Former senior executive at National CineMedia Inc (NCM)
- National CineMedia’s (NASDAQ: NCMI) operating environment – recovery dynamics and movie theatre advertising trends
- Competitive dynamics vs Screenvision Media and others
- Growth opportunities and product innovation, highlighting digital offering expansions
- Outlook for H2 2022 and beyond, including possible M&A and ability to withstand a potential recession
Could you begin with an overview of NCM’s [National CineMedia’s] operating environment and pull out 2-3 trends or drivers that are impacting the business?
You said the pandemic had a huge effect on NCM, but there were potentially some audience behaviour shifts prior to this. Could you expand on that? How was the company thinking about branching out its product offerings pre-pandemic, and how was this then expedited when it became necessary?
What percentage of movie theatres were on-board with the platinum spot idea and how might this shift over time? You said not all movie theatres were on-board with it, notably AMC. What are the major pushbacks from these theatres and how might that change?
What has been the audience consensus with the platinum spot? You said many theatres waited for audience feedback. Obviously, most people don’t love commercials, but has there been enough pushback that many players have continued to think about it?
You mentioned how much of an opportunity the platinum spot is for NCM as there would be higher CPMs. How much more of an advantage is this vs a long ad slot? How do the CPMs differ from some less-coveted slots?
You mentioned there’s been a re-thinking of advertising budgets due to coronavirus. Could you outline the dynamics at play here and what you see with this change?
You mentioned some advantages of NCM’s ads being on a very large screen in front of a captive audience. How does this resonate with advertisers, and how well was the company doing at getting advertisers on-board with the message of, “You can’t get that experience with a streaming platform on a much smaller screen”?
You said it’s been a challenge to track data, and that a streaming platform has very easy ways of checking immediate search activity and buying activity afterwards. Having a beacon ping cellphones was not really effective and this is a challenge NCM and theatres are still working through. Has there been more progress since then? It seems to be an unresolved problem, but what steps could be taken to try to overcome this issue?
Could you outline the Noovie product suite’s full offerings? You mentioned Noovie Shuffle, and there’s also trivia, Name That Movie. Which offerings are currently most central, and what changes might there be to some offerings over time?
What is the state of NCM’s relationships with theatres today? How might these have shifted over the last couple of years, which were a trying time for the company and theatre chains? You mentioned issues the company might come up against with different theatres, as well as some theatres that are perhaps more inclined to work with it on different spots.
You said theatres currently have a lot of leverage. Has it always been this way? Obviously, you could buy nachos for many years, but a different dynamic has come into play in recent years with streaming. How have you seen that power dynamic play out, and has it increasingly been in the theatres’ hands? They’re in survival mode in many cases.
You mentioned NCM’s concession business and the Lobby Entertainment Network, and how there are issues of consistency and scaling that because of different requirements for different theatres, which could be a lot to manage nationally. What opportunities are there to drive more business or to improve existing offerings? This might be solvable with greater coordination or collaboration with a theatre chain.
NCM’s revenue is currently 45-46% of what it was in similar periods in 2019. What is the company’s ability to return to 2019 levels? Is this a realistic benchmark, considering many business lines have been shrinking over the last couple of years or aren’t as feasible post-pandemic?
You said NCM’s local-ad business has shrunk significantly. How important are local ads for the company vs national ads, and could you quantify the decrease? Is it about half the level you’d expect?
You highlighted reductions in employees working on the local-advertising front. There have also been efforts to expand digital offerings, the business outside the theatre. Could these potentially offset what has been lost with local advertising in the mid-to-longer term? How might this business fare?
You highlighted competition from Screenvision. How do you see the dynamics playing out in this match-up, and how can NCM differentiate itself? Is it purely a pricing question or are there other ways?
You said NCM is head-to-head with Screenvision. Since there are only these two big players, is there any opportunity for other companies to emerge and disrupt, or is this not very likely given the challenges the industry is facing? We discussed where ad dollars are being spent. What are advertisers’ thought processes for ad spend in terms of looking at buying ads in movie theatres vs an ad-based VOD [video-on-demand] offering such as Tubi or eventually a Netflix ad-supported tier?
What is your assessment of NCM’s ability to weather a potential recession? Is there a risk it might not pull through? Are there opportunities for further belt-tightening? You already mentioned a headcount reduction.
Do you think NCM’s management would be open to a merger with Screenvision at this point? Would it also agree it would make sense? What are your thoughts on CEO Thomas Lesinski’s management approach and style, and how that might impact the company’s outlook?
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