Palace has poor Christmas

By Paul Allen Business reporter allenp@jamaicaobserver.com

Wednesday, February 22, 2012

Despite hopes that Christmas would help to boost revenues, Palace Amusement Company failed to generate box office buzz over the holidays.

The company lost $8.5 million in its second quarter, October to December, due to increased administrative and direct expenses, according to its unaudited financial statements. The unaudited financials take the company's first two quarters, July to December, into consideration.

Direct expenses for the company totalled over $157 million for the 3-month period when compared to corresponding period of the previous year. The quarter also saw administrative expenses increasing marginally to $35 million,some $3 million more than for the same period in 2010.

The two quarters saw total administrative expenses rising by more than 12 per cent to $72 million.

The company was still able to earn a profit of just under $3 million after tax for the six-month period. This profit is due largely to its first quarter (July to September) revenues.

The theatre-going audience has fallen off in the last few years due to growing piracy activities. That, coupled with increasing ticket prices, has resulted in declining box office receipts across the four cinemas operated by Palace island-wide.

Carib 5 in Cross Roads continues to be the company's greatest earner. It grossed $14 million more than the collective $104 million pulled in by Palace Cineplex (St. Andrew), Palace Multiplex (Montego Bay) and Odeon Cineplex (Mandeville).

Ticket prices went up by $50 in December to deal with rising costs, especially that of electricity. "We agonised over it", Melanie Graham, marketing manager of Palace, told Business Observer at the end of last year.

New energy-efficient air-conditioning units had also been ordered for the theatres to help reduce the cost of electricity, although Graham said the biggest problem was vendors who sell DVDs cheap, saying they "don't have this kind of overhead".

Earlier this month, the company launched Cine Zone in partnership with SportsMax. It showed live screening of a major football match in the English premiere League. With another scheduled match to be shown on the big screen on March 4, it is expected that showing "alternative content" will soon be done at all four cinemas. However, that is dependent on the completion of upgrades being done on some of the screens used.

Palace Amusement has earned about $9 to $10 million for each of the past two years.