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Cinedigm Eyeing Separate Digital Projection Biz

15 Aug, 2016 By: Erik Gruenwedel

Cinedigm's Digital Cinema division facilitates funding, installation and support assisting theaters transition from 35mm film projection to digital projection. With its focus on over-the-top video and retail distribution, Cinedigm is considering spinning off the projection business.

Speaking on an Aug. 15 fiscal call, CEO Chris McGurk agreed with an investor that there is no “direct synergy” between the digital projection business, content distribution and OTT.

He said there are discussions with third parties regarding spinning off the digital assets, which include projectors and other assets.

“If we can find the right deal that would reflect the value of those assets, we would consider either spinning off that business or splitting the business.”

Meanwhile, the company reported a first-quarter (ended June 30) net loss of $4.6 million, compared with a loss of $10.9 million during the previous-year period. Revenue was flat at $22.4 million, which included $6.8 million in content and entertainment.

In addition to distributing physical and digital media at Walmart, Target, iTunes, Netflix, Amazon and pay television, subscription streaming video services Docurama, CONtv and Dove Channel reported about 60,000 combined paid ($5.99) subscribers in the quarter.

The company said SVOD revenue in the quarter was equal to SVOD revenue for the entire fiscal-year 2016.

"We continue to be pleased with our growth in OTT and hope to capitalize on several opportunities immediately front of us to further accelerate channel growth," McGurk said in a statement. "We are also aggressively taking advantage of new content opportunities in our base business that are resulting from favorable industry dynamics."

McGurk said a deal is imminent regarding partnering with a “very larger consumer [electronics] hardware manufacturer” to embed both CONtv and Dove Channel in their North American product slate. 

The executive talks are ongoing with other distribution channels regarding Cinedigm SVOD platforms — discussions McGurk said include sharing capital outlay requirements.

“We’ve engaged an investment banker to us assist with this initiative,” McGurk said in a prepared statement on the fiscal call.

Separately, Cinedigm is utilizing changing market conditions for packaged media to acquire license rights to titles under “favorable terms” which the CEO said could fill future distribution pipelines.

The distributor currently has more than 58,000 movies and episodic content in its library — which includes 30% in family and animation.

“That’s been an important area of focus for us since there continues to be a strong and growing global demand for family-friendly programing,” McGurk said.

The executive was asked whether owning — versus licensing — content was a better option considering the alternative distribution channels beyond streaming.

McGurk cited internal research that found refreshing SVOD content on a regular basis on CONtv, Docurama and Dove Channel was the best option currently.

“What the audience wants to see is not necessarily original programming that you can get anywhere else at this point … but right now it’s really important to have a refreshing of the [library] content every quarter, every six months.”

He said focusing on expensive, untested original content could be addressed in the future, including “very low budget” fare on CONtv.

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