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Cineplex profit jumps on higher attendance, more concession revenue

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A trio of superhero movies, increasing audience numbers and a focus on concession stand offerings helped Cineplex Inc. report a record revenue in its second quarter.

The Toronto-based entertainment giant said Friday that the strong box office performance of Avengers: Infinity War, Deadpool 2 and The Incredibles 2 contributed to all-time high revenues of $409.1 million for the quarter ended June 30, up about 12 per cent from the year before when it made $364.1 million.

The company's net income also jumped significantly, increasing 1,670 per cent to $24.4 million, or 38 cents a share, this quarter from $1.4 million last year.

Analysts had estimated $414 million of revenue and 24 cents per share of net income, according to Thomson Reuters Eikon.

"Cineplex reported record second quarter results including increases in revenue across all reportable segments," president and CEO Ellis Jacob said in a statement

"In addition to growing our revenue sources, we continue to focus on optimizing our cost structure across our ecosystem, having implemented a cost reduction program during the second quarter with the expectation of realizing annualized cost savings of $25.0 million by the end of the year."

The company announced in April that it would lay off "a number of" full-time workers to eliminate duplicate roles following several business acquisitions.

The layoff came as Cineplex has been focused on minimizing the unpredictability of the box office and competing with the popularity of on-demand streaming services by putting attention on its signage business and expanding gaming and restaurant brands it operates, including the Rec Room, Playdium and forthcoming virtual sports complexes TopGolf.

It's also looking at food as a way to nab more customers. In June, Cineplex partnered with Uber Eats to launch a popcorn and snack delivery program in 60 communities throughout Ontario, Alberta, B.C. and Quebec in June and also toyed with expanding concession stand offerings and alcohol in some markets.

On Friday, Cineplex reported that concession revenue per patron rose 9.3 per cent to $6.59.

Box office revenue per patron also climbed 4.4 per cent to $10.82 and attendance rose by 5 per cent to 17.3 million from 16.5 million.

Cineplex said 24 per cent of its box office revenues were attributable to Avengers: Infinity War. Deadpool 2 represented 11.3 per cent, Incredibles 2 9.6 per cent, Jurassic World: Fallen Kingdom 6.8 per cent and Solo: A Star Wars Story 6 per cent of box office revenues.

Cineplex shares were ahead by 1.9 per cent in morning trading Friday on the TSX, climbing to $30.86

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Consumers face slow rollout of cannabis stores in BC

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JAK Group CFO Mike McKee has paid B.C. government application fees on five of the eight stores that he plans to open | Rob Kruyt

Entrepreneurs eyeing the arrival of October 17, when Canada legalizes recreational marijuana, are frustrated with delays and government bureaucracy that have combined to ensure that B.C. will not have any privately run cannabis stores for months to come.

A single British Columbia Liquor Distribution Branch-run (BCLDB) cannabis store is slated to open in Kamloops on the day legalization takes effect, and the government has promised to have its e-commerce platform operational.

The BCLDB told Business in Vancouver in an email, however, that consumers should expect “reduced volumes and assortment of non-medical cannabis.”

That is because the four largest licensed producers that agreed to supply the BCLDB have said that they will not be shipping it their full product commitments by the deadlines set out in their supply agreements, according to the BCLDB.

Many licensed producers that intend to supply the recreational market face challenges such as licensing delays, crop failures, lower-than-expected harvest yields, a shortage of packaging, product scarcity owing to exports and general problems in the supply chains.

Private stores will have an even slower start.

As of October 10, government data showed that entrepreneurs had paid 173 application fees for retail licences across the province. Of the 111 paid applications that government workers deemed to be complete, only 62 have been forwarded to local governments or First Nations to approve.

None of those applicants have received conditional approval, much less had a licence issued.

“Some municipalities have decided that they will put it on the back burner,” said JAK Group CFO Mike McKee, who has paid the B.C. government fees for five applications and had three of those forwarded to municipalities for approval.

McKee said that a year from now, he would like to operate eight private cannabis stores, the maximum number the province allows any ownership group to operate. 

“In Coquitlam, they’re going to wait until after the [October 20] municipal elections before they get down and deal with the issue,” he said. “Right now, there’s no real opportunity.”

Another challenge in some municipalities, he said, is that city councils have told him that they want the process to include spot zoning. That means that instead of allowing a cannabis store to simply open in a commercial area zoned for retail, that store would have to go through an additional rezoning process that includes public hearings.

“In a lot of areas, it is not going to be until spring or summer when you’ll see these types of stores opening up,” he said.

In contrast to McKee, who has never operated a cannabis store, many entrepreneurs have long operated dispensaries that federal law has deemed illegal.

Some of those people are slashing prices to liquidate merchandise and close so they can embark on a legal application, while others are shifting merchandise so that their stores sell only legal paraphernalia.

Weeds Glass and Gifts owner Don Briere told BIV that he will either close his stores in Kamloops, Williams Lake, Sechelt and North Vancouver or temporarily sell only accessories before fully closing them and applying for legal licences.

Don Briere - chung chow

(Image: Weeds Glass and Gifts owner Don Briere samples some of his product outside one of his stores | Chung Chow)

He will keep his four Vancouver stores open pending the outcome of a petition against the City of Vancouver in BC Supreme Court that involves dozens of dispensaries, and also includes provincial and federal attorneys general as participants.

The dispensary petitioners argue that city and federal laws unconstitutionally limit reasonable access to medical marijuana and that the city therefore has no jurisdiction to issue licences.

“They are completely, totally ill-prepared,” Briere said of governments at all levels. •

gkorstrom@biv.com

@GlenKorstrom

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Paul Allen, co-founder of Microsoft, is dead at 65

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Allen was 65, his investment firm Vulcan said in a statement announcing his death. He died in Seattle from complications related to non-Hodgkin’s lymphoma two weeks after Allen said he was being treated for the disease.
Non-Hodgkin’s lymphoma, like the less-common Hodgkin’s disease, is a cancer of the lymphatic system.
“My brother was a remarkable individual on every level,” Allen’s sister, Jody Allen, said in a statement on behalf of his family. “He was a much loved brother and uncle, and an exceptional friend.”
Allen founded Microsoft (MSFT) with Bill Gates in 1975, several years after the two met as fellow students at a private school in Seattle. Allen left the company in 1982 after he was diagnosed with Hodgkin’s disease.
“I am heartbroken by the passing of one of my oldest and dearest friends, Paul Allen,” Microsoft founder Bill Gates said in a statement Monday. “Paul was a true partner and dear friend. Personal computing would not have existed without him.”
Microsoft CEO Satya Nadella called Allen’s contributions “indispensable.”
“As co-founder of Microsoft, in his own quiet and persistent way, he created magical products, experiences and institutions, and in doing so, he changed the world,” Nadella added.
Paul Allen in New York, Oct. 15, 2015. Joshua Bright/The New York Times
Allen didn’t slow down after leaving Microsoft. He stayed on the company’s board of directors for several years while establishing his own philanthropic foundation, along with Vulcan, his investment firm.
He bought two professional sports teams: the NBA’s Portland Trail Blazers and the NFL’s Seattle Seahawks. He was involved with both until his death.
“Paul Allen was the ultimate trail blazer,” NBA Commissioner Adam Silver said in a statement, adding that Allen was one of the league’s longest-tenured owners. “He was a valued voice who challenged assumptions and conventional wisdom.”
NFL Commissioner Roger Goodell called him the “driving force” behind keeping the NFL in the Pacific Northwest. In a statement, Goodell said Allen “worked tirelessly alongside our medical advisers to identify new ways to make the game safer and protect our players from unnecessary risk.”
Friends, family and other admirers also praised Allen for his significant philanthropic contributions.
The technologist, who Forbes says was worth $20.3 billion at the time of his death, donated more than $2 billion to charity. He also founded several organizations, including the space transportation company Stratolaunch, the Allen Institute for Artificial Intelligence and another Allen Institute that focuses on bioscience. Vulcan, which he founded, managed his business and philanthropic interests.
“We shared a belief that by exploring space in new ways we can improve life on Earth,” said Virgin Group founder and CEO Richard Branson.
“All of us who had the honor of working with Paul feel inexpressible loss today.” said Vulcan CEO Bill Hilf. “Today we mourn our boss, mentor and friend whose 65 years were too short — and acknowledge the honor it has been to work alongside someone whose life transformed the world.”
Allen was also known for his love of music. In a 2013 interview with Guitar Player, Allen recalled how listening to “Are You Experienced” by the Jimi Hendrix Experience prompted him to start playing guitar.
“That was a life-changing moment,” he told the publication. “I think I was 14 when I heard it. That was just music from another planet.”
In 1995, Allen even loaned money to Hendrix’s family during a legal battle to regain rights to the guitarist’s image and music, The Washington Post reported. He also funded a $100 million museum for music and pop culture in Seattle, now called the Museum of Pop Culture.
Musician and music producer Quincy Jones mourned Allen’s death Monday evening, called him a “dear friend” and “killer guitar player.”
In his later years, Paul Allen took up a number of other projects -— from the charitable to the adventurous.
In 2014, he pledged at least $100 million to help fight the Ebola virus. In 2017, he pledged $30 million to house Seattle’s homeless.
Allen was still finding other ways to leave his mark on the world this year. A team of explorers led by him discovered wreckage in March from the USS Juneau, a World War II cruiser sunk by a Japanese torpedo in 1942.
His efforts to build the world’s largest plane were also recently profiled by Paul Levy, an editor at large at Wired Magazine. Speaking at the WIRED25 conference in San Francisco on Monday, Levy praised Allen’s accomplishments and said he would leave a mark.
“He and his partner Bill Gates [were] instrumental in pushing the needle and helping make all the things happen that we’re talking about today,” Levy said. “His imprint will be on all of us.”
Mark Cuban, the billionaire entrepreneur and owner of the Dallas Mavericks, also tweeted his condolences.
“You were a good man and will be missed,” Cuban said. “Rock and Roll Heaven just got a lot better.”

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