Image 'Status' Affects Third Quarter Results14 Feb, 2007 By: Erik Gruenwedel
With many of its largest customers reducing DVD buys due to perceived concerns over the company's direction, Image Entertainment posted a third quarter (ended Dec. 31) loss of $3.4 million, compared to income of $2.3 million during the same period last year.
The Chatsworth, Calif.-based distributor said the maturing of the DVD market and contraction of retail clients would also affect fourth quarter (ending March 31) operations, resulting in both quarterly and fiscal year 2007 losses.
Despite strong DVD sales of The Twilight Zone: The Complete Definitive Collection, Essential Art House: 50 Years of Janus Films box set, Elvis Presley: The Ed Sullivan Shows, Wanda Sykes: Sick and Tired and Criterion's The Double Life of Veronique, revenue for the holiday-driven quarter was $24.3 million, down almost 38% from last year's revenue of $39.1 million.
“It was a disappointing three months,” said Martin Greenwald, president and CEO of Image, in an investor call. “This past year was a wake-up call. It is critical we return to profitability. The sooner the better.”
Image said it has been engaged in discussions with numerous parties interested in acquiring the distributor but had no formal announcements.
Interest in Image would appear to revolve around both its home entertainment and digital libraries, in addition to the company's distribution model, said Greenwald.
Revenue for Egami Media, the digital distribution unit, was $337,000 compared to $51,000 last year.
“We've had several groups come in and kick the tires,” said Greenwald.
The CEO added that potential suitors are assessing the value of Image's catalog and how they can better exploit it.
“That's a huge value to a company,” Greenwald said.
Image since last November has eliminated 16% of its workforce and shuttered overseas acquisition units in an effort to reduce operating overhead.
The distributor would appear to be pinning much of its future success on the release of higher profile feature films and the recent hiring of industry veteran Jeff Fink as chief marketing officer.
Fink said his job would be to restructure Image's catalog in addition to distributing higher profile films, including much-anticipated titles from producer Relativity, which company executives said had just finalized a $4.5 billion revolving credit line with Citi Corp.
“Hopefully we can now firm up some opportunities,” Greenwald said. “We are still optimistic.”