National CineMedia filed for bankruptcy, the latest casualty of declining audiences at movie theaters that saw its business further imperiled when Cineworld Group Plc sought court protection last year.
(Bloomberg) — National CineMedia filed for bankruptcy, the latest casualty of declining audiences at movie theaters that saw its business further imperiled when Cineworld Group Plc sought court protection last year.
The Centennial, Colorado-based advertiser filed its petition in the Southern District of Texas on April 11, court papers show. It listed estimated assets of $500 million to $1 billion and liabilities of between $1 billion and $10 billion.
Prior to the filing for bankruptcy, National CineMedia was negotiating with its lenders and bankrupt Cineworld in hopes of maintaining a major ad contract with Regal Cinemas, Bloomberg reported.
The company has been struggling since the pandemic, when would-be moviegoers stayed home. More recently, audiences have trickled back into theaters, but fears of an economic slowdown has caused companies to pull back on advertising spending as questions loom about the recovery of movie theater attendance.
The company can put ads on more than 20,000 movie screens in the US. In 2022, despite the drop in attendance, 394 million people saw a film in one of the more than 1,500 theaters serviced by NCM, the company said in court documents.
NCM was founded in 2005 by the three biggest US movie chains, Regal, AMC, and Cinemark and its fate remains tied to those companies — they are NCM’s biggest customers. In 2007, those companies restructured NCM, taking the company public and selling shares in an initial offering. NCM also took on more than $800 million in debt, the company said in a court filing.
The company then paid the three movie chains nearly $1.5 billion as part of a long-term services agreement and to redeem preferred ownership shares, NCM said. Since then, NCM has also paid the three chains more than $2.2 billion. The company currently has about $1.15 billion in debt.
The partnership with the chains has been profitable, NCM said in court papers. It’s financial troubles were caused mainly by the pandemic, which pushed revenues down by at least $850 million, the company said.
Adding to its woes is an ongoing court battle with Regal, whose parent filed bankruptcy last year. Regal has tried to cancel its advertising contract with NCM. A key court hearing in that dispute is set for Wednesday, NCM said.
The case is National CineMedia, 23-90291, U.S. Bankruptcy Court for Southern District of Texas.
–With assistance from Reshmi Basu.
(Updates with history of the company and a court dispute starting in the fifth paragraph.)
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