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Cinedigm Signs ‘8-Figure’ Content License Deal With Netflix

20 Jun, 2013 By: Erik Gruenwedel


Indie distributor said 2013 fiscal-year revenue from physical disc sales increased 65%


Multiplatform movie distributor Cinedigm Digital Cinema Corp. said it signed an “8-figure” multi-year license deal with Netflix for many of its library movies and TV shows. The Los Angeles-based distributor, which has about 20,000 titles, disclosed the subscription video-on-demand deal during a June 19 fiscal call.

Cinedigm said the Netflix agreement represents more than 10% of its $88 million 2013 fiscal year (which ended March 31) revenue. Specifically, Netflix paid six-figure license fees for the first season of TV shows, with fees going up five-to-seven times for subsequent seasons.

“Effectively we went out, we found content that met their demographic,” CFO Adam Mizel said on the call. “And then we continued to bring them more of that content and the pricing goes up.”

CEO Chris McGurk said the distribution partnership announced in April with Universal Studios Home Entertainment should enhance Cinedigm’s DVD and Blu-ray Disc efforts. Universal is providing supply chain services, including direct sales access to major accounts like Walmart and Target across North America.

Sales of physical discs increased 65% during the fiscal year compared to industry wide 6% decline, according to McGurk.

“With Universal by our side, we look forward to rapidly expanding our home entertainment business and are certain that more opportunities to launch mutually beneficial new business initiatives with Universal will develop us this innovative partnership evolves,” he said.

McGurk said Cinedigm would continue to acquire distribution rights to “quality independent content with star power” at more favorable prices than two or three years ago. He said the company plans to release 15 to 18 movies this year, up from five movies.

Notable titles, which range from horror to documentaries and from traditional releases and day-and-date, included Oscar-nominated doc, “The Invisible War, “ and English Teacher with Julianne Moore and Greg Kinnear, Arthur Newman with Colin Firth and Emily Blunt and Violent & Daisy, starring James Gandolfini, who died unexpectedly June 19 while on vacation in Italy.

“We're particularly excited about the upcoming August release of Short Term 12, a wonderfully written, acted and directed film, which is already being called one of the best indie films of the year,” McGurk said.

The CEO said he isn’t opposed to creating original episodic programming — a tact increasingly popular among SVOD platforms.

“I'm not going to rule out the possibility down the road. But right now, our intent is really just to build our acquisition business and fully leverage -- once we get up to speed, fully leverage, sort of our full slate and our full lineup of product with platforms like Netflix and the other platforms that are available,” McGurk said.

In the fourth quarter, Cinedigm reported a net loss of $16.5 million on revenue of $21.3 million, much of loss due to ongoing investments in content. The company reported a net loss of $5.8 million during the previous-year period.

Regardless, Eric Wold, analyst with B. Riley & Co. in Los Angeles, said he looks forward to Cinedigm’s current fiscal year.

“We remain focused on … a year that should not only drive a 65%+ increase in pre-tax earnings, but also a move into profitability for the indie film division as well as increasing opportunities to monetize the company’s significant digital content library,” Wold wrote in a June 20 note.
 


About the Author: Erik Gruenwedel


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