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Author Topic: Government Files Suit To Block CineMedia/Screenvision Merger
Mitchell Dvoskin
Phenomenal Film Handler

Posts: 1869
From: West Milford, NJ, USA
Registered: Jan 2001

 - posted 11-03-2014 02:47 PM      Profile for Mitchell Dvoskin   Email Mitchell Dvoskin   Send New Private Message       Edit/Delete Post 
Reuters News

quote: Reuters

Nov 3 (Reuters) - The U.S. Justice Department on Monday filed a lawsuit to block National CineMedia Inc's proposed $375 million acquisition of smaller rival Screenvision LLC, a deal that would significantly concentrate a niche advertising market.

The companies are the big players in the slice of the advertising industry that books commercials to be shown in movie theaters. The companies and theaters share in the revenue, the Justice Department said in a statement.

If the deal were to go forward, the new, merged company would serve 88 percent of all U.S. movie theater screens, the department said.

National CineMedia's shares were down 22 percent on Monday, after being halted prior to the Justice Department's announcement.

The two companies create a 20-minute mix of ads and entertainment segments to be shown before movie trailers, which gives advertisers to access to captive moviegoers, the Justice Department said in its complaint aimed at blocking the proposed acquisition.

National CineMedia and Screenvision said that they planned to defend the planned merger in court and argued that the fact that they did not have national reach hampered them in competing to advertise for national brands.

They also said that if the merger was allowed, they would be able to lower costs for advertisers.

"With a better product we will generate more advertising revenue for our theater circuit partners. Advertisers, exhibitors and shareholders all will benefit from this combination," NCM Chairman and Chief Executive Kurt Hall said in a statement.

The department said that National CineMedia had been irked by Screenvision's decision two years ago to become more aggressive, cutting deals to sign up more theaters and lower prices to advertisers.

"This strategy has allowed Screenvision to make significant inroads at NCM's expense," the department said in its complaint.

The Justice Department concluded that advertising in theaters was different from other forms of advertising because it is shown on a large screen and because moviegoers cannot skip through the ads. Furthermore, people who watch very little television but go to the movies can be reached through these advertisements, the Justice Department said.

National CineMedia is partly owned by three movie theater chains: Regal Entertainment Group, AMC Entertainment Inc and Cinemark Holdings Inc. It shows ads on about 20,000 movie screens out of 39,000 total in the United States.

Screenvision sells ads on 14,300 screens in the United States. Carmike Cinemas Inc, the fourth-largest exhibitor in the United States, owns 19 percent of Screenvision.

National CineMedia shares were off $3.52 at $12.38, while Carmike shares were down 10 percent, or $3.30, at $28.75, after earlier being down as much as 12.4 percent. The drop is Carmike' biggest one-day percentage fall in more than 3 years.

In 2013, National CineMedia generated about $426 million in gross advertising revenue while Screenvision produced approximately $160 million. (Reporting by Diane Bartz; Editing by Ros Krasny, Alan Crosby and Steve Orlofsky)

I hate movie theatre ads. I especially hate low resolution movie theatre ads.

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