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Rentrak Earnings Per Share Nearly Double Its Projections

14 Jul, 2004 By: Holly J. Wagner

Rentrak Corp. turned in earnings per share that were nearly double its projections for its full year and the fourth quarter of fiscal 2004, but had to take some charges because of earlier misstatements about rev-sharing deals.

The company's distribution business, built on its pay-per-transaction (PPT) model, is expected to support the company for at least two or three more years as it transitions to its Essentials data collection business, Rentrak chairman and CEO Paul Rosenbaum said.

“I think it's a viable business in the foreseeable future, and we are very pleased with that fact. Our DVD and VHS rev-sharing deals are expected to be profitable,” he said. “We expect those contracts to fund us for the next two years until we are solid in these new businesses.”

The company has three rev-share deals in place and expects to announce as many as three more within the next few months, he said.

"During fiscal 2004, our revenue-sharing business saw renewed growth while we continued to bring new business intelligence services to market. Our most successful introduction thus far, Box Office Essentials, has achieved over 95 percent market share since its introduction 15 months ago,” Rosenbaum said.

Those operations and incremental revenue from Essentials generated $24.2 million in revenue for the quarter ended March 31, compared to $17.5 million from the company's entertainment operations and $4.6 million from the company's former fulfillment subsidiary, 3PF.com, Inc., in the comparable quarter of 2003.

For the full year, continuing entertainment operations generated $73.5 million in revenue, an increase of 4.1 percent from continuing entertainment revenue of $70.6 million in fiscal 2003. The company's continuing entertainment operations generated operating income of $3.1 million in fiscal 2004 , compared with operating income from continuing entertainment operations of $2.9 million in fiscal 2003.

3PF generated $5.2 million in revenue for 2004, including intercompany sales, and recorded an operating loss of $1.4 million. In fiscal 2003, 3PF generated $17.4 million, including intercompany sales, and recorded an operating loss of $3.3 million.

For the fourth quarter of fiscal 2004, net income was $2.1 million, or 20 cents per share, compared with a consolidated net loss of $503,869, or 5 cents per share, as restated, for the comparable quarter of fiscal 2003. Previously, the company had expected 12 cents a share.

Rentrak also discontinued operations at BlowOut Video, a subsidiary that operated several discount video stores, as of March 31, 2003. The discontinued operations incurred a loss of $128,649, or 1 cent per diluted share, in fiscal 2004, compared with a loss of $582,627, or 6 cents per diluted share, in fiscal 2003.

The company also restated results for its rev-sharing business for 2003 and 2002 because of “misinterpretations and misapplications of certain contractual terms” discovered in the course of an audit.

The errors and other fiscal 2004 audit adjustments created a net year-to-date loss of 3 cents per share on the company's previously reported loss of 5 cents per share through the nine-month period ended Dec. 31. There was no effect on the accuracy of amounts Rentrak has paid to the studios under its revenue-sharing deals or on Rentrak's reported cash balances, a spokesperson said, so the company should not have to make further payments for those years.

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