Now the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand.
- Sun Tzu, The Art of War, I-26
The proposed merger between US cinema advertising majors National CineMedia (NCM) and Screenvision has been called off. NCM announced in a press release that it has agreed with Screenvision’s owner SV Holdco to terminate the merger agreement signed on 5 May 2014. The announcement comes four months after the US Department of Justice (DoJ) filed a suit with the aim of blocking the proposed USD $375 million merger.
The announcement must come as a major defeat for NCM, its management and its shareholders. The company seems to bury the lede by sub-heading the press release “National CineMedia Reaffirms 2015 Financial Outlook”, going on to trumpet the excellence of its advertising platforms along with a positive forecast for the box office in 2015.
While the trial initiated by the DoJ was scheduled for mid-April, NCM’s merger financing commitment was only set up to last until 1 April. NCM was said to be working with their banking group to extend those commitments in order to accommodate the litigation process. So while NCM may have been intent on taking the fight to trial, it may be that their bankers and financiers got cold feet, thus forcing today’s about face.
Despite calling off the merger, the North American cinema advertising market will not return to the status quo. Certainly no new merger attempt will take place between NCM and Screenvision in their current configurations. Let’s take a quick look at some of the winners and losers coming out of this thwarted merger.