Carlton in £63m cinema ads deal

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Carlton Communications yesterday increased its presence in the fast-growing cinema advertising sector, announcing a joint venture with its US rival Thomson Multimedia to buy two businesses in Europe for €100m (£63m) cash.

The two will buy the advertising interests, owned by UGC of France and the Belgian broadcaster RTBF, through a new company equally owned by Carlton and Thomson. The deal is the first significant corporate move since Carlton boosted its firepower by putting the loss-making ITV Digital into administration. Carlton's shares climbed 6.5p to 270p.

Carlton is already the market leader in UK cinema advertising, the biggest market in Europe, through its subsidiary Carlton Screen Advertising. SMG is number two through Pearl and Dean.

Carlton and Thomson already have a cinema ad-sales business in the US. Completion of their latest deal is expected within six weeks, and requires regulatory consent.

The two companies are expanding in a sector that has escaped the worst of the ad recession. They predict European cinema advertising, which has risen every year since at least 1989, will climb 8 per cent this year. But total advertising expenditure in the five biggest countries is expected to fall in 2002, according to research company Zenith Optimedia.

Lanny Raimondo, vice president of Thomson, said: "Screen advertising is a profitable and growing business, which will provide a solid foundation to build the next generation digital services in cinema, in partnership with exhibitors and advertisers."

The UK has about a third of the total cinema advertising market in Europe.