The two companies that have made ads on the movie screen as much a part of the process as buying popcorn and watching sneak previews have decided to merge.
National CineMedia said it would pay shareholders in Screenvision $225 million in cash and $150 million in stock in a pact valued at $375 million. The two companies said the merger would cover nearly every large market in the United States and reach more than 1.1 billion moviegoers a year in 3,900 theaters with more than 34,000 screens.
The two companies are likely to use their combined heft to make more of a play to siphon off some of the billions of dollars Madison Avenue earmarks each year for television. For the past few years, NCM has even held a presentation during the “upfront,” when U.S. TV networks attempt to sell the bulk of their ad inventory for the coming season.
The backers of so-called “cinema advertising” have long made the pitch they can get ad messages in front of a sizable audience, including the elusive young-male demographic that often flocks to the theater on Friday and Saturday nights. According to a March report from the Cinema Advertising Council, a trade organization, ad money devoted to movie screens rose 6.5% in 2013 to more than $677.9 million, marking the industry’s fourth consecutive year of taking in $600 million or more.
Ad buyers have used the movie screens to gain leverage in talks with TV networks. In 2008, for example, during the height of a prolonged writers’ strike, large ad buyer MediaVest made noise about moving $100 million from TV ads to cinema pitches. It remains unclear how much money the media-investment firm, which has long represented Procter & Gamble and Coca-Cola, actually switched from one venue to the next.
The deal ” position the combined new company to be much more competitive in the expanding video and overall advertising marketplace, ” said Kurt Hall, chief executive of NCM CineMedia, in a prepared statement.
Ads at the movie theater have long been a contentious topic – who really wants to pay to see advertising before a silver-screen favorite?- but the companies have created “pre-shows” lasting just a few minutes during the time most people are still buying refreshments and finding their seats. In other words, the ads stop playing once the movie’s scheduled showtime arrives. TV networks are some of the most frequent users of the ad venue.
The acquisition was unanimously approved by the boards of directors of both companies and Screenvision’s equity owners, and is expected to close after securing regulatory approval.