National CineMedia (NCMI) is the largest in-theater advertising and media company. The company sells advertising for and produces the pre-show segments displayed in movie theaters. The company was formed in 2007 by the merger of Regal Entertainment's cinema advertising and Fathom Events division with AMC Entertainment's cinema advertising operations.[1] The company operates in two segments: Advertising consists of the pre-show programming displayed in movie theaters before feature films, and Fathom Events produces and facilitates multi-site corporate communication events, such as corporate conventions. The company's advertising network is comprised of more than 17,300 screens and accounts for nearly 89% of total revenues. The Fathom Events network reaches more than 860 screens.[2] Compared to traditional advertising, National CineMedia is able to command higher prices for its ad space because advertisements are guaranteed to reach a captive audience, however the company's inherent association with movie box office numbers exposes the company to risks related to movie attendance and box office income.

Business Growth

FY 2010 (year ended December 30, 2010)[3]

  • Net Revenues increased 12.3% to $427.5 million.
  • Net Income increased 12% to $29.2 million.

In 2010, National CineMedia's revenues were supported by a 20% increase in advertising revenue per theater attendee.[4] Revenue from Fathom Events increased 5.5% as a result of higher revenues from various events (sports, arts, concerts) produced and aired by the company.

Trends and Forces

Box Office Sales and Advertising Revenue

As a vendor of advertising in movie theaters, National CineMedia is vulnerable to box office trends. The company is able to charge more than traditional advertisers because it can ensure a captive audience while also tailoring ads to specific zip codes or regions. Although not entirely dependent on movie attendance, in general National CineMedia's advertising rates are influenced by the numbers of people (moviegoers) who will be seeing the ads.[5] In 2010, movie ticket sales in the US declined 5% to reach its lowest levels since 2001.[6] A rebound in ticket sales would allow National CineMedia to increase or maintain its advertising rates, however a continued decrease in attendance may force the company to cut its prices in order to remain attractive to advertisers.[7]

Growing the Screen Network

National CineMedia has the largest in-theater network of screens and has been able to grow its presence every year since its founding in 2007. As the company's initial partners, Regal Entertainment Group (RGC) and AMC Entertainment (AC), continue to expand via construction of new theaters and acquisition of smaller chains, NCMI's geographic reach and market penetration will also increase. The company already operates in 97 of the top 100 designated market areas (as defined by Neilsen Marketing Research), which raises the prospect that NCMI may slowly be reaching the limits of possible market expansion. However, entering new markets allows the company to increase its advertiser base.[8]


National CineMedia has a distinct advantage over its competitors due to its connection with Regal Entertainment Group (RGC) and AMC Entertainment (AC), the two largest movie theater networks in the US.

  • ScreenVision is a privately-held in-theater advertiser that competes directly with NCMI. They have approximately 15,000 screens.
  • Cinedigm Digital Cinema Corp. (CIDM) is an in-theater advertiser that competes with NCMI. The company has a robust production and development unit for advertisers, but only has approximately 8,000 screens.


  1. NCMI 2010 Annual Report, p. 19
  2. NCMI 2010 10-K, p. 4
  3. NCMI 2010 10-K, p. 45
  4. NCMI Reports Results for FY 2010 Press Release, 2/23/11
  5. Few Silver Linings in the Entertainment Industry, Seekingalpha, 6/17/09
  6. 2010 Theatrical Market Statistics, MPAA
  7. 5 Hot Hollywood Stocks for the Summer Movie Season, Marketwatch, 6/2/11
  8. NCMI 2010 Annual Report, p. 12, 15
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