RLJ Entertainment Eyeing $65 Million Majority Ownership Sale to AMC Networks19 Sep, 2016 By: Erik Gruenwedel
Stock sale and accompanying warrants would give AMC 50.1% control of the home entertainment distributor
RLJ Entertainment is encouraging shareholders to approve a proposed $65 million financial agreement with AMC Networks that would enable the pay-TV distributor to take control of the home entertainment company formed in 2012 through the merger of Image Entertainment and Acorn Media Group.
In a financial filing, RLJ said the proposed sale of 20 million shares of common stock to AMC at $3 per share, represents a significant premium at the current share price of $1.92.
The company believes partnership with AMC would help its existing subscription video-on-demand properties: Acorn TV and Urban Movie Channel, in addition to obtaining economies of scale with respect to manufacturing, sales and distribution of packaged media, including DVDs.
Silver Spring, Md.-based RLJ Entertainment will hold a vote on the proposal at its annual shareholder meeting Oct. 14.
RLJ reported a net loss of $174,000 in the most recent fiscal period, compared to a loss of $546,000 during the same period in 2015. Revenue declined 20% to $15.7 million, from $19.9 million. The decrease was driven by a decline in retail revenue due to a reduced release slate.
The company's SVOD services generated $1.1 million in operating income in the quarter, compared with an operating loss of $400,000 during the previous-year period.