File
Palace Amusement Company's flagship cinema, Carib 5, is all aglow at the reopening of this Kingston landmark in June of 1997.

Richard Deane, Business Reporter

Despite its struggles in recent years to return a profit, Douglas Graham's Palace Amusement is not only confident of the viability of the movie theatre business in Jamaica, but will invest millions next year to introduce 3D cinemas to the island.

"We will be moving to an exciting new phenomenon which will make the movie-going experience virtually three dimensional," Graham told the Financial Gleaner in written answers to questions posed after Palace's recent annual general meeting.

"Patrons will wear 3D glasses and the technology will be accessible via digital signal, DVD or satellite transmission," he added.

However, neither Graham nor other Palace spokespersons were willing to disclose the projected investment for the project, the specifics of the technology to be employed, or precisely when the 3D theatres will be operational.

"More on that later," said Graham.

The more than half a century old Palace has, over the past two decades or so, been forced to shrink its raft of movie houses to four multiplexes in response to competition for audiences from home entertainment systems and movie piracy, including via cable television. Yet, Graham has consistently invested in technological upgrades and the quality of his facilities.

Shareholders in the listed company have, nonetheless, endured a difficult ride.

In the financial year up to June, the company returned an after-tax loss of $682,000, which was an improvement on the loss of approximately $2.4 million of a year earlier.

Box office receipts

That loss was on revenue of $336.4 million, a jump of $41 million or 13.8 per cent over the previous year. About 62 per cent of Palace's revenue comes from box office receipts, with the remainder accounted for in food concessions, movie rentals and advertising.

Expenses on the other hand increased a relatively modest nine per cent to $276 million, returning an opera-ting profit of $12.2 million. However, the company was forced into a loss position after financing costs of $3.55 million and taxation of $9.35 million were taken into account.

In the first quarter of the new financial year, between July and September, revenue of $122 million, was up $16.5 or nearly 16 per cent over the corresponding period a year earlier. Profit for the quarter was $9 million.

This uptick apparently helps to fuel Graham's confidence in the future of the business and viability of cinemas - once the economy is in decent condition and Palace is protected from piracy.

"Our product is a critical part of the entertainment industry and fits well into the Jamaican landscape," Graham said. "To a large extent, success in our industry is dependent on disposable income."

He added: " Young people make up a large segment of the market, and this group is certainly more susceptible to the vagaries of the economy. So, when the economy is as tight as it has been, this will definitely affect the bottom line."

Source: Financial Gleaner, dated Friday, December 14, 2007, to be published on Monday, December 17, 2007.