Home Media Magazine - March 9, 2009 - (Page 6) NEWS BRIEFS I CINRAM POSTS LOSSES Replicator Cinram saw a 10% drop in revenue and losses of $25 million for Q4 2008, versus a loss of $316 million during the same period in 2007. For the year, Cinram posted a loss of $33.8 million. Home video revenue for the company was down 15% to $388 million for the quarter, compared to $454 million in the prior-year period, mostly due to lower DVD replication in North America. CEO David Rubenstein is resigning and will leave the company at the end of March. – Chris Tribbey www.homemediamagazine.com Viacom Chief Touts Quality, Not Quantity By Chris Tribbey ployees are frozen, except on the very bottom levels of SUPPLIER Viacom CEO and president Philippe Dauman the workforce. March 2 said he believes less is more for DVD, if you have “We’ve done all of this without affecting the value of our the right content. brands,” he said, noting that Viacom paid down about $1 “It will be a challenging environment on the DVD side, billion in debt during the second half of 2008. but, even in a weak environment, the top titles, take Iron Nickelodeon, SpikeTV and Comedy Central continue to Man for example, do very well,” he said, see growth on the broadcast side, while speaking at the 17th annual Deutsche «WE’VE BEEN VERY CARE- MTV, VH1 and BET are all struggling, Bank Media and Telecommunications FUL HOW WE PLAN OUR Dauman said. For theatrical, he said Conference on March 2. ONLINE WORLD. … WE fewer movies from Paramount doesn’t “In a tough environment, we’re very DON’T PUT EVERYTHING mean lower quality, pointing to the well-positioned,” he said. “We’re finanOUT DAY AND DATE.» upcoming Star Trek and Transformers: cially strong. We’ll get through this.” PHILIPPE DAUMAN Revenge of the Fallen releases. Speaking mostly about Viacom’s CEO, VIACOM In the digital realm, Dauman said broadcast properties, Dauman said adViacom is seeing little in the way of vertising is where the company is seeing the biggest revenue, but as long as Internet video doesn’t affect revenue drops. In mid-February, Viacom posted income broadcast revenue, Viacom properties will continue to of $173 million for the fourth quarter of 2008, down show up online. “We have developed our digital activities 69% from $560 million during the same period in in conjunction with our brands … [and that’s] allowed us 2007. Before those results came, in December Viacom to provide more integrated market opportunities for our slashed 850 positions, or about 7% of its workforce. The advertisers,” he said. layoffs extended to Paramount Home Entertainment. “We’ve been very careful how we plan our online world. Additionally, Dauman said salaries for all Viacom em- … We don’t put everything out day-and-date.” 30 YEARS OF NEWS MARCH I 2000 Blockbuster Sells Used DVDs Nowadays buying used DVDs is fairly standard practice, but DVDs were really just taking off back in 2000, after launching only three years prior to that. In March 2000, Video Store Magazine (now Home Media Magazine) broke the story that Blockbuster Inc. would sell previously viewed DVDs at a fraction of the price of new DVDs. The move had long-term effects on the home video industry, aiding in driving down DVD retail prices. – Billy Gil I VIRGIN STORES TO SHUTTER Virgin Megastores announced it will shutter its North American stores by this summer. Vornado Realty Trust and Related Cos., the consortium that owns the chain and operates the high-profile Manhattan stores, said it could make more money leasing out the locations to third parties than running them, according to a spokeswoman. – Erik Gruenwedel MTI Celebrates 25th Anniversary By Chris Tribbey SUPPLIER At the Video Software Dealers Association show 25 years ago, a new company launched with the release of Freedanse, a fitness video starring Marine Jahan from Flashdance. MTI Home Video doesn’t do fitness anymore, but instead has relied on good business practices, a variety of product and knowing when the winds are changing (VHS to DVD, revenue sharing, rental to sellthrough) to establish itself as Brahms the oldest independent home entertainment company in America. “We’re still trying to figure out how it happened,” MTI president Larry Brahms said, when asked how MTI had stuck around for 25 years. “When you’re small you kind of go under the radar. A lot of luck.” From ushering in Lions Gate of Canada’s initial entry in the American home video market (under the Avalanche label) to grabbing an adult title and making it suitable for the mass market, MTI has survived and thrived in an industry that’s seen dozens of independents whither and die. “It’s amazing how easy it is when you have a great relationship with someone,” said Scott J. Jones, president of Artist View Entertainment, which has had more than 100 films released through MTI. “They know what they’re doing, they know what their niche is, and they generate great sales.” Larry Brahms concurred: “We’ve got a good reputation for paying people on time.” See MTI, Page 18 I BORDERS TO CLOSE FLAGSHIP CHICAGO STORE Borders will close one of its high-profile stores, on shopping thoroughfare Michigan Avenue in Chicago, in 2010 due to the store not meeting profit goals, The Associated Press reported. Borders said it will continue to operate 19 other stores in the Chicago area. – Billy Gil Revamped Genius, Weinstein Deal Equals $63M in New Debt By Erik Gruenwedel SUPPLIER The recent restructured distribution agreement between Genius Products and The Weinstein Co. resulted in the creation of more than $63 million of new debt obligations, according to a regulatory filing. Santa Monica, Calif.-based Genius, which was 60% acquired in January by GNPR Investments LLC, a privately-held affiliate of Quadrant Management, issued TWC a $20 million promissory note payable I LIONSGATE, MACROVISION CLOSE TV GUIDE DEAL Lionsgate completed the acquisition of TV Guide Network and TV Guide Online properties from Macrovision Solutions, a $255 million deal announced Jan. 5. The studio expects to augment TV Guide Networks’ 83 million households with the 30 million subscribers to Fearnet, a cable partnership with Sony and Comcast. Lionsgate also will incorporate TVGuide.com’s 16 million unique monthly visitors with Break.com, in which it has a 42% equity stake. – Erik Gruenwedel Jan. 1, 2011, excluding 5% annual interest, or $2 million. In addition Genius agreed to pay TWC $43.3 million from the Jan. 1, 2009, closing date through February 2010, as part of Quadrant’s purchase of TWC’s 122 million shares of Genius stock. It also will be liable for any money owed TWC from October through December 2008. Genius shares closed March 2 at 7/10 of a cent. TWC retained a 15% stake in the packaged-media distributor, which remains its exclusive Blu-ray and DVD distributor through 2011. The company also disclosed the resignation of Christine Martinez, EVP of corporate strategy, effective Feb. 1. Martinez was given six months severance, including healthcare. She earned a base salary of $250,000 in 2006. As previously reported, Genius extended three-year employment contracts to CEO Trevor Drinkwater, president Mathew Smith and Mitch Budin, EVP and GM. I REDBOX IN THE BIG APPLE Rental kiosk operator Redbox now has one of its systems in the Walgreens at One Times Square in New York City. Redbox also recently put a kiosk in the Walgreens in the Empire State Building. – Chris Tribbey Image, Nyx Merger Lives Another Day By Erik Gruenwedel SUPPLIER Rollercoaster merger talks between Image Entertainment and Nyx Acquisitions continue, following the receipt of partial funding to the business interruption fee account. Image said Nyx, an affiliate of San Francisco-based Q-Black LLC, deposited $300,000 of an additional $500,000 mandated to the $1.8 million interruption fee account to avoid terminating the breached merger agreement. Nyx said it would deposit the remaining $200,000 by March 6. Image had agreed to extend to March 20 the merger deadline with I HAWAII CONSIDERS WEB RETAIL TAX Hawaii is the latest state to consider taxing online purchases to close a state budget deficit. State lawmakers are considering a 4% tax on purchases made through retailers such as Amazon.com to raise an estimated $166 million for Hawaii. – Chris Tribbey Nyx in exchange for $500,000 added to the $1.8 million fee. Under the deal, Image has the right to terminate the merger and collect the $2.3 interruption fee since Nyx failed to deposit the funds by the previous March 3 deadline. Image shareholders approved the acquisition — originally slated to close Feb. 26 — that called for Nyx to pay Image shareholders $2.75 per share in cash ($60.2 million), in addition to outstanding debt, for a total of $100 million. Nyx has a final option to extend the closing date to March 26, if it adds a final $500,000 for a total $2.8 mil- lion interruption fee by March 19. Wall Street sent Image shares up nearly 24% to close at $1.14 per share. The distributor’s stock fell more than 25% during midweek trading. Analysts continued to question Nyx’s ability to secure funding in the current credit market. “It’s a black eye for sure,” said an analyst who wished to remain anonymous, citing the ongoing negotiations. The analyst said the deal didn’t appear airtight when announced last November with Nyx allowed to exit the deal minus only the business interruption fee. He said the back-and-forth underscored the deal’s weakness. Home Media Magazine March 9–15, 2009 http://www.homemediamagazine.com http://www.Break.com http://www.Amazon.com
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