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AMC Entertainment Reaches Settlement With Justice Department to Clear Carmike Merger

Variety logo Variety 12/20/2016 Ted Johnson
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AMC Entertainment has reached a settlement with antitrust officials at the Justice Department that will clear the way for its $1.2 billion acquisition of Carmike Cinemas.

AMC will divest theaters in 15 markets, sell off its holdings, and relinquish governance rights in National CineMedia, and transfer 24 theaters with 384 screens to the network of Screenvision Media.

“Moviegoers across the United States have benefited from head-to-head competition between AMC and Carmike that has kept ticket prices in check and delivered a higher quality movie experience,” said Renata Hesse, acting assistant attorney in the DOJ’s Antitrust Division. “Today’s settlement will ensure that movie theater competition is preserved in 15 local markets where AMC and Carmike currently compete.”

She also said that requiring AMC to divest from National CineMedia and transfer screens to Screenvision “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.”

The DOJ filed suit to block the NCM-Screenvision merger in November of 2014. The two companies then abandoned their plans to combine. NCM and Screenvision together serve more than 80% of U.S. movie screens and compete for exclusive contracts for pre-show advertising.

The DOJ had concerns with the AMC-Carmike merger because they are competitors in 15 markets.

Under the terms of the settlement, which still must be approved by a federal judge, AMC must divest the majority of its equity interest in NCM so that it owns no more than 4.99% of the company.

The settlement also requires “firewalls” to ensure that AMC does not obtain NCM’s, Screenvision’s, or other movie exhibitors’ competitively sensitive information “or become a conduit for the flow of such information between NCM and Screenvision,” according to the DOJ.

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