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.
Copyright Business Wire 2014