Regal CineMedia, a unit of Regal Entertainment, inked its first deal with General Electric Co.'s NBC, which will provide short-form programming content for its proposed 20-minute Digital Content Network. As part of the agreement, NBC will receive 30-second or 60-second in-theater spots.
Cliff Marks, president-marketing for Regal CineMedia, said the company plans three other major content/advertising relationships. Categories targeted include movie studios, book publishers, and other TV program suppliers, such as cable networks. "These deals go beyond content and advertising," said Mr. Marks, who came to Regal four months ago from advertising sales at Walt Disney Co.'s ESPN/ABC Sports. "They are not like just running promos. Seventy percent of the time it is content-just like on TV."
For instance, Mr. Marks said NBC might create programming such as never-before-seen footage from "The Tonight Show with Jay Leno." Another possibility is a behind-the-scenes look at the network's new action show "Boomtown."
Regal, which has 540 theaters covering 75% of the U.S. market, maintains the advantage for advertisers is digital technology, allowing a single advertiser to target ad messages from theater to theater. "For G-rated movies you could see minivan commercials, for R-rated movies, you could send SUV commercials," said Mr. Marks.
Straight advertising deals may also be struck, and Mr. Marks said 50% of DCN's inventory has been sold for 2003. Advertisers include automotive, video games, confection makers, retail, broadcast and entertainment companies. The network launches in February and is expected to be in 80% of Regal's theaters by late 2003.
In those theaters, DCN will replace the work by two longtime in-theater ad rep sales companies, Screenvision and National Cinema Network, who sell non-film advertising time before movie trailers and films. Typically, theaters run about three minutes of non-movie advertising before trailers.
DCN, operated from Denver via satellite, replaces manual advertising systems whereby commercials are shipped to each theater and spliced onto the movie reel. "Part of the beauty of the system is that we take this out of hands of the theater manager," said Mr. Marks.
DCN is more expensive than network advertising on a cost-per-thousand basis. "We get an average of $35 cost per thousands," he said. Typically, broadcast network can average $13 to $15 CPMs.
Regal said the cost is warranted because theatergoers are a more captive and attentive audience than TV viewers. "In some ways I'm better than Nielsen," said Mr. Marks. "I'm not estimating. We are guaranteeing numbers based on box-office attendance. We average 21 million a month for all theaters."
In addition to providing content, NBC will be featured on Regal's in-lobby plasma screens and out-of-home video screens placed alongside cashiers in some 600 McDonalds restaurants in Phoenix, San Francisco and Philadelphia, and in a number of 7-Eleven locations.
"We have to look beyond our air," said John Miller, co-president of The NBC Agency, NBC's marketing arm. "Because we don't have the vertical integration of our competitors, we look to anything that would give us some parity." Other media conglomerates such as Viacom, News Corp. or Walt Disney Co. have many non-TV properties-such as cable, outdoor media companies or theme parks-in which to cross-promote their TV networks.