AMC movie merger clears regulatory hurdles

AMC movie merger clears regulatory hurdles
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A blockbuster merger that will create the nation's largest movie theater chain is expected to clear regulatory hurdles.

The Justice Department (DOJ) is approving a $1.2 billion merger between AMC Entertainment Holdings, the nation's second largest movie theater company and competitor Carmike Cinemas, with conditions.

Under the DOJ settlement, the deal will go through if AMC divests 24 theaters and 384 screens. AMC must also relinquish control of the advertising company National Cinemedia, the agency said.

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Regulators feared movie ticket prices would skyrocket and that the quality of theaters would suffer in the 15 markets where the two companies currently compete. But the settlement resolves those concerns, the DOJ said.

“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,” Renata Hesse, the acting assistant attorney general for antitrust issues, said in a statement Tuesday.

“Today’s settlement will ensure that movie theatre competition is preserved in 15 local markets where AMC and Carmike currently compete.  In addition, by requiring AMC to reduce its equity stake in NCM, terminate its participation in NCM’s business, and transfer screens to Screenvision, the settlement will promote continued vigorous competition between the two leading cinema advertising networks – competition that the division fought to protect when it blocked the NCM-Screenvision merger.”

AMC Entertainment Holdings said Tuesday it would agree to the settlement in a press call, Deadline reports.

"Needless to say, we are in a good mood," AMC CEO Adam Aron told reporters.

"I cannot contain my enthusiasm," he added.

The Kansas-based AMC is the nation's second largest theater chain. It runs 388 movie theaters in 33 states, and generated $1.9 billion in revenue in 2015. Meanwhile, Carmike, headquartered in Georgia, operates 271 movie theaters and made $490 million in review last year.

This story was updated at 3:17 p.m.