National CineMedia revenue jumps 7% in Q2

In-theater ad firm attributes increase to tight TV scatter market

A tight TV scatter market has buyers turning to in-theater advertising, National CineMedia said Tuesday.

The company reported a 7% increase in revenue during the second quarter to $99.1 million, though net income fell from $7.1 million to $4.6 million because of a pretax, noncash charge.

Pushing up revenue were increases in the CPMs the company was able to charge owing to a robust TV scatter market that had media buyers looking for alternatives, CEO Kurt Hall said.

On a conference call with analysts, he said National CineMedia's base of 100 advertisers has lots of room to grow, considering television boasts thousands of different advertisers.

"We compete for the same pool of money," he said after the company's earnings call Tuesday.

National CineMedia was able to increase its CPMs by 6.7% during the quarter compared with last year. Although the company doesn't disclose rates, analysts figure CPMs run about $35, compared with about $25 for primetime broadcast television and about $15 for cable TV.

Also driving National CineMedia's CPMs higher is 3D advertising, which Hall said attracts a significant premium. The company first began running 3D ads in movie theaters in April.

Dragging down earnings during the quarter were some PG-13 movies that underperformed, Hall said, and also the company's Fathom Events business.

Even though a heavy-metal concert starring Metallica was a hit on movie screens, Fathom posted a 5% decrease in revenue during the quarter to $8.9 million.

Hall said that a current-quarter presentation of Elvis Presley concert footage performed particular well for Fathom, as did a first-quarter one-night show starring Fox News personalities Glenn Beck and Bill O'Reilly live on 400 screens. Sporting events, though, underperformed during the second quarter.

"When you do new stuff in movie theaters, people need to get used to it," he said, noting that the Metropolitan Opera, which they have been presenting on screens for four seasons, has grown into a big draw.