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Image Posts Q3 Profit, Stock Doubles on Merger Greenlight

12 Feb, 2009 By: Erik Gruenwedel


Image Entertainment Feb. 12 defied conventional wisdom and the realities of a challenging economy when it reported third-quarter (ended Dec. 31, 2008) net income of $304,000, compared to a loss of $2 million during the prior-year period.
The Chatsworth, Calif.-based distributor posted a 43% revenue growth to $39.2 million, compared to revenue of $27.3 million during the prior-year period.

The results were in stark contrast to Paramount Pictures, which reported an 81% decline in operating income, to $22 million from $117 million last year.

Best-selling DVD releases for Image in the quarter included Jeff Dunham: Very Special Christmas Special, Stuck, The Who: Live at Kilburn 1977 and Ghost Hunters: Season 4 Part 1.

Image President David Borshell, in a call with analysts, said the company had already achieved its two primary goals in fiscal 2009 to increase revenue and generate positive operating and net income. He cautioned, however, that Image was not immune to the recession and that it was in the midst of evaluating internal operations and costs going forward.

“We will be the first to state that we do need to find ways to drive stronger bottom-line results,” Borshell said.

He said that despite widely reported retrenchment by the major studios that included staff reductions and consolidation of divisions, reduced content purchases at the retail level and store closings, Image had managed to carve itself a “nice position” in the industry.

“We intend to preserve and grow it,” Borshell said.

Specifically he was referring to the company’s successful strategy of acquiring and distributing independently produced, cast-driven feature films that excel at retail, despite falling below the radar of the major studios.

Upcoming examples include In the Electric Mist, with Tommy Lee Jones, streeting March 3 on Blu-ray, DVD and digital; The Last Word, with Winona Ryder and Ray Romano (April 21); thriller Incendiary, starring Michelle Williams and Ewan McGregor (May 5); drama Powder Blue, with Jessica Biel and Ray Liotta (June 9); The Edge of Love, with Keira Knightley and Sienna Miller (July 14); and $5 a Day, with Christopher Walken, on Aug. 11.

Another title Image is banking on is Management, starring and produced by Jennifer Aniston, with Steve Zahn and Woody Harrelson, which it will release May 15 theatrically through Samuel Goldwyn Films.

“We are making a significant investment in this film,” Borshell said.

Additional projects include a series of comedy DVDs with newly signed ventriloquist Terry Fator.

Image raised its fiscal-2009 revenue guidance, now $128 million to $131 million, up from $120 million to $130 million.

Shares of Image stock skyrocketed 95% to close at $2.01 after the company announced that it had received the final $1.3 million installment of a $1.8 million business interruption fee, indicating that the planned $100 million cash acquisition by Nyx Acquisitions would go through, pending shareholder approval.

The deal appeared in doubt last month when San Francisco-based Nyx failed to deliver the $1.3 million payment by a Jan. 20 deadline.

Nyx, a subsidiary of Q Black Media based and headed by co-founder and CEO Joe Bretz, made an initial deposit of $500,000 into a trust account as a down payment of the business interruption fee last year.

The deal is expected to close Feb. 26.

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