Category Archives: Cinema Advertising

NCM-Screenvision Call Off Merger – Winners and Losers


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.

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Cinemaxx and CineStar Launch German Cinema Marketing JV

Red Carpet Communication

Stephan Lehmann (Cinestar, left) and Christoph Ahmadi (Cinemaxx, right) announce Red Carpet Cinema Communication.

Details have been announced about Germany’s new cinema marketing venture, formed as a JV by Cinemaxx and CineStar, aimed at corporate and advertising clients. Red Carpet Cinema Communication GmbH & Co. KG. will target German B2B clients in an effort to enhance the position of cinema for corporate 360° marketing and use.

The JV between Germany’s two largest cinema chains was first announced in mid-November last year and was later approved by the German competition authorities in early December.

The aim of the JV is to enable corporate clients to have “an even easier entry into the world of cinema.” The largest venture of its kind in Germany and Europe means that clients in every German city with more than 100,000 inhabitants will have access to 685 screens across 86 cinema properties. The business is open to the inclusion of further cinema chains in the future.

The headquarter of the JV will be in Hamburg – where Cinemaxx is based and most of Germany’s advertising business is concentrated – with regional offices planned for Berlin, Düsseldorf and Frankfurt-am-Main. The venture will comprise two divisions: Red Carpet Media and Red Carpet Events.

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US Department of Justice Seeks to Block NCM-Screenvision Merger

NCM DoJ Screenvision

The United States Department of Justice (DoJ) has filed a lawsuit with the aim of blocking the proposed USD $375 million merger between US cinema advertising majors National CineMedia Inc. (NCM) and Screenvision LLC. NCM admitted to being both “disappointed” and “surprised” by the decision, but predicted that the case could be overcome within “four months or possibly more,” setting the stage for what could be an interesting court battle.

The DoJ move shows that, whatever the merits of the deal, NCM has not made a strong enough case as to why “eliminating competition that has substantially benefitted movie theaters, advertisers and, ultimately, movie goers” (in the words of the DoJ) should be allowed to be replaced with a de-facto monopoly for cinema advertising in the US.

The DoJ’s Case Against the Merger

The DoJ issued a strongly worded press release on Monday 3rd of November after the DoJ Antitrust Division’s lawsuit was filed in the United States District Court for the Southern District of New York.

“The proposed combination of NCM and Screenvision is a bad deal for movie theaters, advertisers and consumers.  This merger to monopoly is exactly the type of transaction the antitrust laws were designed to prohibit,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “If this deal is allowed to proceed, the benefits of competition will be lost, depriving theaters and advertisers of options for cinema advertising network services and risking higher prices to movie goers.”

As the press release points out, the proposed merger is between two majors that control cinema advertising in “88 percent of all movie theater screens in the United States through long-term, exclusive contracts.” What the press release does not say is that while this merger covers 88% of total US screen count, these screens represent a higher proportion of box office, cinema attendance and prime audience demographic, which is what matters to advertisers.

The DoJ is methodical in laying out why during the past few years competition in the US cinema advertising sector has been so strong:

Over the past two years, competition between NCM and Screenvision intensified as Screenvision became a particularly aggressive competitor, increasing its efforts to steal business from NCM by dramatically reducing the prices it charges advertisers and offering movie theaters a variety of attractive financial incentives. The complaint contains statements from NCM’s and Screenvision’s executives describing the competition between the two companies and the motivation to end that competition by entering into the transaction:

  • Aggressive competition between NCM and Screenvision for movie theaters led NCM to observe that “we need to buy [Screenvision] before either us or [Screenvision] does a stupid deal.”
  • By April 2014, NCM arrived at what it called a “Strategy Decision Crossroads.” As NCM had told its board it could either acquire Screenvision, which would give NCM the ability to “Control Selling Tactics,” including “Pricing,” or it could compete through more aggressive pricing and adding theaters to its network. NCM chose to buy out its competitor.
  • NCM viewed Screenvision’s “new strategy of undercutting [NCM’s] pricing by 50 percent (or more) [as] a direct threat to [NCM’s] business model” and “a very unusual strategy in a duopoly.”

The implication is that NCM is not pursuing the merger so much to unlock synergies and better compete with television and online advertising, as to get rid of pesky competition that is eating into its bottom line.

The DoJ believes the proposed merger would lead to “advertisers paying more for cinema advertising and movie theaters receiving less revenue,” which in turn is likely to “result in movie theaters having to raise ticket or concession prices to consumers or forego theater upkeep and improvements.”

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CJ@IBC ‘Big Screen and Second Screen – can they coexist peacefully and profitably?’


This IBC Big Screen session looks at how to turn the No. 1 irritant of modern cinema into something that enhances both revenue for cinema operators and enjoyment for the greater audience.

Given that there are people who have been shot and killed for using their smartphone in a cinema, this is a highly topical discussion, with some leading practitioners and experts assembled to give their view and demonstrating some cutting edge innovations.

Expect this session to go beyond the customary “now please tun ON your phone” jokes , though sadly there won’t be any demonstrations of the cinema ‘barrage’ types of big screen interactivity that have been making waves in China and beyond recently.

Chaired by Julian Pinn (of Julian Pinn Ltd.) he promised that the IBC Big Screen Experience would be “digging into the art, science and business of not just the big screen but also home and second screen.” He pointed out that for a long time we talked about digital cinema, “but now we will be talking about ‘disruptive cinema.’” (Then comes the ‘turn ON your phones ‘ joke – no escaping it.)

“How did we get here?”

Julian asks each of the panelists, “How did we get here?” not least given that cinema advertising was always about reels of 35mm ads. DCM’s Evea starts off by saying that “now that cinema have gone digital, they have become much more relevant for brands.” And with the advent of mobile, “it means that custmers can take the experience back with them.” He also stresses that cinema is the ultimate social medium. Mike from UK competitor Pearl & Dean observes that cinema audiences are not distracted and receptible to brand communication already in the cinema lobby.

Scarratt from Yummi says that apps and platforms like Yummi add value to the advertising experience. Shazam’s Weedon points out that using smartphones in cinemas is a “natural evolution of consumer behavior, starting with consumers having one screen. Now there is an intelligence between the first and second screen. This word, engagment, makes me wonder what we ever did without it” The formal presentations then started.

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Future of Cinema Advertising on Show at SAWA Cannes Lions 2014

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The Screen Advertising World Association (SAWA) held its annual showcase of Cinema Advertising innovation at the Cannes Lions Festival of Creativity 2014 on Monday 16 June. For those of you unable to attend (perhaps understandably, as CineEurope kicked off the same day), we bring you a report of what was said and shown.

The theme this year was “Back to the Future”, in honour of the imminent key year of 2015 that featured in all three films of the trilogy, which is also predicted to be the biggest year in box office history. As Cheryl Wannell, General Manager of SAWA pointed out in a pre-show interview, “there is no better time to use the cinema medium.

SAWA together with its sponsors pulled out all stops to stand out in the crowded Cannes Lions schedule, not least attracting attention by hiring one of the original DeLorean cars from Universal and parking it in front of the Palais. Delegates filled out the Estrelle auditorium in the Palais De Festivale as the music and trailer from Back To The Future (BTTF) played.

The regular MC channelled Doc Emmet Brown from the films and with an electric arc flash opened ‘the portal to the future’ that is cinema big screen, in terms of showcasing innovation. Speaker after speaker would return to this point, that innovations are often imagined in films before the become reality as real life technology. Nothing matches cinema’s ability to inspire innovation, as the audience was about to be told and show.

First up was a clip reel combining gadgets and technologies such as interactive driving maps, hand-held communicators, swipeable surfaces and voice controlled computers from films such as James Bond, Star Trek and Minority Report, coupled with adverts from companies such as General Motors, Samsung, Microsoft and Apple that had brought these technologies to life.

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Volkswagen Public Service Ad Makes Impact In Cinemas

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Please Note: To experience the full intent of the advertisement being discussed, it is advised to watch the spot, embedded above, before reading this post.

These days for an advertising campaign to be considered a success it has to not only has to reach a large percentage of its intended audience, it often must work across multiple platforms. German auto manufacturer Volkswagen is providing us with a perfect example of such an ad campaign with a spot they created to prevent texting while driving.

The public service announcement, produced in collaboration with the international ad agency Ogilvy & Mather, is currently being shown in Hong Kong cinemas before movies. In fact, the ad was created to be shown specifically in movie theatres. That in and of itself isn’t necessarily unique, sincere there have been many ad campaigns produced solely for cinema, though in the case of VW’s spot, the effectiveness of the advertisement relies on being shown in a movie theatre.

In addition, the interactive nature of the ad means that it can’t just be dumped into a preshow at any old cinema, but rather one setup with a close-range, location based mobile messaging broadcaster. Let me explain.

The spot was setup to play before a film at the MCL Cinema in Hong Kong. VW and Ogilvy then filmed the presentation of the ad as shown in the clip above this post. It starts out with cinema patrons entering the theatre and auditorium, then shows them watching the advertisement on screen. The ad features a driver’s point-of-view through the front windshield of a car as they speed along a country road. The audience looks relatively bored. That’s when somebody is shown using a computer to broadcast a text message, an SMS, to all the mobile phones in the auditorium. When we cut back to the audience we can hear everyone’s phones vibrating and chirping as they receive the text message. Naturally, moviegoers reach for their phones curious to see who is pinging them and a second or two after their devices light up…. CRASH! The car on screen has swerved off the road and smashed into a tree, shattering the windshield.

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NCM Surrenders Lobby Ad Selling to Focus on Big Screen

NCM Monster Media

Cinema advertising major National CineMedia has together with Cinema Scene entered a joint-selling agreement with Adspace Networks for a major digital place-based network that will dominate movie theater lobbies in the United States. The move will create economies of scale and free up NCM to focus on the integration of Screenvision’s on-screen cinema advertising network.

Under the terms of the deal NCM’s Lobby Entertainment Network (LEN) and Cinema Scenes’ cinema lobby  Trailervision network will be combined for a total of 1,687 theatres with around 3,600 lobby screens in 189 designated market areas (DMAs). The key aim of the alliance will be to target the sought-after but elusive millennial demographic, that traditional television ads do not reach sufficiently well.

Adspace’s Digital Mall Network already consists of more than 2,800 screens in 211 shopping malls across the top 45 DMAs. Jointly the three networks create a digital place-based footprint covering 2,000 venues with 6,500 screens.

Adspace NCM CinemaScene logos

Quoted in the press release, Cliff Marks, President of Sales & Marketing, NCM, says,

“It makes perfect sense to join forces with the digital place-based experts at Adspace to incorporate our cinema lobbies into a larger national digital place-based network, in addition to continuing to include the LEN in our own integrated on-screen, on-site, online and mobile cinema advertising offerings. As NCM increasingly focuses on the video marketplace, the Adspace management team’s focus on selling the on-the-go consumer to the digital place-based media industry will now give brands an even easier way to reach our combined audiences nationwide.”

The combined network will feature three types of displays, including 52-inch portrait monitors, 42-inch landscape monitors, as well as 138-inch video walls. These will show ads on a four-minute loop for greater frequency, with trailers and behind-the-scenes footage in between the adverts.

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Cinema Advertising Goes Back to the Future at Cannes Lions 2014

Cannes Lions 2014

The Screen Advertising World Association (SAWA) has announced the theme for this year’s much anticipated session at the Cannes Lions Festival of Creativity, held 15-21 June in Cannes. The Back to the Future focus is a recognition of the milestone that in the second film of the BTTF trilogy Marty McFly and Doc Brown travel from 1985 to 2015, couple with the fact that 2015 looks set to be one of the greatest box office years on record.

Called ‘THE CINEMA MEDIUM – THE PORTAL TO THE FUTURE’ the session will take place on 16 June, the first full official day of the 2014 Cannes Lions. It will be held at the Salle Estrelle, which has been SAWA’s window to the creative community that flocks to Cannes Lions for the ninth year in a row.

Speaking exclusively to Celluloid Junkie, SAWA’s General Manager Cheryl Wannell told us:

Cinema has been showcasing the future use of technology in movies since film first arrived, in that tradition SAWA will run a 45 minute innovation showcase connecting the past, the present and the future of products and brands proving that Cinema truly is “the portal to the future “. It will highlight the new and innovative ways the integration of technologies can connect advertisers and brands with rich entertainment content in 2015.

SAWA logo

SAWA’s past seminars are unique in that they are regularly voted on the Top 10 of the 70+ events features each year at Cannes Lions, despite being up against sessions with ‘star’ names such as Sir Martin Sorrell, Sarah Jessica Parker, Vivienne Westwood and Jack Black. Cheryl Wannell attributes this to “the power of cinema and the breadth of creative innovation on display”.
With 87 per cent of cinema in Europe now converted to digital, screen advertising is exploring and exploding the boundaries of how ads can target and engage audiences in key demographics.

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In recent year this has seen such innovative campaigns as Finch’s Gold Lion winning Pedigree Adoption ad with audiences seeing different films depending on which pair of polarised glasses they were given. There is also DCM and Yummi Media’s Cinime app that connect the big cinema screen to smartphones for interactive quizzes, games, polls, downloads, trailers and rewards.

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NCM’s Acquisition of Screenvision Is Hard To Fathom

 Shark eating shark eating shark

To say the announcement of National CineMedia’s acquisition of arch-rival Screenvision stunned the cinema industry would be an understatement, even though the deal had been anticipated for some time.

Within the cozy confines of the cinema advertising industry this outranks deals like Dolby buying Doremi or even Omnicom and Publicis merging. Think Apple buying Samsung or Facebook acquiring Twitter and you get an inkling of the impact currently reverberating across every cinema screen in North America.

So how did this happen, what are the deal’s implications and will it actually go through? Most importantly, is the de-facto monopoly that this creates any good for the business?

The NCM-Screenvision Deal

The basic details of the deal are straightforward enough.

National CineMedia, Inc. (NCM Inc) has agreed to buy Screenvision for a total of USD $375 million, a combination of USD $225 million in cash and USD $150 million in stock. It is worth highlighting that NCM Inc. owns 45.8% of National CineMedia, LLC (NCM LLC), so it is not America’s largest cinema advertiser buying the industry’s second largest, but the largest shareholder in the largest cinema advertiser doing the buying.

The press release makes all of this quite clear:

Following the merger, NCM, Inc. will evaluate whether to contribute the Screenvision assets to NCM LLC. Although it is under no obligation to do so, NCM, Inc. expects that it will contribute the Screenvision assets and debt incurred to finance the acquisition to NCM LLC in exchange for approximately 9.9 million NCM LLC membership units and that the combined operation will result in an estimated $30 million of annual operating cost synergies. The merger will create a higher quality and more competitive video advertising network that will cover nearly all 210 Designated Market Areas across all 50 states and deliver to approximately 3,900 theatres with over 34,000 screens, reaching over 1.1 billion annual patrons.

A “kill fee” is attached to the deal.  Should NCM decide to pull out or if the deal is rejected by the FTC it will be liable to pay USD $28 million, while Screenvision in turn will have to pay between USD $10 million to $18 million if it has a change of heart. However, given the fact that the acquisition has already been unanimously approved by the boards of directors of both NCM Inc. and Screenvision, as well as Screenvison’s equity owners, that is unlikely to happen.

So the only thing that stands in the way of the acquisition is the approval of U.S. federal regulatory authorities, which could take up to six months. (More on this in a moment).

With NCM LLC having traditionally dominated in larger markets as Screenvision focused on smaller markets, this means that a merged NCM-Screenvision will dominate in EVERY market throughout the territory. Who does this leave as the remaining cinema advertising players? Effectively nobody. North of the border there is of course Cineplex Media, which represents 93% of Canadian box office, but in the US there isn’t even a significant No. 3. BeforetheMovie, Inc. or Spotlight Cinema Networks anyone? No, cinema advertising has been a two-horse race since the formation of NCM and everybody else was pygmies. Now they are smurfs by comparison – sorry, 1 Better LLC.

A Deal Long Anticipated

The NCM-Screenvision merger is a shock but not a surprise. As far back as five years ago we wrote about it here at Celluloid Junkie, following the industry rumours surfacing in a USA Today article.

Back in May of 2010 we wrote:

A merger between Screenvision and NCM seems unimaginable, if not impossible, given the two firms majority share of the North American cinema advertising business.  Surely there will be some regulatory group that will object to having only one company control most of the profitable advertising placement in the country’s leading movie theatres.

What ultimately made the current deal inevitable was Screenvision’s change of ownership in 2010 from ITV to Shamrock Capital Advisors, the investment vehicle set up by the late Roy Disney, for USD $160 million. On the same day it was announced that the ex-head of DCIP Travis Reid was coming onboard to head up the company. Shamrock held 61.2 percent of Screenvision’s stock, while Technicolor had an 18.8 percent stake and Carmike Cinemas 20 percent of the company, with which it had then close a 30-year exclusive deal.

It was clear that the company was to be streamlined and positioned for the near future when all cinemas would be digital, at which point Shamrock would sell. Just like the private equity firm that owned AMC before it was sold to Wanda, all such entities look for an exit at some point through a liquidation event (sale, IPO, merger, etc.).  Shamrock has less of an interest in whether such a deal is good for the market, and more as to whether its good for their balance sheets (ROI) and investors (i.e. getting the highest possible price for the company).  That is their fiduciary responsibility.

The key was thus for Shamrock to not steamroll the other stakeholders but to get unanimous support. So the price had to be right. Having sold on Screenvision to the only other obvious buyer for nearly twice what they initially paid for it, Shamrock has thus done very well out of the four year ownership of Screenvision and the minority shareholders are likely very happy too.

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Audience Entertainment Is Helping Moviegoers Become A Part of the Story

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Now that the worldwide digital cinema rollout is nearing completion, with most of North America and a majority of Europe and Asia converted, companies, business models and content will begin to emerge that exploit the capabilities and benefits of the new technology.

One such entity you can expect to be hearing about at this year’s CinemaCon and in the months that follow is Audience Entertainment. The company creates branded entertainment which large groups can interact with in unison. To date, Audience Entertainment has worked mostly on interactive games for ad campaigns that are played in movie theatres, concerts and special events. Barry Grieff is the CEO of the company, which he founded in 2009.

If Grieff’s name sounds familiar there may be good reason. During a decades long career in the entertainment industry, Grief has held a number of positions in a all areas of the business. He started out as the National Advertising Director for National Lampoon and went on to work as a senior executive in music for A&M Records and as a Vice President of Marketing at ABC Records. He’s even been the President of Lorne Michaels’ production company Broadway Video. Back in 1984 he produced “Treasure: In Search of the Golden Horse” which was the first interactive laser disc for Pioneer as a showcase for the new digital medium.

“Treasure” was actually an interactive game that sent viewers out in search of a golden horse worth USD $500,000 that had been buried somewhere out in the world. It very well might be one of the earliest examples of transmedia, since it was released on multiple platforms including theatrically, on television, and on laser disc.

As Grief explained during an in-depth conversation a week before CinemaCon, it was this early experience with interactive content that ultimately led to Audience Entertainment. After several years of trials, tests and one-off productions, the company is ready to launch in earnest. To help the company grow its platform in cinemas around the world, Audience Entertainment recently announced a deal with Barco, the digital cinema projector manufacturer. The strategic partnership is part of the latter company’s new CinemaBarco suite of product offerings.

Celluloid Junkie: Maybe it’s best to start at the very beginning of your career since you’ve had several different focuses throughout your professional history. Is your varied experience an asset when it comes to Audience Entertainment?

Barry Grieff: Absolutely. Unlike someone that’s been in a distribution system their entire career, it’s more difficult for them to see the benefits and the pitfalls of that. I’m more agnostic about that. I look at things and say, “There are all these distribution channels, why limit yourself to just this one.” So, I think my lack of holding a job is a good thing.

CJ: Did the concept for Audience Entertainment originally come from your work with Pioneer in the 1980s? That kind of interactive entertainment was a little ahead of its time, so what was it that stuck with you for more than 20 years to want to expand on the idea?

BG: What I saw with “Treasure” was that this game was used by schools, by teachers, it taught geography, it taught logic, it taught math, because the puzzles were all interesting. I saw involvement at a level I had never seen in previously passive kinds of media and I was intrigued by it. But there was no real future because nothing was digital yet. I kind of held onto that idea hoping that someday this would be possible. Then a couple years before I started Audience Entertainment, I was heading a company called the Brand Experience Lab. We had technologies from different universities and folks around the world that they were looking to showcase to marketers. We had a 3D printer, we had holograms, we had virtual reality, but nobody knew what to do with it. What I saw was incredible interest from everybody. During that period we ran into a technology, which is motion capture, which is what we’re using now. One of the clients that came into the lab saw it and said, “Hey that’s really interesting could you do that in the movie theatre?” And it hadn’t occurred to us prior to that so I said, “I don’t see why not”.

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