National CineMedia, Inc. (NASDAQ:NCMI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement>
On September 17, 2019, National CineMedia, LLC (“NCM LLC”) and each of Cinemark USA, Inc. (“Cinemark”) and Regal Cinemas, Inc. (“Regal”) entered into amendments to the Amended and Restated Exhibitor Services Agreements (“ESAs”) between NCM LLC and each of Cinemark and Regal, respectively. The amendments to the ESAs extend the terms of the ESAs and modify the program distributed by NCM LLC through its Digital Content Network for exhibition in Cinemark and Regal theaters (the “Pre-Feature Program”).
Extended Term of the ESAs. NCM LLC and each of Cinemark and Regal extended the term of the respective ESA by an additional four years from February 13, 2037 to February 13, 2041.
Post-Showtime Advertising. Beginning on November 1, 2019, NCM LLC will be entitled to display up to five minutes of its Pre-Feature Program after the scheduled showtime of a feature film (“Post-Showtime Inventory”). The amount of time included in the Pre-Feature Program displayed prior to showtime will be reduced by the sum of five minutes plus the aggregate length of time of any Platinum Spot, as described further below.
In consideration for utilization of the theaters post-showtime, Cinemark and Regal will be entitled to receive post-showtime theater access fees. These fees are based upon Cinemark\’s or Regal’s attendance and a post-showtime theater access fee per patron. NCM LLC will pay a post-showtime theater access fee to Cinemark and Regal as follows: (i) beginning on November 1, 2019, $0.025 per patron, (ii) beginning on November 1, 2020, $0.0375 per patron, (iii) beginning on November 1, 2021, $0.05 per patron, (iv) beginning on November 1, 2022, the post-showtime theater access fee per patron will increase by 4 percent and (v) beginning on November 1, 2027 and every five years thereafter on November 1, the post-showtime theater access fee per patron will increase by 8 percent.
Platinum Spot.>Beginning on November 1, 2019, NCM LLC will be entitled to display an additional single unit that is either 30 or 60 seconds of the Pre-Feature Program in the trailer position directly prior to the “attached” trailers preceding the feature film (the “Platinum Spot”). The “attached” trailers are those provided by studios to Cinemark and Regal that are with the feature film, which is at least one trailer, but sometimes two trailers.>
In consideration for the utilization of the theaters post-showtime for Platinum Spots, Cinemark and Regal will be entitled to receive 25 percent of all revenue generated for the actual display of Platinum Spots in their applicable theaters, subject to a specified minimum. If NCM LLC runs advertising in more than one concurrent advertisers’ Platinum Spot for any portion of the network over a period of time, then NCM LLC will be required to satisfy a minimum average CPM for that period of time.
Beverage Slot.>The beverage agreement advertising rate related to the beverage slot at Cinemark and Regal theaters will increase by two percent annually, effective beginning the first day of the 2020 fiscal year and thereafter on the first day of each subsequent fiscal year.
Optional Termination of Amendments.>In its sole discretion, NCM LLC may, by written notice to each of Cinemark and Regal no later than August 1, 2022, terminate the amendments effective November 1, 2022. If NCM LLC exercises such termination option, then as of November 1, 2022, the ESAs will revert to the terms that were effective immediately prior to the amendments, other than certain changes to the confidentiality provision.
The terms of the ESA amendments were approved by the Board of Directors of National CineMedia, Inc. (“NCM, Inc.”), which serves as sole manager of NCM LLC, and by a committee of disinterested directors of the NCM, Inc. Board of Directors. The committee engaged its own separate legal counsel and financial advisors to advise it regarding the ESA amendments. The committee received a fairness opinion in connection with the ESA amendments.
The foregoing description of the terms and conditions of the amendments to the ESAs does not purport to be complete and is qualified in its entirety by reference to the amendments, copies of which are attached as Exhibits 10.1 and 10.2 hereto and incorporated herein by reference. Descriptions of the ESAs and certain relationships between NCM LLC and each of Cine
mark and Regal can be found in the definitive proxy statement filed by NCM, Inc. on March 14, 2019 under “Certain Relationships and Related Party Transactions – Transactions with Founding Members.”
Item 7.01 Regulation FD Disclosure.
NCM LLC has scheduled a conference call and audio webcast to discuss the ESA amendments at 9 a.m. Eastern Time on Tuesday, September 17, 2019. An updated investor presentation of NCM, Inc. will also be available at NCM, Inc.’s website at http://investor.ncm.com>under “Featured Documents.”
The information on NCM’s website is not incorporated by reference into this Current Report on Form 8-K. The information in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by reference to such filing.
National CineMedia, Inc. Exhibit
EX-10.1 2 ex101cinemarkesaamendment.htm EX 10.1 Exhibit Exhibit 10.1FINAL NOTE: CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. “[***]” INDICATES THAT INFORMATION HAS BEEN REDACTED.FIRST AMENDMENT TOAMENDED AND RESTATED EXHIBITOR SERVICES AGREEMENTThis First Amendment to Amended and Restated Exhibitor Services Agreement (this “Amendment”),…
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About National CineMedia, Inc. (NASDAQ:NCMI)
National CineMedia, Inc. (NCM, Inc.) is a holding company that manages its consolidated subsidiary National CineMedia, LLC (NCM LLC). NCM LLC operates the digital in-theatre media network in North America, through which it sells in-theatre and online advertising and promotions. The Company is engaged in advertising business. It operates through advertising segment. The Company’s advertising and entertainment pre-show, FirstLook, lobby entertainment network (LEN) and programming are distributed across its digital content network (DCN) utilizing its digital content software (DCS). NCM, Inc. has no business operations or material assets. Its on-screen digital FirstLook pre-feature show consists of national and local advertising, as well as behind the scenes making-of and other entertainment content provided by its content partners and other clients. The Company’s Lobby Entertainment Network (LEN) has approximately 3,104 screens in over 1,519 theatres connected to its DCN.
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