v3.26.3
Business Combinations
 9 Months Ended
Oct. 01, 2026
Business Combination [Line Items]  
Business Combinations

4. BUSINESS COMBINATIONS

 

Acquisition of Captivate Holdings, LLC and Captivate Network Holdings, Inc.

On September 18, 2026, the Company completed the acquisition of Captivate, the leading operator of digital video elevator and lobby advertising in North America, whereby the Company acquired 100.0% of Captivate in exchange for cash consideration as outlined below. This acquisition combines NCM LLC’s established leadership in cinema advertising with Captivate’s unrivaled office and residential footprint, creating the leading premium video and digital out-of-home advertising platform. The combination of the NCM LLC and Captivate networks brings together three complementary premium audiences coveted by advertisers: NCM LLC’s young, diverse moviegoing audience and Captivate’s affluent professional audience in both Class A office buildings and residential properties. Together, the combined platform provides advertisers with a single premium media partner capable of reaching consumers and business decision makers in high-attention environments.

The following table summarizes the consideration transferred to acquire Captivate (in millions):

Fair Value of consideration transferred:

 

 

 

Cash

 

$

267.7

 

Escrow (1)

 

 

5.0

 

Less: Expected working capital adjustments

 

 

(0.3

)

Total

 

$

272.4

 

 

(1) The escrow is expected to be released within approximately 90 days of the close of the acquisition of Captivate.

The following table summarizes the fair value of Captivate 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.

 

Fair value of assets acquired:

 

 

 

Cash, cash equivalents and restricted cash

 

$

1.3

 

Receivables (1)

 

 

17.5

 

Prepaid expenses and other current assets

 

 

5.9

 

Property and equipment

 

 

13.8

 

Fair value of intangible assets

 

 

183.3

 

Goodwill (2)

 

 

109.3

 

Other long-term assets

 

 

1.0

 

Total assets acquired

 

 

332.1

 

Fair value of liabilities assumed:

 

 

 

Accrued expenses

 

 

0.8

 

Accrued payroll and related expenses

 

 

2.4

 

Accounts payable

 

 

7.2

 

Deferred revenue

 

 

0.6

 

Other current liabilities

 

 

0.7

 

Long-term liabilities

 

 

0.3

 

Deferred tax liabilities

 

 

47.7

 

Total liabilities assumed

 

 

59.7

 

Purchase price

 

$

272.4

 

 

(1)

Receivables acquired:

 

Fair value of trade receivables acquired:

 

 

Contract value of receivables acquired:

 

 

Amount of contractual cash flows not expected to be collected:

 

Trade receivables

 

$

17.5

 

 

$

17.5

 

 

$

—

 

(2) The Goodwill balance recognized of $109.3 million is partially related to the value of the assembled workforce which does not qualify for separate recognition as an intangible asset, as well as expected synergies from combining operations and projected growth of the acquired entity.

The provisional identifiable intangible assets of $183.3 million are subject to amortization. The following table summarizes the major classes of intangible assets acquired and their respective weighted-average estimated useful lives.

 

Useful Life

 

Fair Value

 

 

 

(Years)

 

(in millions)

 

Intangible assets subject to amortization

 

 

 

 

 

    Developed technology

 

3

 

$

35.8

 

    Customer relationships

 

6

 

 

40.9

 

    Installed base

 

17

 

 

91.5

 

    Trade name - Captivate

 

14

 

 

15.1

 

Total intangible assets

 

 

 

$

183.3

 

The acquired business contributed revenues of $2.5 million and a net loss of $1.7 million to the Company for the three and nine months ended October 1, 2026, respectively.

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 added 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):

 

Fair Value of consideration transferred:

 

 

 

Cash

 

$

7.1

 

Contingent consideration

 

 

1.3

 

Less: Expected working capital adjustments

 

 

(0.2

)

Total

 

$

8.2

 

 

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 unaudited Condensed Consolidated Statement of Operations. During the three and nine months ended October 1, 2026, the Company recorded a $0.1 million and $0.2 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 nine months ended October 1, 2026, $0.0 million and $0.0 million was included within ‘Network operating costs,’ $0.0 million and $0.0 million was included within ‘Selling and marketing costs’ and $0.0 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.

 

Fair value of assets acquired:

 

 

 

Cash, cash equivalents and restricted cash

 

$

1.2

 

Receivables (1)(3)

 

 

2.8

 

Prepaid expenses and other current assets

 

 

0.1

 

Property and equipment

 

 

2.0

 

Fair value of intangible assets

 

 

5.4

 

Goodwill (2)(3)

 

 

0.6

 

Total assets acquired

 

 

12.1

 

Fair value of liabilities assumed:

 

 

 

Accrued expenses

 

 

0.4

 

Accounts payable

 

 

2.4

 

Deferred revenue

 

 

1.1

 

Total liabilities assumed

 

 

3.9

 

Purchase price

 

$

8.2

 

 

(1)

Receivables acquired:

Fair value of trade receivables acquired:

 

Contract value of receivables acquired:

 

Amount of contractual cash flows not expected to be collected:

 

Trade receivables

$

2.9

 

$

2.9

 

$

0.0

 

 

(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. This goodwill was fully impaired in the three months ended October 1, 2026.

(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 $2.0 million and $6.0 million and net loss of $0.4 million and $0.4 million to the Company for the three and nine months ended October 1, 2026, respectively.

Pro Forma Financial Information (Unaudited)

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 nine months ended September 25, 2025, as well as the pro forma financial information as if the Captivate Acquisition had been included in the consolidated results of the Company for the entire period for the three and nine months ended October 1, 2026 and September 25, 2025. The unaudited financials are presented for informational purposes only and are not necessarily indicative of future operations or results had the Spotlight acquisition been completed as of December 29, 2023 and the Captivate Acquisition been completed as of December 26, 2024.

 

 

Three Months Ended

 

 

Nine Months
 Ended

 

 

Three Months Ended

 

 

Nine Months
 Ended

 

 

October 1, 2026

 

 

October 1, 2026

 

 

September 25, 2025

 

 

September 25, 2025

 

Net revenue

 

$

74.5

 

 

$

196.0

 

 

$

78.9

 

 

$

198.6

 

Net loss

 

$

(36.1

)

 

$

(74.0

)

 

$

(11.2

)

 

$

(78.9

)