Canadian movie theater chain Cineplex (TSE:CGX) has announced that it will appeal a government fine imposed on it for what’s been called “deceptive marketing” practices.
Canada’s Competition Tribunal fined Cineplex C$38.9 million for charging moviegoers an “online booking fee” of C$1.50 per ticket. The fee was not properly disclosed, according to the government tribunal that levied the fine and ordered Toronto-based Cineplex not to impose similar fees for at least 10 years.
The fine was issued as Canada’s federal government seeks to crackdown on so called “junk fees” and price gouging that is seen as hurting consumers financially. Cineplex has now said that it plans to appeal the fine.
The Decline of Movie Theaters
Cineplex and other movie theater chains, such as AMC Entertainment (AMC), have imposed new fees and raised prices on concessions as they try to recoup some of the money lost during the Covid-19 pandemic when their theaters were forced to close or operate at reduced capacity.
Movie theater chains such as Cineplex are also under threat from streaming services that are keeping audiences at home and reducing attendance. Box office receipts in May of this year, at the start of summer, totaled $520 million, roughly on par with the $510 million generated at the box office in May 1998, more than 25 years ago.
Is Cineplex a Good Stock to Buy?
Wall Street analysts have a Strong Buy consensus rating on TSE:CGX stock based on six Buy and one Hold recommendations made in the past three months. After a 21.67% rally in its share price over the past year, the average TSE:CGX price target of C$18.77 implies 76.97% upside potential.