Cineplex Expands UltraAVX Format, Says Customers "Love" It

Cineplex Galaxy Income Fund (CGX.UN.T), Canada's biggest film exhibitor, said its premium UltraAVX theaters are a hit with customers and announced locations for seven more to open before the end of the year. The announcement comes just a few weeks after AMC Entertainment Inc. opened its first crop of IMAX Corp. (IMAX) theaters in Canada.

Cineplex, IMAX's biggest customer in Canada with nine screens, used to have IMAX exclusivity in most of the country. But the partners failed to come to a new arrangement, which opened the door to AMC, IMAX's biggest operator in the U.S. AMC opened its first four IMAX theaters in Toronto and Ottawa last month.

Four of Cineplex's UltraAVX theaters are already operating in Ontario and Alberta, and the new locations - all of which are expected to open by Dec. 17 - will be in Ontario, Quebec and British Columbia.

Cineplex spokeswoman Pat Marshall said the company announced back in June that it would open the additional UltraAVX theaters, which feature larger-than-average screens, enhanced sound, and reserved seating. She said multiplexes in Toronto and Montreal slated for UltraAVX already have IMAX theaters, which will remain in place.

"We are very pleased with the results, but most importantly our guests 'love' UltraAVX," she said, noting that Cineplex offers customers a variety of entertainment technologies, including IMAX, 3D, and motion seats from D-Box Technologies Inc. (DBO.A.V).

With AMC moving in on Cineplex's turf, that means the IMAX theater-operator customers have to duke it out for films because two IMAX venues in the same zone typically can't show the same movie. For instance, Cineplex's flagship IMAX theater in downtown Toronto won't be showing the next "Harry Potter" film because the new IMAX at the nearby AMC location got it instead. However, Cineplex has snagged the next title on the IMAX slate, "Tron Legacy," according to show schedules.

An industry observer said IMAX, in its desire to expand its commercial network and support all customers through market exclusivity agreements, also contributed to the rise of such competing premium formats as exhibitors wanted to charge higher ticket prices in locations they were prevented from installing an IMAX. With these home-grown formats performing well, it's a safe bet that exhibitors will continue to roll them out, the observer added.

In the U.S., the top five exhibitors, all of which are IMAX customers, have launched or are preparing to launch large-format-style theaters: Regal Entertainment Group (RGC) has the "RPX," AMC has the "ETX," Cinemark Holdings Inc. (CNK) has the "XD," Carmike Cinemas Inc. (CKEC) has "The BigD," and Rave Motion Pictures, which announced a multi-theater JV deal with IMAX a couple of months ago, just unveiled plans to debut its own big-screen format in mid-November. Rave has yet to announce a name for the format.

These auditoriums use "off-the-shelf" digital technologies and lack the special formatting, audio/visual enhancements, and physical configuration of the trademark IMAX Experience. IMAX tickets are usually a little more expensive than the other large formats.

IMAX declined to comment.

Company Websites: http://www.cineplex.com, www.imax.com

-By Andy Georgiades; Dow Jones Newswires; 416-306-2031; [e-mail]