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National CineMedia Sees Overall Ad Revenue Rise Amid Box Office Recovery for Exhibitors

In-theater advertising firm National CineMedia unveiled its third quarter earnings on Tuesday, the first quarterly results since the company completed a financial restructuring in August.

On Tuesday, NCM LLP for three months to Sept. 28, 2023 saw overall advertising revenue rise to $69.6 million, up 28 percent from a year-earlier $54.5 million, and its operating loss jumped to $150.7 million, against a year-earlier loss of $4.2 million.

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“Our third quarter revenue growth of nearly 28 percent year-over-year demonstrates the strong momentum of cinema advertising and solid execution by our team,” Tom Lesinski, CEO of NCM, said in a statement that accompanied his latest financial results. Summer box office from Oppenheimer and Barbie helped underpin an improved ad sales market for NCM during the latest quarter.

“As moviegoers went to the theaters in record numbers, advertisers turned to NCM to connect with the hard-to-reach young audiences that we deliver each week. With our strong and unlevered balance sheet and our attractive advertising platform, NCM is well positioned to unlock significant shareholder value going forward,” Lesinski added.

The latest financial results have a changed revenue recognition after the deconsolidation of NCM LLC in April 2023 and the reconsolidation of NCM LLC on August 7, 2023 to complete a financial restructuring, which included a $55 million exit financing facility, as the company emerged earlier this year from court-directed Chapter 11 bankruptcy proceedings.

That was preceded by NCM’s business being hit by the shutdown of cinemas due to the COVID pandemic, followed by the slow Hollywood industry recovery since the reopening of theaters and advertising being affected by macro-economic clouds.

Ronnie Ng, CFO of NCM, told analysts during an after-market call the company secured around $90 million in reduced annual fixed charges as part of its recently Chapter 11 restructuring, which included ending “non-profitable exhibitor contracts” and restructured or eliminated office leases.

“We have a lot of options and we plan to make the most out of this opportunity, particularly focusing on the cinema business,” CEO Lesinski told analysts when asked about how NCM would use its debt-free balance sheet currently to grow its business going forward, without being specific about market tactics or strategy.

Lesinski also discussed the impact of the dual Hollywood strikes on NCM, with a resolution to the SAG-AFTRA labor action possibly in the works. “There’s been no impact on this year’s business from the strike, in terms of the cinema ad business,” he said.

In the near term, Lesinski added a resolution of the strike will be followed by around 30 to 60 days where major studios make key decisions on the production and release schedules for the movie slates. “So we can’t give any more visibility on (20)24 until they really make those announcements,” he insisted.

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