Gaiam TV Spin-Off Set for Sept. 3012 Mar, 2015 By: Erik Gruenwedel
Company defers comment on Gaiam Vivendi Entertainment litigation to regulatory filings
Gaiam Inc. plans to complete transitioning Gaiam TV into a separate business unit by Sept. 30, chairman Jirka Rysavy said on the company’s March 12 fiscal call. Last month, Gaiam filed paperwork with the Securities and Exchange Commission to transfer Gaiam TV into a separate publicly traded company.
Gaiam TV operates as a standalone $9.95 monthly subscription streaming service, in addition to separate branded launches in January on Comcast and Xbox International. The company also bowed Gaiam TV Unplugged, which grants offline access to more than 7,000 titles to authenticated viewers.
The Boulder, Colo.-based distributor of yoga, wellness and fitness products — including DVDs — expects the TV business to become profitable by June, based on an annual “run rate” of $14 million, according to Rysavy. The “run rate” is a fiscal term used to extrapolate current revenue results over a certain period of time. Gaiam TV’s existing “run rate” is $12 million based largely on standalone subscriptions.
Rysavy said Gaiam wouldn’t get initial results from the Comcast partnership until later this month.
Separately, CFO Steve Thomas said Gaiam would defer to regulatory filings future comments regarding litigation against Cinedigm and the sale of packaged media distributor Gaiam Vivendi Entertainment.
Cinedigm Feb. 12 filed a lawsuit against Gaiam regarding the $51.5 million GVE acquisition in 2013. Cinedigm is seeking more than $30 million in damages. It claims Gaiam engaged in “fraud and tortious [litigious] acts” in connection with the sale, including the non-collection of accounts receivables, transfer of cash from collected accounts receivables, and mishandling post-closing collections, among other charges.
At the time of acquisition, Gaiam cited multiyear relationships with numerous content suppliers, including WWE, NFL, Hallmark, National Geographic, Discovery, Scholastic and The Jim Henson Co. It also had key direct sales and marketing relationships with most major physical and digital retailers such as Walmart, Target, iTunes, Netflix and Amazon.
Gaiam filed its own arbitration claim against Cinedigm seeking working capital reimbursement of more than $6 million.
Thomas said Gaiam is prepared for the legal challenge and has allocated resources to the cause.
“Given this process is complex and could go on throughout the year and beyond, we’ve booked a [fiscal] reserve in contemplation of anticipated legal and professional expenses and other factors,” Thomas said on the call.