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Rev-Share Deals Drag on Rentrak

13 Nov, 2003 By: Holly J. Wagner

Revenue from Rentrak Corp.'s revenue-sharing business declined 32.2 percent, to $12.2 million, in the second quarter ended Sept. 30, down from $18 million in last year's comparable period on a weaker assortment of available VHS revenue-sharing titles during the quarter.

Total unit shipments to independent retailers in North America increased 15 percent from last year's fiscal second quarter, reflecting a 309 percent increase in DVD and video game shipments, partially offset by a 19 percent decline in VHS shipments. As studios have brought VHS prices down and restructured their rev-sharing agreements to reduce or eliminate upfront fees, the distributor has suffered a corresponding decline.

Due in part to the company's new combined VHS/DVD revenue-sharing program with Warner Home Video that was announced in August, management expects PPT (Pay-Per-Transaction) shipments for the second half of the fiscal year to increase substantially and lead to a revenue increase of between 35 percent and 40 percent compared with the first half of the fiscal year.

“Our PPT business continued to contribute positively to the company's overall results despite extremely challenging circumstances that are now largely behind us,” said Rentrak chairman and CEO Paul Rosenbaum. “Our new combined VHS/DVD revenue-sharing program with Warner Home Video should lead to renewed PPT shipment and revenue growth beginning in the third quarter, and the possibility remains that additional studios will begin to offer DVD revenue-sharing.”

Consolidated revenue from continuing operations for the quarter totaled $14.3 million, compared with revenue from continuing operations of $20.8 million for the same period a year ago. Revenue from the company's continuing entertainment operations totaled $13.8 million.

The company plans to spend $1.6 million to bolster sales and marketing of the new products, which include the Box Office Essentials real-time theatrical tracking system, Supply Chain Essentials and Calendar Essentials retail systems, and the VOD Essentials program that lets the company track use of all kinds of programming on demand.

“Today, Rentrak is the only company in the world capturing and reporting hourly North American box office performance data with the ability to combine it with more than 15 years of detailed North American movie rental and sales data. Over the next few years, video-on-demand and other technologies that deliver media and entertainment to consumers electronically are expected to move from early adoption to mass availability,” Rosenbaum said, noting Rentrak's business is positioned for this future, which will include a company name change.

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