Movie Ad Firm National CineMedia Rallies After AMC Bares 6.8% Equity

AMC Entertainment Holdings, Inc. (NYSE: AMC) disclosed on late Tuesday it has acquired a 6.8% equity stake in cinema advertising company National CineMedia (Nasdaq: NCMI). The latter places ads across in-theater networks, including AMC’s, except those in contract with rival Screenvision.

Following the news, CineMedia’s shares jumped 31% after-hours, before trading up roughly 12% today.

The theater chain apparently acquired 5,954,646 shares in CineMedia on April 13, 2022, and disclosed the passive stake yesterday. No details have been disclosed yet on the total consideration for the transaction but as of trading price on the reported date, the acquisition is worth US$14.5 million.

National CineMedia Inc. owns 47.4% of National CineMedia. In its fiscal Q1 2022 financials, the firm reported US$35.9 million in revenue and a US$46.0 net loss. It is looking to earn between US$63.0 – US$70.0 million in revenue in Q2 2022.

AMC used to own a stake in the cinema ad firm until it had to sell its equity to Cineworld Group and Cinemark Holdings for US$156.8 million, as a consequence of AMC’s acquisition of Carmike Cinemas.

In 2014, CineMedia and Screenvision entered into a US$375 million merger agreement. The US Justice Department blocked the merger based on antitrust concerns, leading to the cancellation of the deal and CineMedia paying Screenvision a US$26.8 million termination agreement.

Back in 2019, AMC CEO Adam Aron frowned upon CineMedia’s planned initiative to attach “platinum spots” to feature movies–advertisement spots immediately two trailers away from the main movie.

“That trailer package is extremely valuable real estate,” Aron said in an earnings call. “I would so much rather be advertising movies.”

While the acquired stake in CineMedia is right up AMC’s alley, the theater chain announced in March 2022 its acquisition of 22% equity in Hycroft Mining–causing the latter’s shares to also rally by as much as 98%.

AMC Entertainment last traded at US$13.64 on the NYSE.

Information for this briefing was found via Edgar, Seeking Alpha, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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