AMC Can Merge With Carmike, Under Conditions

(RTTNews) - The U.S. Department of Justice has approved AMC Entertainment Holdings Inc.'s (AMC) proposed $1.2 billion acquisition of Carmike Cinemas Inc. (CKEC), under certain conditions.

Under the terms of the DOJ's proposed settlement, AMC Entertainment is required to divest theaters in 15 local markets, sell off most of its 17.4 percent stake and relinquish all of its governance rights in cinema media company National CineMedia LLC or NCM (NCMI).

AMC must also transfer 24 theaters with a total of 384 screens to the network of NCM's rival Screenvision LLC, to close the Carnike acquisition.

The DOJ's Antitrust Division filed a civil antitrust lawsuit Wednesday in the U.S. District Court for the District of Columbia to block the proposed acquisition. At the same time, the DOJ also filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit.

The DOJ noted that without the required divestitures and other relief, the merger would result in higher prices and lower quality theater amenities for moviegoers. It also weakened competition in the markets for preshow services and theater advertising, where Screenvision is NCM's only meaningful rival.

"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. Today's settlement will ensure that movie theatre competition is preserved in 15 local markets where AMC and Carmike currently compete," Acting Assistant Attorney General Renata Hesse of the DOJ's Antitrust Division said.

AMC is required to divest the movie theaters in the 15 local markets where AMC and Carmike are direct competitors, by February 18, 2017. In addition, by June 20, 2019, AMC must not own more than 4.99 percent of NCM's outstanding equity interests.

The proposed settlement also requires AMC to establish firewalls to ensure that it does not obtain competitively sensitive information of NCM, Screenvision or other movie exhibitors.

As of September 30, 2016, AMC operated about 388 theaters with a total of 5,295 screens located in 33 states and the District of Columbia. Its U.S. box office revenues were about $1.9 billion in 2015.

Carmike operated 271 movie theaters with a total of 2,917 screens located in 41 states. Its U.S. box office revenues were about $490 million in 2015.