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Rentrak Reaching Half of U.S. Cable-Enabled Homes With Trial Data Analysis

14 Feb, 2005 By: Erik Gruenwedel

Rentrak Corp.'s ongoing trial data analyses of consumer activity for Comcast, Insight Communications and other cable providers now tracks more than 50 percent of all cable-enabled homes in the United States, said Paul Rosenbaum, chairman, president and CEO today in a call with investors.

The Portland, Ore.-based company, which also claims 40 percent market analyses of on-demand cable programming, expects to reach 60 percent market penetration in both media in the next fiscal year.

“We've gone from roughly 80,000 transactions a week to hundreds of times more than that,” Rosenbaum said.

A single transaction can include a customer pausing, rewinding, forwarding or changing programming.

By the end of the first full year of trials, Rentrak expects to track close to 1 billion customer transactions.

“At that point, we will be able to project to 100 percent and have a viable revenue generating business,” Rosenbaum said.

For the third quarter (ended Dec. 31), Rentrak posted net income of nearly $1.3 million, or 12 cents per diluted share, compared to $578,534, or 6 cents per diluted share, during the same period last year.

Revenue for the quarter was $22.8 million, up 12 percent from $20.3 million last year.

Rentrak continues to generate the bulk of its revenue through revenue-sharing agreements with more than 6,000 video retailers in North America.

The company said rentals and purchases of previously viewed movies and games online and in stores increased substantially in 2004 from 2003 despite the strong DVD sellthrough market.

The company said it generated about 8 percent of quarterly residual revenue from an undisclosed “single major” customer whose revenue-sharing agreement expired last year. Rentrak expects to earn about $500,000 from this customer in the fourth quarter and none thereafter.

“PPT revenues will remain consistent,” Rosenbaum said. “It all depends on what happens with the new customers we might get on board in the next few months.”

Rentrak has revenue-sharing agreements with all of the studios except Warner Bros.

Ongoing and new forays into information management services (IMS) contributed an undisclosed amount to quarterly revenue.

“For the near-term, this segment will continue to provide the cash flow necessary to fuel growth in the [IMS] segment,” Rosenbaum said.

He remained unsure when the syndication of “aggregated information to secondary and tertiary customers” would become profitable.

Rosenbaum touted Dallas Mavericks' owner Mark Cuban's $2.8 million purchase of 308,200 shares of Rentrak common stock as a testament to the controversial NBA team owner's recognition as “a thought leader in digital media.”

“[Cuban] repeatedly stressed the importance of being able to count the clicks representing consumption and navigation within digital media,” Rosenbaum said. “He sees the future, and he sees the future of this company is being able to connect those clicks throughout Telcos, Internet, wireless, and broadband.”

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