National CineMedia In-Theater Advertising Slow To Make Gains

In-theater advertising continues to be soft for National CineMedia in its third-quarter period -- partly due to slower-than-expected movie-theater recovery.

Revenue was at $31.7 million -- up from $6 million in the third quarter a year ago. Consensus analysts' estimates were expecting $42 million. Net loss widened to $15.2 million from $12.7 million in the third quarter of 2020.

B.Riley Securities says advertising demand has lagged box-office recovery with advertisers looking “for confirmation of positive attendance and box office trends before committing ad dollars.”

Eric Wold, media analyst of B.Riley Securities, says: “We now believe the weakness in the regional/local markets could persist well into the first half of 2022, given the lingering supply chain issues.”

He adds: “In addition to a reluctance of regional/local companies to advertise in front of potential labor/product shortages, we also believe management unwilling to lower CPMs in a highly competitive scatter ad market for short-term gain at the expense of longer-term pricing power.”



Looking to next year, National CineMedia has secured upfront advertising commitments from roughly half of the advertisers in 2019. Wold says “the only weakness seen, understandably, from the automotive sector.”

National CineMedia says due to “uncertainties related to the COVID-19 pandemic over the near term and the impact of changes in consumer behavior on attendance following the reopening of the theaters,” it is not offering guidance on revenue or cash flow for its fiscal 2021 year.

Longer term, Wold says 2022 upfront sales activity is tracking around 75% of that of 2019 level.

“We believe this demonstrates the attractiveness of the in-theater sector to reach key demographics as a strong film slate continues to build,” he says. Wold has lowered revenue estimates to $125.4 million (2021); $369.5 million (2022); and $435.4 million (2023).

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