AMC Closes Carmike Acquisition, Becoming Largest Circuit in North American, European, and Global Markets
DOJ Proposed Settlement Has Ripple Effects Across Pre-Show Cinema Advertising Industry
AMC Theatres has officially become the largest exhibition circuit in in the North American, European, and Global markets after closing its acquisition of Carmike Cinemas for approximately $1.1 billion.
AMC Theatres has seen a large influx of investment to its brand after being acquired by China’s Wanda Group in 2012 for a sum of $2.6 billion. The Wanda Group operates its own major exhibition circuit in China, known as Wanda Cinemas. This is the second major acquisition of the year for AMC Theatres, coming only a month after the closing of its acquisition of European exhibition circuit ODEON & UCI.
AMC’s presence now expands to around 900 locations and over 10,000 screens worldwide. The company’s screen count in the United States alone includes 661 theaters with more than 8,200 screens. As was the case with its recent acquisition of ODEON & UCI, AMC will continue to be headquartered in Leawood, Kansas with Adam Aron remaining as CEO and President, and Craig Ramsey as Executive Vice President and CFO.
“AMC now has a larger audience and a bigger stage to introduce our industry-leading innovations including plush power-recliner seats, enhanced food and beverage choices and premium large format screens,” said AMC CEO and President Adam Aron through a company press release. “We also have expanded AMC’s footprint across greater geography and more diverse demographics, serving most of the largest cities in the U.S. and Europe, along with hundreds of home towns, where guests can have an amazing AMC experience. In the United States, AMC now will enjoy increased benefit from movies that play better on Main Street and movies that play better in major metros, and, of course, from movies that play well in both.”
“We are fortunate to be adding so many talented and hard-working associates to the AMC team, which speaks well for the leadership of Carmike over the past several years,” added Aron. “Today we take a moment to celebrate becoming the biggest exhibitor in the U.S., in Europe and throughout the world, and then we roll up our sleeves and get to work to ensure that we are not only the biggest exhibitor but also the best in each of our markets.”
The closing comes a day after the Department of Justice announced a proposed settlement that would require AMC to divest from theaters in 15 local markets, sell off the majority of its holdings and relinquish governance rights in pre-show advertising company National CineMedia (NCM), and transfer 24 locations with a total of 384 screens to rival Screenvision.
The Department of Justice’s proposed settlement has roots that date back to the failed NCM-Screenvision merger of 2014, a deal that was ultimately blocked by the government agency in 2015. Concerns about the ripple effects of AMC’s Carmike acquisition to the pre-show advertising industry pervade in an official statement provided by Acting Assistant Attorney General Renata Hesse of the Department of Justice’s Antitrust Division.
“Moviegoers across the United States have benefitted from head-to-head competition between AMC and Carmike that has kept ticket prices in check and delivered a higher quality movie experience,” stated Hesse. “[This] settlement will ensure that movie theatre competition is preserved in 15 local markets where AMC and Carmike currently compete. In addition, by requiring AMC to reduce its equity stake in NCM, terminate its participation in NCM’s business, and transfer screens to Screenvision, the settlement will promote continued vigorous competition between the two leading cinema advertising networks – competition that the division fought to protect when it blocked the NCM-Screenvision merger.”
Andy England, CEO of National CineMedia, commented on the ruling, “It is business as usual here at NCM. We continue to operate under our governing documents with AMC, and we look forward to benefiting from the future growth of the larger AMC/Carmike entity under our long-term Exhibitor Services Agreement (ESA) as new theaters are built or acquired. As AMC CEO Adam Aron mentioned earlier today on the AMC investor call, AMC will be working closely with NCM to astutely manage this transition over the coming months in a way that preserves value for both NCM and AMC. To that end, in anticipation of an agreement between AMC and the DOJ, NCM’s Board of Directors had previously established a committee of independent Directors tasked with evaluating any proposals made by AMC to ensure that all agreements reached are in the best interest of NCM shareholders.”
U.S. box office revenues for AMC reached $1.9 billion in 2015, while Carmike finished the year with $490 million.