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Rentrak Looking to Sell Legacy PPT Business

6 Feb, 2014 By: Erik Gruenwedel

Data tracking company’s namesake pay-per-transaction disc rental business increased third-quarter revenue $1.9 million to $13.1 million with operating income of $2.1 million

Rentrak Corp. Feb. 6 said it is exploring strategic options for its legacy pay-per-transaction (PPT) packaged-media rental business, including selling the division, CEO Bill Livek told analysts during the fiscal call.

The Portland, Ore.-based data tracking company’s PPT business enables independent video rental stores to acquire greater copy depth on select studio new releases by charging on a per-transaction basis. Rentrak, which bases its name on the PPT business, said it expects to generate 7% to 10% revenue growth in home entertainment in the current fiscal year.

Lively said the decision to spin-off the PPT business reflects Rentrak’s increased move toward digital data tracking businesses, coupled with the fact PPT’s largest store-based client — Blockbuster — has ceased operations. PPT’s third-quarter revenue growth was due in part to Warner Home Video’s decision to offer greater selection of new releases on street date to video stores — a move that upped content availability 30%, according to Livek.

“We will not be reporting any revenue from Blockbuster as of  Feb. 1,” he said. “Our management team has done a fantastic job of turning our PPT business around this fiscal year. At the same time, given the secular trends in this business … we are actively pursuing strategic options for the PPT business. We believe this business provides significant value for brick-and mortar video stores and we are confident in our ability to find the right option for our home video customers.”

PPT generated $13.1 million in third-quarter (ended Dec. 31) — up 17% from revenue of $11.2 million during the previous-year period. Operating income for the PPT business was $2.1 million compared to net income of $1.5 million a year ago.

CFO David Chemerow said any sale of the PPT business would not include the direct revenue sharing (DRS) business, which he described as a “high margin” segment that measures data collected on all PPT transactions.

Chemerow said he expects PPT revenue to range from $43 million to $46 million in the current fiscal year. That revenue will drop upwards of 25% in the next fiscal year with the loss of Blockbuster and ongoing shrinkage in the home video store footprint, according to the CFO.

“This would result in PPT revenue in the 2015 fiscal year in the range of $33 million to $35 million,” Chemerow said, which includes the elimination of Blockbuster. Operating income would range from $2 million to $3 million.

“Although we have not made a decision on the PPT business, if we do decide to sell it before the end of our fourth quarter (March 31), we believe will be able to treat that business as a discontinued operation [on the books].”

Meanwhile, Rentrak’s “advanced media and information” business, which tracks TV ratings, box office tallies, transactional VOD and electronic sellthrough, saw revenue increase 35% to $18.5 million from $13.7 million in revenue during the previous-year period.

Rentrak narrowed the quarterly loss to $366,000 from $1.8 million last year. Revenue grew 27% to $31.6 million from $24.9 million a year ago.


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