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Feds Slam Cinemedia Monopoly Bid
The Justice Department has filed a civil antitrust lawsuit to block National CineMedia Inc.’s $375 million acquisition of Screenvision LLC, arguing the deal would give the company a stranglehold on the cinema advertising market.
Assistant Attorney General Bill Baer said the proposed merger would eliminate competition that has benefitted movie theaters, advertisers and consumers. “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,” he said.
Cinema advertising networks, like NCM and Screenvision, act as intermediaries between movie theaters and advertisers. They create pre-shows, 20 to 30 minute programs combining advertisements with special content, which movie theaters play prior to the start of each movie.
The complaint alleges that NCM and Screenvision together serve 88 percent of all movie theater screens in the United States through long-term, exclusive contracts. Aggressive competition between the two companies led NCM to consider buying out its competitor, with NCM executives describing the competition as a “direct threat to [NCM’s] business model”.
Regal Entertainment Group, AMC Entertainment Inc. and Cinemark Holdings Inc., the three largest movie theater circuits in the United States, are the majority owners of NCM. The complaint alleges that these circuits exercise significant control and influence over NCM’s actions, including the right to block NCM from entering into contracts with independent movie theaters that contain upfront payments exceeding $1 million.
The lawsuit seeks to prevent the companies from merging and to preserve their existing head-to-head competition. The Antitrust Division filed the lawsuit in the United States District Court for the Southern District of New York. If the 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.
Key Facts
- State: Federal
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release ↗
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