Business Combination |
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| Business Combination [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination | 4. BUSINESS COMBINATION
Acquisition of Spotlight Cinema Networks On November 14, 2025, NCM LLC entered into the MIPA with Spotlight, a niche cinema advertising company, whereby the Company acquired 100.0% of Spotlight in exchange for cash consideration as outlined below. The acquisition of Spotlight adds high-scale luxury screens and exhibitors that offer unique and engaging customer experiences to the Company’s platform, unlocking new advertising and preshow entertainment inventory. The following table summarizes the consideration transferred to acquire Spotlight (in millions):
The contingent consideration was placed in an escrow account as of the acquisition date and will be released over the next three years as the required contract renewals are obtained for specified exhibitor agreements with upcoming expiration dates or as the exhibitors remain on the Spotlight Cinema Network for specified time periods. The fair value of the consideration and contingently returnable consideration are calculated utilizing the present value of payments by exhibitor probability weighted based on the respective estimated likelihood of renewal. The undiscounted maximum amount of contingent consideration is $1.6 million. Each period, the Company will revalue the contingently returnable consideration to its fair value and record the related changes in the Consolidated Statement of Income. During the three and six months ended July 2, 2026, the Company recorded a $0.1 million and $0.1 million increase, respectively, in the contingently returnable consideration. Changes in the contingently returnable consideration result from changes in assumptions regarding probabilities of successful achievement of exhibitor renewals, the estimated timing in which renewals are achieved and the discount rate used to estimate the fair value of the asset. In connection with the acquisition of Spotlight Cinema Networks, the Company entered into transition agreements with various employees, transitional independent contractor agreements and a transition services agreement with one of the sellers. The expense related to these agreements is recognized as the underlying services are performed. For the three and six months ended July 2, 2026, $0.0 million and $0.1 million was included within ‘Network operating costs,’ $0.0 million and $0.0 million was included within ‘Selling and marketing costs’ and $0.1 million and $0.2 million was included within ‘Administrative and other costs,’ respectively, as presented on the unaudited Condensed Consolidated Statements of Operations based upon the nature of the work being performed. The following table summarizes the fair value of Spotlight and provisional fair values of the assets acquired and liabilities assumed as of the acquisition date (in millions). The provisional allocation of the purchase price was based upon a preliminary valuation, and the Company's estimates and assumptions are subject to change as valuations are finalized within the measurement period, which cannot extend beyond one year from the acquisition date.
(1)
(2) The Goodwill balance recognized of $0.6 million is primarily related to the value of the assembled workforce which does not qualify for separate recognition as an intangible asset. (3) Includes a working capital adjustment recorded during the three months ended July 2, 2026 that decreased accounts receivable, net by $0.1 million and increased goodwill by $0.1 million. The acquired business contributed revenues of $2.4 million and $4.0 million and net income of $0.6 million and net loss of $0.0 million to the Company for the three and six months ended July 2, 2026, respectively. Pro Forma Financial Information (Unaudited) - Spotlight Cinema Network The following represents the pro forma Consolidated Statement of Operations as if the Spotlight acquisition had been included in the consolidated results of the Company for the entire period for the three and six months ended June 26, 2025.
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