Cinema Advertising Firms Call Off Merger


(CN) – National CineMedia and Screenvision LLC called off their proposed $375 million merger on Monday after the Justice Department sued to block the deal on antitrust grounds.
     In a joint statement the companies said that “after a thorough review of the options,” they determined “the ongoing cost and distraction of the suit to their employees, advertisers and exhibiter Partners could no longer be justified.”
     National CineMedia and Screenvision, long fierce competitors in the cinema advertising space, announced their intention to merge on May 5, 2014.
     Both companies are intermediaries between movie theaters and advertisers, and specialize in creating “pre-shows” – 20- to 30-minute-long programs combining advertisements with special content – which movie theaters play prior to the start of each movie.
     The cinema advertising networks and movie theaters share the advertising revenue based on the specific financial terms of each theater’s contract.
     Together, National CineMedia and Screenvision serve 88 percent of all U.S. movie-theater screens through long-term, exclusive contracts, the Justice Department said, and that was a significant factor in the agency’s deciding to oppose the merger.
     It sued in the Manhattan Federal Court in November seeking to preserve the existing head-to-head competition between the two companies.
     In a written statement, National CineMedia said the termination of the merger agreement will be effective upon its payment of a $26,84 million termination payment to Screenvision, which it has agreed to do within 10 days.
     In the wake of the announcement, the Justice Department said it would dismiss its lawsuit without prejudice.

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