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Cinedigm CEO: We Are 'Clear-Cut' Market Leader in Indie Film Distribution

18 Oct, 2013 By: Erik Gruenwedel

Following the $51.5 million Gaiam Vivendi Entertainment acquisition, new Cinedigm Entertainment Group unit expects to generate up to $54 million in revenue and $13.5 million in pre-tax earnings in the second half of fiscal year

Cinedigm’s $51.5 million acquisition of Gaiam Vivendi Entertainment (GVE) is expected to help the former expand its presence in the distribution of independent movies on disc, digital and theatrical, CEO Chris McGurk told analysts.

Speaking Oct. 18 in a conference call, McGurk said GVE’s staple of consumer-friendly brands and “unique” direct retail relationships coupled with Cinedigm’s strength in digital distribution would create a “powerful” new studio with what he said has the biggest library of indie content and rights.

“We are now the clear-cut market leader for independent film and digital content distribution in theaters, the home and mobile,” McGurk said.

The new Cinedigm Entertainment Group — which is headed by GVE president Bill Sondheim — features a 32,000-title portfolio (a TV season can include more than 20 episodes) that includes rights to 15,800 movies and TV episodes for subscription video-on-demand; 26,000 movies and episodic programming for electronic sellthrough; 3,000 to 7,000 titles for ad-supported VOD; and others for theatrical.

Notable theatrical releases include 2012 Oscar nominee The Invisible War, Arthur Newman and Short Term 12, starring Brie Larson (Don Jon’s Addiction) as a supervisor at a foster-care facility for at-risk teenagers. McGurk said Cinedigm would push the film for end-the-year awards considerations.

Gaiam Vivendi Entertainment generated 80% of its revenue from disc distribution, followed by 10% to 20% digital, according to Cinedigm. The distributor said it expects to double digital revenue by 2017, while focusing on Blu-ray Disc in physical, which Cinedigm said saw 30% growth in household penetration to 89.4 million homes in 2012.

“We will be able to drive additional digital revenue out of the their physical product,” CFO Adam Mizel told investors. He believes disc sales for GVE content will erode more slowly than other content brands due to the collectable nature of the content.

“Many of the customers we have are focused on collectable discs, which is a different end of the retail market. Those consumers are buying DVDs in greater numbers than [what we see] in the decline of the new release [disc] business,” Mizel said. “We feel pretty good where we sit in the combined home entertainment landscape.”

In addition to WWE, NFL, Hallmark, National Geographic, Discovery, Scholastic and The Jim Henson Co., GVE has distribution deals for ABC Family, Shout Factory!, Marvel, The Weinstein Co., Animal Planet and Televisa, among others.

GVE has direct retail relationships with 60,000 store locations nationwide, including Walmart, Target, Meyer, Kohl’s, Costco, Sam’s Club and Whole Foods, among others. It also has deals with digital deals with Amazon, iTunes, Netflix, Redbox, Vudu and Hulu.

“This a key core asset and competitive advantage,” McGurk said. “GVE immediately gives Cinedigm leverage and scale across the entire entertainment value chain, and significantly strengthens its position at the forefront of the digital revolution.

Cinedigm also plans to expand distribution of GVE content through its recently launched “Docurama” over-the-top documentary subscription streaming available on YouTube, Samsung, Roku and Xbox, among other platforms.

“This a game changing positive for Cinedigm at every level,” McGurk said.


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