TORONTO – Cineplex Inc. is selling its digital signage subsidiary for $70 million.
The theatre giant announced Thursday that Cineplex Digital Media will be transferred to U.S.-based Creative Realities Inc.
Both companies offer signage for a wide range of businesses including retailers and banks as well as digital menu boards for restaurants.
While the deal will see Creative Realties takeover the screens Cineplex controls, the Canadian company will remain the advertising sales agent for its digital-out-of-home networks in the country, which span malls and office buildings.
Cineplex chief executive Ellis Jacob said the arrangement will strengthen his company’s balance sheet and provide it with the kind of capital it would need for share buybacks, debt reduction and other unspecified corporate priorities.
“We’ve always been looking at opportunities,” Jacob said on a call with analysts, where he revealed the deal was months in the making. “It was a good opportunity to get the cash and look at other ways to invest the money.”
Cineplex Digital Media was started in 2009 as some consumers started gravitating toward streaming movies, putting pressure on the company to diversify its business beyond theatre exhibition.
In the years after Cineplex Digital Media was launched, it started the Rec Room, an arcade restaurant concept, and later, the Junxion, a venue that built on the Rec Room model by adding theatres to entertainment spaces.
However, the last year has seen Cineplex double down on entertainment by dumping many of its ancillary businesses.
It revealed in February that it sold its digital rentals business to a subsidiary of CosmoBlue Media for “nominal proceeds.” The digital rentals business launched in 2008 as a way to sell DVDs and Blu-ray discs online.
Cineplex Digital Media was the company’s last business-to-business subsidiary, Jacob said.
The deal is expected to close in the coming weeks, subject to regulatory approvals and other customary closing conditions.
