National CineMedia renewed several major agreements with media companies that provide content for its First Look pre-show. The two-year pacts, with NBC Universal, Warner Bros., A & E, and the History Channel, also include advertising commitments.
The announcement was made late Thursday (Aug. 7) during the cinema rep firm's second quarter earnings call.
Cinema advertising continues to percolate in a down economy. In contrast to radio and TV groups which reported double-digit revenue declines, NCM reported a 7 percent revenue increase in second quarter to $92.9 million, beating most analysts expectations. Advertising was up 11.6 percent to $74.8 million. National advertising revenue was up 21.5 percent, but meetings and events revenue declined 21 percent.
Despite the strong performance, NCM was somewhat cautious about the second half of the year, citing low visibility, a difficult pricing environment and tough financial comparisons with last year. One of NCM's largest advertisers, the military, has decided to push its second quarter spending to 2010. In addition, the company was unsure how the TV upfront, creating a stronger scatter market, might effect cinema advertising.
"We're clearly hearing about rollbacks in CPMs and that creates a softer CPM pricing environment. There's a reasonable amount of money being held back. In the past, we viewed that as a positive, meaning there is more money to compete for in the marketplace," said Kurt Hall, CEO of NCM. "It generally comes back to the market in the form of scatter, but that will be dictated by the speed of economic recovery."
NCM also said it was not allowed to participate in the sale of the 50 percent of Screenvision that Thomson put on the block earlier this year.
"While we have so far not been included in the Screenvision sales process, we continue to believe that a transaction would provide attractive synergies and a national advertising network that is more competitive in the national TV marketplace," said Hall. "This is especially true in the packaged goods, retail and QSR (quick service restaurant categories where we are significantly under representing from a spending standpoint."