NEW YORK — Red ink flowing from United Artists Theatre Group ran heavier in the second quarter, as higher film rental costs and lower attendance increased UA’s net loss 15% to $9.2 million on 6% lower revenue of $156.6 million.
Highlighting UA’s performance more acutely, the exhibitor’s earnings before interest, taxes, depreciation and amortization (cash flow) dropped 34% to $13.3 million in the quarter.
Like Cineplex Odeon Corp. and AMC Entertainment in recent weeks, UA said its operating performance was hurt mainly by the relatively short run of several films released in the quarter, which effectively raised film rental costs and hurt attendance.
UA’s admissions revenue fell 6.6% to $107.3 million, while concession revenue dropped 4% to $44.2 million. While many other exhibs reported higher admissions rev in the quarter, the growth was due in most cases to an increase in the number of screens from building programs and acquisitions.
UA chief operating officer Kurt Hall said attendance across the industry fell. “There wasn’t as much revenue in the quarter, and what revenue there was came quicker in the runs of pictures, so film costs were up.”
Hall added that the third quarter picture is looking brighter, and he said, “It is not necessarily appropriate to draw any significant conclusions from one quarter.”
UA’s earnings for the quarter ending in June were also affected by a restructuring charge of $500,000, reflecting the continuing shakeup in the company, as well as an $8.5 million increase in depreciation charge from the buyout of two theater leases and a writedown of the value of theaters that have been put on the market.
These charges were offset by an $11.8 million profit on the sale of UA’s Hong Kong theater properties. UA is using the $17.5 million raised from the sale of the Hong Kong properties, and another $24.75 million it will get from selling its Mexican and Argentinean properties, to renovate theaters in key markets.