jacob told the Georgia Straight that during a lunch with Rai Bachchan and her actor husband, Abhishek Bachchan, he had his picture taken with her. It later came in handy when he took a train trip in India.

“Anytime I had trouble, I’d just pull it out and I would show them,” Jacob recalled with a laugh by phone from his office. “Whatever the hell you wanted, they would do for you.”

Jacob was born in Calcutta (now Kolkata), so he’s familiar with the mania surrounding Bollywood movie stars.

He admits to falling under their spell as a boy when he saw legen­dary actor-director Raj Kapoor’s first colour film, Sangam, which was released in 1964.

Under the leadership of Jacob, who speaks Hindi, Cineplex has pioneered showing Hindi-language Bollywood and Punjabi movies in mainstream Canadian theatres, most notably Strawberry Hill in Surrey. It’s one of many innovations that have kept his company growing at a stunning rate while others have been in retreat.

“When we went public 11 years ago, we had 3,500 employees,” Jacob said. “Today, we have 11,000 employees.”

Dhoom 3, a Hindi blockbuster starring Bollywood hunk Aamir Khan, grossed more at one Toronto Cineplex theatre than anywhere else in North America, according to Jacob.

At Strawberry Hill, he said, Hindi and Punjabi movies will sometimes generate more revenue per screen than Hollywood fare.

“I’m very much about diversity and showing movies from all parts of the world, because I think our community in Canada is so diverse.”

Cineplex has invested heavily in premium-priced VIP theatres, UltraAVX technology with superlarge screens, and Dolby sound systems that surround the viewer.

In addition, the corporation has launched its own food and drink brands and grown its media revenue in different ways, including ads shown before screenings.

“When we started 11 years ago and went public, we were in the movie and food business,” Jacob said. “Today, we are in multiple businesses.”

In 1999, Jacob and Steve Brown, both former Cineplex Odeon executives, formed Galaxy Entertainment.

Four years later, Galaxy merged with Cineplex; two years after that, it took over Famous Players, becoming Cineplex Entertainment in 2006.

Cineplex began operating the multiplex at International Village in 2010, and last year it took over the Fifth Avenue Cinemas and the Park Theatre in Vancouver.

It plans to open an 11-theatre multiplex in 2016 near the Canada Line’s Marine Drive Station.

When asked why Cineplex didn’t buy the now-defunct Granville 7 Cinemas, which hosted many international festival films, Jacob responded that this was one of the theatres his company dropped to obtain regulatory approval to merge with Famous Players. Because the Granville 7 closed, many film festivals are finding it difficult to secure venues.

“It wouldn’t have been right for me to go back and tell the government, ‘I’m doing this,’ ” he said. “It didn’t make a lot of sense. The theatre also needed a lot of work.”

Jacob spoke to the Straight in advance of the annual ShowCanada conference, which takes place in Whistler from Tuesday to Thursday (June 3 to 5). Designed to showcase the cinema industry, it includes a trade show and an awards dinner.

Even though Jacob is one of the Canadian entertainment industry’s most influential executives, he was largely unknown until a couple of years ago, when he shaved his trademark mustache and wore a toupee to appear on the TV show Undercover Boss Canada. He explained that it took 80 hours to complete a one-hour episode because he had to work six 12-hour shifts at a Cineplex concession.

UltraAVX technology enables films to be seen on larger Cineplex screens.

He said it gave him “great insights” into the industry.

In recent years, there’s been a growing number of baby boomers attending movies.

“That’s what we’re trying to convince Hollywood: don’t forget the 50-plus have disposable incomes, they’ve got time, they want to get entertained, and they don’t want to spend their time in a bar.”

In the most recent quarter, Cineplex revenue reached $280 million, up 12.9 percent from the same quarter a year ago. Food-service sales were up 14.8 percent, and box-office take jumped 7.6 percent.

Media revenue rose a whopping 49 percent, though it still represents less than 10 percent of overall sales. This includes digital media provided to other corporations, such as Tim Hortons, McDonald’s Canada, Walmart, RBC, Scotiabank, and BMO.

“It will be a larger contributor to what we do,” Jacob predicted.

He said he hopes that within five years, 30 percent of box-office revenue will come from “other than Hollywood movies”.

Meanwhile, Cineplex has started extending company brands outside its theatres: there’s a YoYo’s Yogurt Café in Guelph, Ontario, and a Poptopia is about to be launched in Toronto.

“We’ve got 80 million people coming through our doors,” Jacob stated. “We can build brands. We can create value for these people who use our Scene loyalty program, which has 5.6 million members. We’ve got nine million who downloaded our mobile app. So there’s lots of opportunities for us.”

Last year, Cineplex bought 24 theatres in Atlantic Canada. Even though revenues were higher this past quarter than in the first quarter of 2013, net income was significantly lower on a year-to-year basis: $5.1 million compared to $8.8 million.

Jacob said that unlike many of his U.S. competitors, he doesn’t fret over the next quarter’s results because he’s operating on a longer time horizon.

“It would be nice if we weren’t in all these businesses,” he said. “We’d be reporting higher earnings today, but it’s what this company is going to look like three to five years from now.”

Almost 40 percent of revenues come from what he called “premium offerings”, including the VIP cinemas, IMAX, and 3-D films. Cineplex has also named theatres after companies—a local example is Scotiabank Theatre Vancouver—which is another way to generate income.

He said that Cineplex focuses on providing better entertainment in its theatres than people can get at home, noting that attending movies is a “social experience”.

“My analogy with everyone is you have food in your refrigerator,” he said. “Do you stop going out to eat?”

Jacob also maintained that going to a movie isn’t expensive in comparison to other forms of entertainment. He pointed out that the ticket price at Scotiabank Theatre Vancouver is lower than it was 10 years ago. And he said that ticket prices in Canada are half what people pay in the U.K. and less than half of what patrons fork over in Australia.

“I think we provide one of the best values,” he said. “Where can you get a $100-million experience for the amount it costs you to park for two hours?”

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