National CineMedia (NCMI) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Significant declines in theater attendance could reduce the attractiveness of cinema advertising and could reduce our revenue
2. 02buyers that our network is no longer relevant to their marketing plan due to the decreases in attendance and geographic coverage
3. 03NCM LLC’s network theater circuits also may not successfully compete for licenses to exhibit quality films and are not assured a consistent supply of motion pictures
4. 04Pandemics, epidemics or disease outbreaks, such as the COVID-19 virus, have disrupted and could materially affect our business and the business of NCM LLC’s network theaters in the future
5. 05Changes in theater patron behavior could result in declines in the viewership of The Noovie® Show which could reduce the attractiveness of cinema advertising and our revenues
6. 06changes in theater patron amenities, including bars and entertainment within exhibitor lobbies causing increased dwell time of patrons
7. 07Changes in the ESAs with, or lack of support by, the ESA Parties could adversely affect our revenue, growth and profitability
8. 08The ongoing effects of NCM LLC’s Chapter 11 Case, including the risks and uncertainties associated with bankruptcy, may harm the Company’s business following emergence
9. 09Competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted
10. 10If the non-competition provisions of the ESAs or other advertising agreements are deemed unenforceable, the counterparties could compete against us and our business could be adversely affected
11. 11is contrary to the public interest
12. 12The ESA with an ESA Party that has declared bankruptcy may be rejected, renegotiated or deemed unenforceable
13. 13We may not realize the anticipated benefits of additional Post-Showtime inventory or be successful in increasing the number of theaters in which NCM LLC has the right to display Post-Showtime inventory
14. 14There can be no assurance that we will be successful in increasing the number of theaters in which NCM LLC has the right to display Post-Showtime Inventory
15. 15Our business relies heavily on technology systems, and any failures, disruptions or cyberattacks may materially and adversely affect our operations
16. 16Our plans for developing additional digital or digital out-of-home revenue opportunities may not be implemented and may not be achieved
17. 17The 2025 Credit Facility contains restrictions and may not provide sufficient capital resources and flexibility for the Company in the future
18. 18The personal information we collect and maintain through our data and digital services, as well as from third-party sources, may expose us to liability or cause us to incur greater operating expenses
19. 19Changes in laws, regulations or rules relating to privacy, data security, the Internet or other areas of our data and digital services may result in the need to alter our business practices or incur greater operating expenses
20. 20The markets for advertising are competitive and we may be unable to compete successfully
21. 21If we do not continue to upgrade our technology, our business could fail to grow and revenue and operating margins could decline
22. 22Economic uncertainty or deterioration in economic conditions may adversely impact our business, operating results or financial condition
23. 23We are subject to risks from changes to regulations, government funding, trade policies and tariffs imposed by governments that impact our advertising clients
24. 24If we are unable to grow our high margin advertising revenue at a rate at least equal to that of our contractual obligations, our margins and results would be negatively affected
25. 25Our contracts for theater advertising allow certain counterparties to engage in activities that might compete with certain elements of our business, which could reduce our revenue and growth potential
26. 26We depend upon our senior management and our business may be adversely affected if we cannot retain or replace them
27. 27The ESA Parties and our network affiliates are subject to substantial government regulation, which could limit their current business, slow their future growth of locations and screens and in turn impact our business and slow our growth prospects
28. 28We may be unable to effectively manage changes to our business strategy to continue the growth of our advertising inventory and network
29. 29Our revenue and Adjusted OIBDA fluctuate from quarter to quarter and may be unpredictable, which could increase the volatility of our stock price
30. 30In some instances, we may not be able to or may choose not to protect, maintain or defend our intellectual property rights or the laws of certain foreign countries may not protect our intellectual property rights to the same extent as do the laws of the U.S

Risks Related to Our Corporate Structure

1. 31We are a holding company with no operations of our own, and we depend on distributions and payments under the NCM LLC operating and management services agreements from NCM LLC to meet our ongoing obligations
2. 32Pursuant to the management services agreement between us and NCM LLC, NCM LLC makes payments to us to fund our day-to-day operating expenses, such as payroll. However, if NCM LLC has insufficient cash flow to make the payments pursuant to the management services agreement, we may be unable to cover these expenses
3. 33The Company’s actual financial results following NCM LLC’s emergence from bankruptcy may not be comparable to the Company’s historical financial information or to NCM LLC’s projections filed with the Bankruptcy Court
4. 34the Effective Date. Accordingly, the Company’s future results of operations, financial condition and business may not be comparable to the results of operations, financial condition and business reflected in our historical financial statements
5. 35NCM LLC’s other equityholders or their affiliates, as well as our largest stockholders, may have interests that differ from those of our public stockholders and they may be able to influence our affairs
6. 36The agreements between us and the ESA Parties were made in the context of an affiliated relationship and may contain different terms than comparable agreements with unaffiliated third parties
7. 37Our certificate of incorporation and bylaws contain anti-takeover protections that may discourage or prevent strategic transactions, including a takeover of our Company, even if such a transaction would be beneficial to our stockholders
8. 38do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates
9. 39Any future issuance of membership units by NCM LLC and subsequent redemption of such units for common stock could dilute the voting power of our existing common stockholders and adversely affect the market value of our common stock
10. 40Our future issuance of preferred stock could dilute the voting power of our common stockholders and adversely affect the market value of our common stock
11. 41If we are determined to be an investment company, we would become subject to burdensome regulatory requirements and our business activities could be restricted
12. 42Our TRA with the ESA Parties is expected to reduce the amount of overall cash flow that would otherwise be available to us and will increase our potential exposure to the financial condition of the ESA Parties
13. 43The substantial number of shares that are eligible for sale could cause the market price for our common stock to decline or make it difficult for us to sell equity securities in the future