National CineMedia, Screenvision may consider deal

— -- If you're looking for a compelling drama at the movies this summer, check out the ads — or, more precisely, the companies that sell them.

"I'm not sure that (a combination) is possible from an antitrust perspective," says Lazard Capital Markets analyst Barton Crockett. "It would affect some advertisers, studios and independent theater chains that like to play those two (companies) against each other."

Yet Screenvision's owners, French technology company Thomson and British TV network iTV, need cash. They've hired UBS to sell the firm.

"The process is commencing shortly and should be completed by the end of the year," Screenvision CEO Matthew Kearney says.

National CineMedia is intrigued with the prospect of controlling an industry that generated about $658 million in sales last year, up 56% since 2004. The company is publicly traded but controlled by the three largest movie theater chains: Regal Entertainment, AMC and Cinemark.

"We're interested in Screenvision as we'd be in any media company that would make sense for our shareholders," says Cliff Marks, National CineMedia's chief marketing officer.

If they try to unite, then antitrust regulators would have to decide whether it would be a whale in the market for movie ads or a minnow competing with TV networks and newspapers for national ads. "We don't consider ourselves to be in the cinema market as much as in the national media arena," Marks says.

National CineMedia and Screenvision typically transmit ads via satellite to digital projectors they install next to the ones used for feature films. That enables them to tailor ads to the audience by film and location.

Because it costs theater owners little to run ads, the revenue is "very significant," National Association of Theatre Owners CEO John Fithian says. "It's one of the reasons in the last five years we've been able to keep ticket prices reasonable."