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Image 'Cleans' Library, Settles with BTP

26 Jun, 2008 By: Erik Gruenwedel

Seeking to turn the page on tumultuous fiscal year 2008, Image Entertainment Inc., reported a fourth quarter (ended March 31) $10.4 million accelerated amortization and fair value writedown on its DVD catalog, selected distribution fees and advanced royalties.

The charge on its 3,500-title catalog contributed to the Chatsworth, Calif.-based distributor posting a net loss of $14.7 million, compared to a $3 million loss during the prior-year period.

Image reported net revenue of $26 million, down 14% from $30.2 million last year. Digital revenue from Egami Media increased nearly 30% to $535,000 from $412,000.

Principal DVD sellers included Jeff Dunham titles Spark of Insanity and Arguing with Myself; Twilight Zone: The Definitive Collection; Fear and Loathing in Las Vegas (The Criterion Collection); Katt Williams: Live; Short Circuit and Gabriel Iglesis: Hot and Fluffy.

In a call with investors, Image president David Borshell said the writedown signified the maturation of the DVD market as well as the distributor's strategy to pursue cast-driven theatrical content for better placement on a continually shrinking retail shelf space.

“We are a public company, and we have to disclose it,” Borshell said previously. “And we're not afraid to.”

He said Image is actively pursuing higher profile theatrical content similar to previously released ThinkFilm titles Before the Devil Knows You're Dead, Numb and The Air I Breathe, among others.

He said distributing such content would generate higher revenue and more shelf space credo among the big box retailers.

“Shelf space restrictions are a real challenge,” Borshell said.

The executive also said the distributor June 24 settled “a litany of disputes” with BTP Holdings and its affiliates (ThinkFilm), which resulted in the termination of mutual lawsuits and outstanding output deals.

He said both companies agreed to interim output agreements based on select titles going forward.

“It's great news for Image, shareholders and vendors,” Borshell said.

Image reported more than $1.9 million in expenses directly related to BTP.

The distributor still has a pending lawsuit against film producer Relativity Media, claiming it has yet to deliver content spelled out in a 2006 distribution agreement.

Relativity has recently financially backed such fare as Talladega Nights: The Ballad of Ricky Bobby, The Fast and the Furious: Tokyo Drift, Inside Man, The Bank Job, 3:10 to Yuma and pending release The Forbidden King.

For the fiscal year, net revenue declined nearly 4%, to $95.8 million, from $99.8 million in fiscal 2007. Image executives issued guidance for fiscal 2009 revenue from $115 million to $125 million.

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