Image Q4 Loss No Laughing Matter28 Jun, 2006 By: Erik Gruenwedel
Strong DVD and CD sales of blue-collar comedy Ron White: You Can't Fix Stupid couldn't overcome lingering effects of the Musicland bankruptcy and the shrinking independent retail front as Image Entertainment posted a fiscal fourth-quarter loss.
The distributor posted a loss of $283,000 for the quarter ended March 31, compared to profit of more than $1 million during the same period last year.
The fiscal year loss was $207,000 on revenue of almost $112 million, compared to income of $5.1 million and revenue of $118.3 million last year.
The disappointing results renewed inquiries about whether Image was officially on the block or susceptible to a hostile bid from outside bidders, including Lionsgate, the distributor's second-largest shareholder.
Lionsgate, which unsuccessfully tried to acquire Image last year, has submitted a slate of six board candidates for Image's shareholder meeting later this year.
An Image lawyer declined comment during an investor call.
Revenue for the quarter totaled $30 million, compared to $28.9 million last year. You Can't Fix Stupid recorded more than $7 million in sales, and the Criterion Collection distribution agreement represented 26% of quarterly revenue, compared to about 14% last year. More than 50% of revenue came from catalog.
In addition, sales of top 10 new release DVD/CD titles, including Chicago and Earth, Wind & Fire: Live at the Greek, KISS: Rock the Nation Live and seasons three through five of “The Twilight Zone,” combined for 16% of fiscal year revenue, compared to 29% for the top 10 new releases last year.
However, additional production costs and amortization related to the Home Vision (Criterion) titles and separate UMD format titles (which executives believe have a relatively short shelf-life) helped push operating costs above $24 million, compared to $21.3 million last year.
“[Fiscal 2006] was a choppy year with amazingly good and bad quarters,” said Martin Greenwald, president and CEO of Image.Image expects first-quarter 2007 revenue (ending June 30) to range from $21 million to $23 million, up from $18.6 million during the same period in 2006. The company expects to post a first-quarter loss.