~ Companies Defend Their Merger~
~ Combined Company Will Benefit Advertisers
and Theatre Circuit Partners~
National CineMedia, Inc. (NASDAQ: NCMI) (the “Company” or “NCM”)
and Screenvision, LLC (“Screenvision”) defended their proposed
merger in response to the complaint filed by the U.S. Department of
Justice (“DOJ”) seeking to block their combination.
NCM Chairman and CEO Kurt Hall said, "I am obviously very
disappointed that the DOJ did not see the benefits of the new
combined company to our advertising clients and their agencies and
our exhibitor partners. We look forward to demonstrating those
benefits. Combining NCM and Screenvision will enable us to offer
advertisers a better product with the broader reach, ubiquitous
geographic coverage, more advertising impressions, enhanced
targeting capability, and lower costs that advertising clients and
their agencies seek. With a better product we will generate more
advertising revenue for our theatre circuit partners. Advertisers,
exhibitors and shareholders all will benefit from this combination
which will better enable NCM 2.0 to compete in the increasingly
competitive video advertising marketplace.”
Screenvision CEO Travis Reid noted, “The merger preserves all
the desirable attributes of cinema advertising while allowing the
combined company to compete more effectively on dimensions
important to advertisers. Together, NCM and Screenvision will be
more competitive in the expanding video advertising marketplace and
provide long term incremental advertising revenue to our theater
partners.”
Benefits of the Combined Company
Greater
Reach
Advertisers place a premium value on reach.
The merger will increase the number of theatre attendees reached by
approximately 60%, allowing NCM 2.0 to offer a greater number of
the advertising impressions that will be more competitive with
cable and broadcast TV networks and online and mobile video
advertising platforms.
Ubiquitous
Coverage
Advertisers value ubiquitous audience
coverage. NCM and Screenvision’s competitors including TV
broadcasters, many cable programmers and virtually all the online
and mobile advertising platforms have ubiquitous national reach.
This limits NCM’s and Screenvision’s current ability to compete for
the budgets of national brands, most notably QSRs, Retailers and
CPG brands who have businesses with national distribution (or
store) networks that require their advertising to be in virtually
all markets in which they operate. The merger will allow the
combined company to offer advertisers the ubiquity they
require.
Ability to Target
Specific Audience Demographics
Advertisers prefer to buy a network that can
provide a high percentage of a specific age or gender demographic
group (e.g. Female 18-34); audience members outside that target
represent waste that is inefficient for the advertiser and the
network. Neither NCM nor Screenvision alone have a large enough
base of attendance (advertising impressions) to target specific
audience groups as well as TV networks or online and mobile video
advertising platforms. The increase in advertising impressions
resulting from the merger will provide enough advertising
impressions to enable us to create targeted buys across the nearly
80 age and gender demographic groups currently sold on a guaranteed
basis by TV networks and to provide the psychographic and other
more precise targeting provided by Internet and mobile advertising
platforms.
Lower Costs for
Advertisers
While demanding reach, ubiquity and targeting
capability, advertisers also want advertising platforms that will
make it less difficult to plan and execute their advertising
strategies. Advertisers want a single network that provides
consistency across all impressions purchased, makes it less
difficult to compare performance with other media acquired for a
specific campaign, and improves efficiency of media buying process
(i.e., takes less time to execute). The merger creates the network
that advertisers tell us they want to buy and eliminates the costs
associated with the many differences between the NCM and
Screenvision networks including differing proposal and rating point
estimate processes, different pre show quality and format and ad
placement, confusing messaging about reach and market coverage and
the value of preshow placement, different pricing methodologies,
different delivery technologies and different posting
processes.
Significant Expense
Synergies
As a result of the merger more than $30
million of annual recurring operating expense synergies will be
realized through the elimination of duplicative functions and
operating costs. These operating expense savings will be reinvested
into upgrading the network equipment within theatres and creating
new systems like CATO (NCM’s planned “Cinema Audience Targeting
Optimizer”), to make our cinema advertising product even more
attractive to advertisers.
As previously announced, the boards of directors of both NCM,
Inc. and Screenvision, as well as, Screenvision’s equity owners,
approved a plan to combine to create a stronger combined cinema
advertiser.
About National CineMedia, Inc.
National CineMedia (NCM) operates NCM Media Networks, a leading
integrated media company reaching U.S. consumers in movie theaters,
online and through mobile technology. NCM presents cinema
advertising across the nation’s largest digital in-theater network,
comprised of theaters owned by AMC Entertainment Inc. (NYSE: AMC),
Cinemark Holdings, Inc. (NYSE: CNK), Regal Entertainment Group
(NYSE: RGC) and other leading regional theater circuits. NCM’s
theater advertising network covers 183 Designated Market Areas® (49
of the top 50) and includes over 20,000 screens (approximately
19,200 connected to our Digital Content Network). During 2013, over
710 million patrons (on an annualized basis) attended movies shown
in theaters in which NCM currently has exclusive cinema advertising
agreements in place. NCM Digital offers 360-degree integrated
marketing opportunities in combination with cinema, encompassing 33
entertainment-related websites, online solutions and mobile
applications. National CineMedia, Inc. (NASDAQ: NCMI) owns a 45.8%
interest in and is the managing member of National CineMedia LLC.
For more information, visit www.ncm.com.
About Screenvision
Headquartered in New York, N.Y., Screenvision is a national
leader in cinema advertising, offering on-screen advertising,
in-lobby promotions, and integrated marketing programs to national,
regional, and local advertisers. Screenvision provides
comprehensive cinema advertising representation services to top
tier theatrical exhibitors presenting the highest quality
moviegoing experience. The Screenvision cinema advertising network
is comprised of over 14,200 screens in 2,200+ theater locations
across all 50 states and 94 percent of DMAs nationwide; delivering
through more than 150 theatrical circuits, including six of the top
10 exhibitor companies.
Forward Looking Statements
This press release contains various forward-looking statements
that reflect the current expectations or beliefs of the respective
companies’ managements regarding future events, including
statements about the proposed merger. Investors are cautioned that
reliance on these forward-looking statements involves risks and
uncertainties. Although NCM believes that the assumptions used in
the forward looking statements are reasonable, any of these
assumptions could prove to be inaccurate and, as a result, actual
results could differ materially from those expressed or implied in
the forward looking statements. The factors that could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements are, among others, the outcome of our
defense of the merger with the DOJ and the combined company’s
ability to timely and successfully integrate Screenvision’s
operations into those of NCM and achieve the anticipated expense
synergies and increased revenue and earnings. NCM is currently
unable to forecast precisely the timing and/or magnitude of any
such amounts or events. Please refer to NCM’s Securities and
Exchange Commission filings, including the “Risk Factor” section of
NCM’s Annual Report on Form 10-K for the year ended December 26,
2013 and subsequent filings, for further information about these
and other risks.
National CineMediaMEDIA CONTACT:Amy Jane Finnerty,
212-931-8117amy.finnerty@ncm.comorINVESTOR CONTACT:David
Oddo, 800-844-0935investors@ncm.com
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