From 1 January 2011 DCM will have the exclusive rights to sell on-screen advertising in Vue Entertainment’s 67 multiplex cinemas. The contract is a revenue share deal with no minimum guarantee.
The Vue contract is worth about 20% of the total cinema market and accounted for almost half of Pearl & Dean’s revenue. From 1 January DCM will hold about 80% of the cinema ad sales market, with Pearl & Dean having the remainder.
It is understood the contract will not create any competition issues as DCM, known as Carlton Screen Advertising until December 2008, accounted for 75% of the market in 2005.
Pearl & Dean’s contract with Vue included a minimum income guarantee, £17.6m for 2010, viewed as so harsh that Pearl & Dean’s former owner STV called the contract "onerous" in its 2009 results. It is not known if Pearl & Dean bidded for the new contract.
Martin Bowley, managing director of DCM, said: "Since its inception DCM has worked hard to create a professional sales outfit. We innovate all the time and it’s all about getting cinema on media plans. We hope to have a long relationship with Vue."
Bowley said DCM had no plans to "staff up" to rep the Vue contract as DCM has a flexible structure which is designed to be able to take on more business.
Vue Entertainment said it chose DCM because it felt DCM offered opportunities to innovate, would improve the accessibility of cinema advertising to advertisers, and it liked the DCM team and its structure and offered long term stability.
Tim Richards, chief executive of Vue Entertainment, said: "DCM is best placed to develop, deliver and handle our screen advertising business and we both agree there is a great opportunity to grow the overall share of the ad market that cinema enjoy."
STV agreed to sell Pearl & Dean Cinemas to a new company backed by the owner of Empire Cinemas for £1 in April this year. Under the terms of the deal, the new company Image Limited paid STV £9.1m of the minimum income guarantee paid to Vue cinemas for the period from 1 May.
Following the sale of Pearl & Dean it took over the contract for Empire Cinemas, which was previously held by DCM, on 1 July. Other Pearl & Dean contracts include Showcase, Apollo, AMC and a number of independent cinemas.
Pearl & Dean had not responded to request for comment at the time for publication. It is not known whether there will be any changes to its structure following the loss of Vue.
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