Q4 2021 National Cinemedia Inc Earnings Call
Ladies and gentlemen, you're currently on hold for today's National Screen Media, Inc, Q4, and full year 2021 earnings conference call. At this time are still many additional participants do you Wanna get away momentarily I appreciate your patients, especially if he's made a note.
[music].
Please standby we're about to begin.
Good day and welcome to the National Cinema Media, Inc, Q4, and full year 2021 earnings Conference call. Today's conference is being recorded at.
At this time I'd like to turn the coverts over to Mr. Roni, Inc. CFO . Please go ahead Sir.
Great. Thank you good afternoon, I'm joined today by our CEO , Tom Lesinski I would like to remind our listeners that this conference call contains forward looking statements within the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of 19.
34 as amended.
All statements, including our discussion about the future impacts of COVID-19, other than statements of historical facts communicated during this conference call may constitute forward looking statements.
These forward looking statements involve risks and uncertainties.
Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's filings with the SEC.
All forward looking statements are expressly qualified in their entirety by such factors further our discussion today includes some non-GAAP measures in accordance with regulation G. We have reconciled these amounts back to the closest GAAP based measurement.
These reconciliations can be found at the end of today's earnings release or on the Investor Relations page of our website I N C. M. Dot com now I will turn the call over to Tom. Thank.
Thank you Ronnie and good afternoon, everyone.
Welcome to our fourth quarter and full year 'twenty, one earnings call. It's been a very active and productive quarter for National cinema media as we successfully navigated through the unique marketplace challenges that have impacted our business for nearly two years I.
I am pleased to report that we have generated positive adjusted OIBDA for the first time in six quarters and.
In addition, we've strengthened our liquidity position and have begun to turn the corner operationally and once again our position for growth.
With the strong box office performance since Labor day weekend cinema is back into the planning cycle for the advertisers and their agencies.
With this more consistent film release schedule and the record breaking box office results of Spider Man.
Cinema is once again, providing the broad reach of our clients have been accustomed to.
In fact spiderman its opening weekend had higher ratings than either with the Super Bowl now delivers.
Given this cinema recovery, we are very optimistic for 'twenty two.
For the first time since the start of the pandemic, we're starting the year with meaningful upfront bookings.
Packed in attractive film release slate and growing consumer demand to return to the theaters as COVID-19 infections.
Plummet and mass mandates come to an end.
During today's call Ronnie and I will provide a high level update on our company's enhanced liquidity position and our progress to rebuild our cash flow and working capital back to normalized levels. I will also address how we've taken steps to expand diversify and improve our business to enable us to capitalize on a strong 22 theatrical film slate with a return to.
Exclusive release Windows.
The effectiveness of our cinema network combined with our digital advertising platforms and exciting new audience driven data solutions have never been more valuable to advertisers as TV ratings continue to fall and new questions are being raised about consumer privacy.
We will also discuss how we are once again aggressively competing in the TV upfront and scatter marketplaces and then we'll open the line for questions.
Well I realize that the long term success of our business does not hinge on one film.
Sony Spiderman, Nobody home had a meaningful impact on our AD business as well as the cinema business.
Despite its release schedule of December 17th which coincided with the rise of the on the Crown variant Spiderman broke multiple attendance records and demonstrated the cinema cultural impact and ability to create huge marketing and PR awareness for film.
So demand is currently the third highest grossing domestic film of all time with most of its attendance coming with omicron cases were surging and.
And the severity was still unknown.
It enjoyed the biggest domestic December opening of all time at $260 million. It was the first film to grow to $1 billion Mark.
Worldwide since 2019.
The initial theatrical trailer garnered 355 million global views at a 24 hour period, topping Black widow Avengers Infinity War and Star Wars, the last Jedi.
Early ticket sales overwhelmed ticketing selling platforms, such as Fandango, Movietickets Dotcom day, AMC and Regal sites and first day ticket Presale broke pandemic records for AMC and Cinemark.
The film franchise has a social fan base of over $1 5 billion followers with the film Premier hosted by Tictac, garnering 50 billion views.
The most important statistic of note, let's speaking with the advertising community as that Spider man its opening weekend Dilip.
Deliberate a larger 18 to 34 year old audience in the 2022 Super Bowl.
With a rating of $28 three compared to the superbowl weighting of 24.1.
This data point, coupled with commanding reached statistics, along the movie Goer journey from a trailer to ticket pre sales to opening weekend and beyond has been a powerful selling tool.
In the recent scatter market and more importantly, during our preliminary 'twenty two 'twenty three upfront meetings block.
Blockbuster theatrical releases bring enormous scale and cultural influence, especially among the highly coveted Gen Z and millennial consumers, which is very important to our advertising clients.
This demonstrates the power of the cinema platform as a marketing launch pad.
That TV and streaming platforms, just cannot provide to movie studios and producers.
In addition to Spider Man, we saw young diverse audience just come out in droves for other fourth quarter releases, such as venom Eternal no time to die Ghostbusters and dune nearly one and two adults aged 18 to 34 went to the movies in the fourth quarter.
In addition, the fourth quarter backlog box office of over 2 billion was 75% of 2019 levels and 73% of the five year average for 2015 to 2019.
This is a clear demonstration of the consumer demand for the big screen experience. The movie theater, and we expect that trend to continue and strengthen through this year and beyond as the film release schedule deepens.
Theres just film slate is so promising that there may in fact be several titles that could follow and Spider man as record breaking footsteps.
2022, potentially driving other record box office years.
There are a number of Tentpole films opening in the first half of the year such as the Batman arch fourth.
On April 11th.
I like the Hedgehog on April 8th Doctor Strange on May 6th.
Top gun on May 27th and Jurassic World on June 10th as well as Pixar as light year on June 17th.
These highly anticipated sales are driving significant social buzz and high interest as we discussed them with advertisers and they will get consumers back into the movie going habits before the summer vacation months.
It's also important to note that most film releases are confirmed for a 40 day exclusive theatrical window as we saw in 2021 those films that opened exclusively on streaming services or day and date with cinema did not benefit from the huge marketing and PNR exposure provided by our broad initial theatrical launch.
Now the streaming and other downstream platforms will once again be able to take advantage of the powerful launch platform that an exclusive cinema at least provides.
Even Netflix has begun to provide a short exclusive theatrical window for select films.
And initial theatrical release will also significantly reduce the risk of piracy that companies that accompanies an initial on my online release as Warner Brothers recently experienced with the matrix resurrection.
While macroeconomic headwinds associated with supply chain supply chain disruptions and inflation continue to persist overall consumer demand in the job market continuing to strength and we expect the advertising marketplace to remain robust and for Gen Z and millennials to be the fastest growing consumer segment.
Millennials already spent one trillion annually and that spending power will increase as their income reaches over eight trillion by 2025.
Six point Fortunately for Gen Xers, and 1.1 Chilean from Baby Boomers.
This is great news for US is sentiment is the best place for marketers to connect with this young and growing consumer segment.
Throughout the pandemic, we have worked very hard to maintain client and agency relationships and sell this value proposition. So that we were well positioned as theatrical release schedule normalizes and the audience returns to the cinema.
While our AD revenue recovery has lagged the cinema box office recovery somewhat due to the inability to participate in the 2020 broadcast and calendar upfront selling seasons. This trend began to reverse itself in Q4 and is expected to continue to reverse due to higher level commitments received during the recent 2021 'twenty two upfront and the 20.
Two twenty-three upfront that are currently in the planning process.
While most well first quarter is seasonally a slower quarter. We are pacing in line with projections and significantly ahead of Q1 2021 thanks in large part to this year's successful upfront.
Our 'twenty two calendar year upfront is currently tracking at similar levels that we previously shared with many deals still in active discussions we expect most of the big brands, who advertise with MCM in the past to make commitments to US again in 'twenty. Two in addition to a few new brands specifically in the crypto and online bedding categories.
We will also benefit from a higher sell through of our platinum AD unit, our newest and highest value inventory that runs closest to the start of the film.
We sold the platinum units in November and December of 'twenty, One and we recently secured another platinum come in from an advertiser in the travel category. During March of 'twenty. Two as you may recall the platinum unit was introduced just prior to the start of the pandemic in the second half of 2019.
Thus, we are anticipating higher revenue from platinum sales in 'twenty, two and beyond and in fact, it will be featured as part of our post Showtime product mix during the upcoming upfront selling season, beginning this month.
With the 2022 broadcast TV in 2023 calendar upfront season approaching we have planned for a very aggressive marketing and sales campaign that features a series of in person upfront meetings and film screening events. This spring we are inviting marketers and media agencies in New York L. A and Chicago two exclusive lie presentations.
Similar to the upfront meetings held by the TV networks in New York City in May, but much more intimate and focused on planning and buying decision makers as well as their clients.
As media planners and virus consider their option within the current media landscape the power and importance of the theatrical advertising spreads has great momentum after a strong Q4 anchored by the overwhelming success of Spider Man.
The trend of younger audiences, abandoning AD supported linear television and in some cases.
And never having watched it at all making cinema, a very attractive T. B G ERP replacement vehicle.
In addition, while AD supported streaming is growing it only represents approximately 9% of overall video consumption and in any given weekend provides for farthest reach and overall effectiveness that cinema.
The results of an AD effectiveness study we conducted in Q4 demonstrated that cinema AD recall is approximately three times higher than TV or social media advertising.
During the upfront events, we will also make several new announcements to the advertising community and provide details on recent sales initiatives for instance, we have a new transformative data driven solution. We've been testing that allows us to better serve advertisers key consumer segments, using our extensive data and knowledge of moviegoers and their behavior.
And the <unk> ongoing commitment to growing our datasets also allows us to utilize digital to deliver one to one addressable witty.
Our digital platforms are well positioned in our current offering as the past two years have served as an opportunity to leverage digital advertising tell brands reach movie fans.
This proved to be a particularly effective with our local advertisers as a complement to the big screen campaigns.
These integrated selling efforts during the pandemic kept positions us very well as the cinema business recovers in the coming months, we've already had several big integrated wins in the travel category in Q1 and will continue to focus on the integrated selling throughout the year.
In October of 'twenty, one, we launched a partnership with new time media.
Media advertising sales represent representation company that focuses on the black and Hispanic consumer to help us better serve marketers looking to reach African Americans and Hispanic audiences importantly, mcm's audience is 42% diverse with new time, we're bringing to market to highly targeted specialty cinema advertising networks.
<unk> Black cinema network, which includes 339 theaters with over 5400 screens expected to reach an audience of 11.4 million consumers monthly as.
As well as Mcm's. Hispanic cinema network, which includes over 449 theaters and over 6000 screens expected to reach $15 4 million consumers monthly.
Another area of strategic focus during a pandemic has been to re imagine our newly pre show by integrating into the show innovative content marketing opportunities for advertisers.
In Q4 of 'twenty, one we began developing and producing new intellectual property concept being ideas, which will engage the movie going audience, while offering customizable sponsorships integration and branded content platforms to advertisers.
Even for the massive success of Spider Man, and we leaned into the public's passion for franchises from the Marvel cinematic universe, and DC comics and create a superhero themed original content series called the newbie versus that were hosted by an array of social media Influencers, who discussed the upcoming feels and editorial content.
Our Spider man themed episode resonated with the public and drove a 17% increase in followers under the social media.
Throughout 'twenty, two our marketing digital research and sales planning teams will aggressively create and package new original and studio IP and content led products for advertisers elevating mcm's capability as a creative media company.
During the pandemic, we also completed and launched our new cinema advertising management system that will allow us to more effectively utilize in price of inventory short order to screen lead times create more flexibility to meet advertiser budgets and maintain lower I T and operating staffing levels.
It will also provide strategic scheduling capabilities, creating more equitable rotation across the network, including the ability to better optimize campaigns in flight.
This platform is in a central components of the foundation for future automation and programmatic offerings, both of which could significantly enhance our business.
The local and regional front, we completed the restructuring of our business model and selling organization to place more sales focus on the larger markets favored by advertisers and increased gross margins of this segment of our business.
We now have four major markets local and regional sales teams, which will place more focus on larger client partnerships as smaller local businesses recover from the pandemic and begin to market their businesses more aggressively.
While advertising investment is picking up across the country with smaller local businesses are still challenged while larger businesses within three key categories government education and health care have increased their share to now account for 62% of fourth quarter revenue for our local and regional business segment.
Importantly, we have already started to see that that is up at this new implemented structure in the first quarter of this year.
The pandemic required us to make many difficult choices and balancing the business and financial needs of the company, while retaining a very high quality team at high quality relationships with our clients, we have right sized and filled in staffing where needed and restored full pay for all <unk> employees beginning in January of 'twenty two.
As we continue to evaluate the short medium and long term needs of the business, we expect a stable workforce for 'twenty two and beyond.
I'm very very proud of the job our retiree NCR team did during the pandemic and the hard work that continues and I would like to sincerely. Thank them, our board and exhibition partners for their continued support as we navigate the evolution of our businesses together.
We believe that we're well positioned for the future as we continue to maintain strong liquidity and begin to shift our focus to growth by executing on our sales and operating plan that will bring the unparalleled marketing power of the movies and are desirable in growing audiences to marketers and their brands, although I'll turn it back to Rodney to discuss our financial results and conditions in more.
Dale.
Thank you Tom and good afternoon, everyone National Center Media finished the year on a strong note as we continue to accelerate the momentum from the third quarter into the fourth quarter, we experienced significant quarter over quarter and monthly sequential attendance growth during the fourth quarter.
In addition, despite not having meaningful upfront sales advertising demand increased throughout the fourth quarter as evidenced by our strong monthly sequential advertising sales growth.
Our sales fundamentals also continue to improve with a higher average C. P M and revenue per attendee compared to the prior quarter.
Combination of our meaningful improvement in revenue and our continued strict expense management.
Resulted in our first positive adjusted OIBDA and positive interest coverage quarter since the start of the pandemic.
Along with increased focus on better working capital management and capital allocation, our cash burn for the quarter was well below our guidance back in November .
In addition, we also bolstered our liquidity position at the start of the start of 2022 with the funding of a new 50 million dollar revolving credit facility.
Which when combined with our improved operating performance resulted in a ratings upgrade from S&P.
For the fourth quarter total revenue was $663 5 million, which increased 305% compared to the same period of the prior year and was more than doubled the revenue of the third quarter in.
In addition, our monthly revenue during the quarter strongly grew sequentially each month.
This growth in revenue was achieved despite not having meaningful upfront sales for the period, which limited our ability to fully monetize the record breaking success of Spider Man No way home.
In addition for the first half of the quarter. We continue to work through the typical lag between to return theater attendance and increases in AD revenue as media buyers concerned about additional delays in film releases needed to confirm a critical mass of AD.
<unk> before they make substantial ad commitments.
Our operating metrics continue to improve in the fourth quarter has total network theater attendance for the fourth quarter was $112 1 million.
Which was 48% higher compared to the third quarter.
And attendance grew sequentially each month during the quarter.
Advertising pricing also improved with national CPM slightly exceeding that of the fourth quarter of 2019.
Yeah, and it was also up 38% compared to the third quarter of 2021.
National utilization rates for the fourth quarter increased approximately 637 basis points.
Paired to the third quarter of 2021.
As a result of the improving fundamentals.
Our revenue per attendee, excluding beverage for the fourth quarter grew by 35% compared to the third quarter.
Fourth quarter operating expenses, excluding depreciation and amortization was $46 8 million, which was approximately $5 1 million higher compared to the third quarter.
The increase was primarily related to the continue return of theater attendance, which.
Which resulted in higher theater access fees and affiliate expenses.
As the pace of recovery continues to accelerate we also continue to monitor and manage expenses tightly to maintain savings that were captured over the last two years as we implemented many core operating efficiencies.
In the fourth quarter, our core operating expenses averaged approximately five milligram per month.
<unk> to our pre Covid run rate of nine and a half milligram per month or a savings of 47%.
This also compared favorably to our third quarter average of 6 million per month.
A 16% improvement.
As we have mentioned before while we expect these average monthly core operating expenses to increase somewhat as our business continues to trend back to historical levels. Some of these savings are expected to be permanent.
Total fourth quarter, adjusted OIBDA of $18 4 million exceeded both management, an average consensus expectations.
This also compared favorably to the negative $9 9 million in the fourth quarter of 2020 and negative $8 2 million in the third quarter of 2021.
Again. This is the first quarter of positive adjusted OIBDA since the pandemic started at the end of the first quarter of 2020.
The positive adjusted OIBDA reflects the revenue growth driven by the continued return of moviegoers and increasing advertiser demand combined with strict core operating expense management.
Our fourth quarter average cash burn rate was approximately.
One 9 million per month.
A substantial improvement compared to the third quarter of $11, two mellon and much better than the optimistic end of our guidance for the fourth quarter of three to 4 million per month.
Given during our third quarter earnings call in November .
Better than expected cash burn for the quarter reflected continued revenue growth.
Tight expense management.
And improved working capital management.
For the full year of 2021 National Center media generated $114 6 million in total revenue compared to $90 4 million in 2020 and.
An increase of 26, 8%.
This increase was driven by the return of movie goers, starting with the strong Labor day weekend box office.
Adjusted OIBDA for the full year of 2021 was negative $24 7 million compared to negative $19 4 million in 2020.
Which was due to the positive adjusted OIBDA generated in the first quarter of 2020 that was mostly unaffected by the pandemic has movie theaters began to close in late Q1 of 2020.
Theatres were also closed very large larger portion of 2020 compared to 2021.
Which resulted in lower theater access fees in 2020.
It's important to note that these year over year comparisons understate the strength of the recovery in 2021 as our AD revenue for the last nine months of 2021.
Increased over 325% versus the last nine months of 2020.
For the fourth quarter, we reported GAAP earnings per diluted share of 11th.
Versus a loss per diluted share of <unk> 45 in the fourth quarter of 2020.
For the full year of 2021, where we reported a GAAP diluted loss per share of <unk> 61.
Compared to a loss per diluted share of <unk> 84 for the full year of 2020.
For the full year 2021 capital expenditures were $6 5 million compared to $11 2 million in 2023, a reduction of $5 7 million.
This decrease was related to the completion of our cinema advertising management system in the first quarter of 2021.
And the reduction of nonessential capital spending.
As Tom mentioned, the cinema advertising management system has been a huge success and has laid the foundation for other sales and operational improvements in the future.
In the fourth quarter and for the full year of 2021 integration and other encumbered theater payments due from AMC were $1 3 million and $1 6 million compared to zero in one formula respectively for 2020.
The E&C integration payments are based on what <unk> see them could have earned had advertising been sold in those theatres by our sales teams.
As a reminder, these integration and other encumbered theater payments are added to adjusted OIBDA for debt compliance and partnership cash distribution purposes, but.
Are not included in reported revenue or adjusted OIBDA as they are recorded as a reduction to net intangible assets on the balance sheet.
Turning to our balance sheet or.
Our total debt net of cash at N C. M. LLC at the end of 2021 increased 113 million to 1.05 billing.
<unk> two 936 million at the end of the year of 2020.
Our average interest rate on all debt was approximately five 5%.
For the full year of 2021 compared to 5% for the full year of 2020.
Due to the <unk> Mellon of new terminal will be funded first.
Quarter of 2021, and the amendment at the at that time.
Excluding revolver balances.
Approximately 68% of our total debt outstanding at the end of 2021 had a fixed interest rate.
N C M LLC cash balance at the end of 2021 was $58 6 million and.
And including the $6 8 million of availability under the revolver MCM LLC total liquidity at year end was approximately $65.
Formula.
Which was in excess of our liquidity covenant that requires a minimum liquidity of 55 million.
Okay.
As I mentioned in my opening remarks at the start of 2022, we completed the funding of a new $50 million dollar revolving credit facility.
And an amendment to our existing credit facilities.
The new $50 million revolving credit facility significantly enhanced our liquidity position, which will help the company build its working capital back to normalized levels.
The new revolving facility, which was fully drawn at close.
Will mature with our existing bank revolver in June .
2023.
It has an interest rate of sulfur plus 800 basis points.
And a 1% sulfur floor.
Simultaneously, we also completed an amendment to our existing senior secured credit agreement.
Which will provide a comfortable path for N C Allen to fully recover from the pandemic.
The amendment included an extension of the suspension of our financial maintenance covenants until and including the quarter ending December 29 2022.
It also amended our net total leverage ratio and net senior secured leverage ratio for the first three quarters of 2023, when our adjusted OIBDA will begin to drive leverage levels down to historical levels.
In addition, as mentioned previously.
Due to the improved liquidity and outlook S&P upgraded national cinema media LLC credit rating, one notch to a corporate family rating and secure rating of BB minus from Triple C plus an unsecured rating of Triple C from Triple C minus.
As a result of the new financing a better than expected Q4 and improved receivables collections.
N C. M. Lse's current cash balances are $86 7 million and including the $6 8 million of availability under the revolver.
And see them LLC has total liquidity is approximately 93 and a half million dollars.
Meaningfully higher than our 55 million dollar liquidity covenant.
Our board of directors voted to maintain the MCM, Inc. Quarterly cash dividend at <unk> per share of common stock.
This dividend will be paid on March 31.
2022 to stockholder of record on March 17th of 2022.
The quarterly dividend will result in a current yield of six 8% based on today's closing share price of $2 93 sons.
<unk> cash balance will be approximately $39 3 million after payment of this most recent dividend.
The net financial flexibility during.
During the pandemic recovery.
This financial flexibility will continue to be proactively evaluated by the board of directors and management in order to maximize the alternatives associated with changes in our capital structure that may be required due to future debt maturities, which began in June 2023.
As always the declaration payment timing and amount of future dividends payable will be at the sole discretion of the board of directors, who will also consider general economic and advertising market business conditions and the company's financial condition.
While overall business contingent conditions continue to improve.
And our revenue begins to recover there continues to be some level of uncertainty related to the lingering impact of the pandemic on our business on our business, making it difficult to provide annual revenue and adjusted OIBDA guidance.
However, going forward, we intend to provide quarterly guidance.
For the first quarter, which is a seasonally slower quarter, we expect revenue and adjusted OIBDA to be much improved compared to the first quarter of 2021.
We currently already have more than the majority of our first quarter national advertising booked compared to our internal estimate and our local and regional business is starting to recover are smaller businesses begin to recover from the pandemic.
We expect first quarter revenue to be 32 million to $35 million for a 487% to 542% growth compared to the prior year due primarily by the upfront commitments secured last year.
Again, given the slower seasonal first quarter and an increase in theater access fees associated with the cinema business recovery. We expect the first quarter of 2022 to have negative adjusted OIBDA of seven 4 million.
In addition, due to the expected cash interest expense of approximately 14 million and approximately $1 6 million of Capex for the first quarter.
We expect.
The first quarter to have a monthly cash burn of six to 8 million.
Our core operating expenses for the full year of 2022 is.
As expected to average approximately six and a half two seven and a half million per month.
Which is significant which is a significant savings compared to our pre COVID-19 run rate of nine and a half million per month.
Slight increases in core operating expenses compared to 2021 are expected to come from increased sales commissions because of higher sales levels and restoring all employees to full pay.
Capital expenditures for the full year of 2022 is expected to be six five to seven and a half Miller as we continue to judiciously invest in management systems and other growth.
Initiatives.
In summary, our business is starting to turn the corner and we continue to see acceleration in business activity and increased interest in our coveted.
The demographic and our national reach.
With the benefit of a solid calendar upfront completed last year.
We are very optimistic about the prospects on those accounts.
Fight the unprecedented challenges of the pandemic and evidenced by the record breaking box office performance of Spider Man. It is clear that the cinema that the cinema experience is still the best place for filmmakers to launch their films and the preferred place to experience their work.
Strong momentum coming out of 2021, we are looking forward to an exciting and prosperous 2022.
With that we will now open the lines for questions operator.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad.
Using a speaker phone. Please make sure that your mute function is turned off to about your signal to reach our equipment. Once again that is star one if you'd like to ask a question.
We will take our first question from Eric Wold with B Riley Securities. Please go ahead.
Thank you.
Afternoon.
A couple of questions I guess one.
Thinking back to the Q3 conference call you noted at the time that.
The 'twenty two calendar upfront was running are tracking about 75% of 19 miles can you give us an update.
Where that shaped out in kind of your thoughts on.
That relative to your direction.
Well, let me, let me just sort of.
Sort of find a way to frame. This most important thing is you know the upfront is still very much strong and where we had originally forecasted it to be and the most important thing is how it's correlating to the box office.
If you look at the box office estimates for this year.
The 75% tracking is very consistent with where we are from a box office point of view.
And importantly.
We're doing a very very good job of maintaining.
The premium pricing that we're known for as a company.
So.
We're very pleased with how the Upfronts going as you know we have another upfront starting literally this month, which is the broadcast and calendar upfront really beginning.
For the fourth quarter of this year going into next year. So all things being said every major advertiser.
Who's been with us in the past.
It's pretty much back in the upfront more than 50 different brands.
Participating in the upfront or half production number and so we were very happy with the upfront, especially like knowledge that a lot of that upfront negotiating that's what's happened.
Whilst the omicron variant and Covid was still running pretty rapidly.
In the country.
So we're pleased with where we are and we're pleased with the continued interest.
In our company from an upfront point of view.
No that's helpful.
Maybe you could drill down a bit so it kind of beyond kind of an absolute number of an upfront.
You kind of dive down into.
Kind of the components of it so to speak in terms of.
How far in advance advertisers are.
We're willing to commit or kind of how far advanced are looking for their placements kind of relative to pre pandemic side with campaigns CPM. They didn't give a sense I'm just kind of the drivers of that versus just the overall size of the yes for himself.
You know as I mentioned on the on the prior quarter called the most important metric we have as a advertising company is commitments people are making.
Over multiple periods of time, so as you know the upfront is a year long commitment.
We believe it's a far better indication of consumer purchases may of advertiser interest in our platform.
So in the case of this most current upfront.
Basically people who are committing a year ahead of time.
And when you think about that they were making a lot of those decisions while the mass mandates were largely in place.
And largely while Covid was still a big unknown compared to how much it's changed just in the last month.
It's really a pretty impressive indication that people were willing to make money or to put money down.
On the upfront.
In terms of pricing, we've been able to maintain our premium position in the pricing category. As you know Eric we are next to the Super Bowl and the Academy Awards, and probably the NBA finals. The most expensive CPM medium out there. So we're happy to be maintaining those kind of levels on the upfront basis, which you can imagine.
That's been fairly difficult to do given the uncertainty of the box office.
In terms of the you know the dollar amounts we arent, we arent providing that specific information on the upfront.
But I think you can calculate based on the percentages, we've given kind of where that lines up to 2019 levels.
Got it and then just final question.
If obviously you got visibility into into the upfront.
Turning to see scatter.
Demand.
Loosen up so to speak and you've got to kind of the reconfigured.
Sales force on that.
As the main hold that from kind of providing even though the baseline annual guidance really just uncertainty around.
Ladies movement, and something could pop up around COVID-19 or is there some uncertainty around.
At all around the safety net so to speak of that upfront.
There, there's nothing Covid related right now that's really I would say affecting the scatter market I think whats affecting the scatter market more than anything right. Now is the economy in general supply chain certain big advertisers like the car companies that have inventory issues.
And even as recently as you know the the impact of things like the war so.
We're not getting any real direct impact on scatter today.
It related to COVID-19 or attendance.
Having said that you know the scatter market historically in the first quarter is always a little slow coming out of the holidays and you know again, it's by far the lightest month.
They're not only we have but also that the advertising industry has so I think come next quarter. When we've got another quarter behind us and we've got outlook into Q2 will be a far better indication of how the scatter market looks for everybody but.
But we're pleased so far with how it's gone in.
Q4 and Q1.
Got it thank you.
Sure.
Okay.
Thank you we'll take our next question from Jim Goss with Barrington Research.
Alright.
Yeah.
Hum.
I was wondering if you could talk about I.
I guess any inroads <unk> made in terms of attracting new advertisers to the platform I know you mentioned crypto and then just.
Or <unk>.
Categories might be performing less well versus where they were pre pandemic adjustments.
Just mentioned auto gone through supply challenges et cetera.
Kind of maybe still smartphone.
Yeah.
Honestly.
Sides crypto.
Besides crypto of which Theres. Many many crypto companies out there now that weren't around as early as even six months ago.
We believe that the sports.
<unk> gaming business.
As another new opportunity for us.
And we believe sort of given the pervasive nature of that industry growing that that could be a big opportunity in terms of.
Other areas that have not been productive we the only softness honestly is the supply chain related car business and that is not affecting just you know MCM, it's affecting the network business in the TV business, including the digital businesses.
Having said that we deal with very good business with some of the non impacted chip companies, including the Korean brands. So youll see advertising for example from key us electric car or a platform today.
And we recently did do a fairly good deal with a large U S. Auto company. So we believe the second half of the year is going to be a.
A significant recovery for the car part of our business, but I can tell you that no individual category.
Is any different than it was in 2019 and actually we're quite happy with everything from the insurance companies to electronics consumer package goods insurance.
E tail.
Every major category that has been with us in the prior upfronts going back to 2019 all of those categories are with US today, which is really you know I'm a little surprised by honestly, but I'm really encouraged by the support we're getting.
From those industries that have always been big fans of cinema advertising.
Okay.
And then just.
Lastly.
I guess bill.
There is an opportunity to benefit from I guess political displacement from general broadcast Oh, yes, yes.
I do think it's an opportunity obviously, it's something that requires a lot of.
Instrument in terms of looking at the type of political advertising that exists there certainly advocacy advertising.
That is potentially.
Less problematic, we want to make sure if we ever accept political advertising, which we historically haven't done.
That is not going to be anything that's going to upset anyone in the crowd. So it's another category that we.
We hope to mine.
Especially going into the fourth quarter.
But we want to be mindful that it's all about the movie experience and making sure.
Thats certain kinds of political advertising that being the more controversial ones, it's not a problematic situation for.
Theater visitors.
And Jim your your your question on displacement.
We certainly.
Expect there to be some positive upside from that in particular in the third and the beginning of the fourth quarter.
Okay. Thank you.
Yes.
Thank you and that does conclude today's question and answer session I would now to turn the conference back over to management for any additional or closing remarks.
Okay. So as I've mentioned previously we are very well positioned for the future.
As we leave this pandemic behind us hopefully for good and as we focus on the road ahead.
Again as the last six months have proven out there is ample demand for the theatergoing experience and as such advertising demand for our hard to reach diverse 18 to 34 year old demographic is very very high.
The progress we've made today with the execution of our business strategies and additional financings and amendments have positioned us very very well in 'twenty, two and beyond and.
In addition, the strong film slate in 'twenty, two and the commitments by major studios to an exclusive window will ensure the growth of movie attendance.
I'd like to once again, thank our senior management team and our whole staff for their hard work. During these past couple of challenging years, and particularly thank our shareholders and lenders for their support and patience.
We truly appreciate you joining us on the call and hope everyone continues to stay safe and healthy.
See you at the movies look forward to it thank you very much.
Thank you and that does conclude today's conference. We do thank you all for your participation and you may now disconnect.
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