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The secret to juicy profits? Give people what they want

Village Roadshow (ASX: VRL) has the slogan “people will always go out.” It’s not the catchiest corporate slogan you might ever have read but it makes the point that humans desire community and entertainment.

Rupert Murdoch has made billions of dollars through his Twenty-First Century Fox (ASX: FOX) and News Corp (ASX: NNC) empires, however there are also some lesser followed entertainment companies with impressive track records of growing their profits.

Amalgamated Holdings’ (ASX: AHD) operations consist of cinemas, hotels, Thredbo Alpine Resort and other entertainment venues. The company reported 2.1% growth in revenue for the financial year (FY) ended 30 June and normalised net profit after tax of $82.9 million, up 9.8%. For the 12 months the board has declared dividends worth 42 cents, a 3 cent increase on the prior year.

Ardent Leisure (ASX: AAD) is the owner and operator of some of Australia’s premium leisure assets including Dreamworld and WhiteWater World. The company also owns AMF bowling centres and Goodlife Health Clubs. Ardent reported a 15% rise in revenue for FY2013 and a jump in core earnings of 19.2% to $50.3 million although a capital raising to help fund growth strategies during the year meant that on a per share basis earnings increased just 1.8% to 13.14 cents per share (cps). The dividend was also raised 2.6% to 12 cps.

Village Roadshow delivers shareholders a NPAT up 8.2% to $57.2 million and earnings per share up 5.2% to 36.2 cps. For the full year, the company, which has operations spanning theme parks, film distribution, film production and cinema, paid dividends of 26 cps, up 18.2% year on year.

Foolish takeaway

Village Roadshows’ profits are up 128% since 2009 – which is certainly impressive and goes to show that there are juicy profits to be made by selling people the entertainment that they want. With human nature unlikely to change anytime soon, entertainment companies will remain an attractive sector to invest in.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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