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Film advertising company National CineMedia rebounds after AMC reports 6.8% equity

AMC Entertainment Holdings, Inc. (NYSE:AMC) announced late Tuesday that it had acquired a 6.8% stake in a theatrical advertising company National CineMedia (Nasdaq: NCMI). The latter places ads on in-theater networks, including AMCs, except for those that have a deal with rival Screenvision.

Following the news, CineMedia’s shares rose 31% in after-hours trading before climbing about 12% today.

The theater chain apparently acquired 5,954,646 shares of CineMedia on April 13, 2022 and disclosed the passive stake yesterday. Details of the total consideration for the transaction have not yet been disclosed, but at the trading price as of the report date, the acquisition is valued at US$14.5 million.

National CineMedia Inc. owns 47.4% of National CineMedia. In its financial results for the first quarter of 2022, the company reported revenue of $35.9 million and a net loss of $46.0. It is targeting revenue of between $63.0 million and $70.0 million in the second quarter of 2022.

AMC formerly owned an interest in the cinema advertising company until selling its equity to Cineworld Group and Cinemark Holdings for $156.8 million as a result of AMC’s acquisition of Carmike Cinemas.

In 2014, CineMedia and Screenvision entered into a $375 million merger agreement. The US Department of Justice blocked the merger over antitrust concerns, resulting in the transaction being canceled and CineMedia paying Screenvision a $26.8 million termination agreement.

In 2019, AMC CEO Adam Aron disapproved of CineMedia’s proposed initiative to affix “platinum spots” to feature films – commercials that are immediately two trailers away from the main film.

“This trailer pack is extremely valuable real estate,” Aron said in a prize call. “I would so much rather promote movies.”

While the acquired stake in CineMedia ticks all the right boxes for AMC, in March 2022 the theater chain announced it would acquire a 22% stake in Hycroft Mining — which caused the latter’s shares to soar as much as 98% as well.

AMC Entertainment was last trading at $13.64 on the NYSE.

Information for this briefing was found through Edgar, Seeking Alpha and the companies mentioned. The author has no securities or affiliations with this organization. No buy or sell recommendation. Always conduct additional research and consult a professional before purchasing any security. The author does not own any licenses.

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