UPDATE: National CineMedia expects it to take about six months to win federal approval for its merger with Screenvision. But once that’s done it should be able to quickly offer the same pre-show programming across both companies’ theaters, NCM chief Kurt Hall told analysts. It’s “a straightforward process” because as much as 80% of Screenvision’s network receives the content via satellite or broadband. NCM would have to pay $28M if it scraps the deal or it’s rejected by the feds, and Screenvision would pay at least $10M — and potentially as much as $18M — if it changes its mind.
PREVIOUS, 1:17 PM: National CineMedia shares are up about 10% in after market trading following its long-anticipated agreement to combine with Screenvision, which pretty much locks up the market for movie theater ad sales. Screenvision owners will receive $225M in cash and $150M in stock. Carmike owns about 19% of the No. 2 theater ad sales company. After the deal, NCM will serve 210 markets in all 50 states, with 34,000 screens that reach more than 1.1B patrons a year, it says. No word yet on post-merger management or transition plans — but you can be sure that NCM CEO Kurt Hall will be peppered with questions shortly when he talks to analysts in a conference call for his company’s Q1 earnings, released this afternoon.
The combo comes a little more than a week before NCM addresses advertisers for its annual upfront sales presentation in NYC. The union will result in a “more efficient national network” that will “bring more advertising revenue to our theatre circuit partners and a higher quality pre show to their patrons,” Hall says. But National CineMedia also says that it is withdrawing its financial guidance for 2014 while it determines how the merger with Screenvision will change things.
NCM lost $3.1M in Q1, down from a $1M loss in the period last year, on revenues of $70.2M, -4.8% not including the Fathom Events unit it sold in December. The revenue number, and its five cent loss per share, both matched the Street’s expectations.
Several analysts figured the time was ripe for an NCM-Screenvision merger. Benchmark Co’s Mike Hickey noted last week that the window for an agreement had opened “as Screenvision repairs cash flows in front of expiring theater network deals.”
Here’s the release: (more…)