Home Media Magazine - April 27 - May 3, 2008 - (Page 7) www.homemediamagazine.com NEWS BRIEFS I CANADIAN FILM BOARD TITLES GO TO DOCURAMA Two award-winning documentaries from the National Film Board of Canada will see DVD releases this year thanks to a new partnership with independent distributor Docurama Films. The films are The Wild Horse Redemption, a profile of inmates in Colorado who are introduced to a horse-taming program; and Dr. James Orbiniski’s Humanitarian Dilemma, a co-production between the Film Board and White Pine Pictures, which follows the triage doctor in Somalia, Rwanda and the Congo – Chris Tribbey Survey: Consumers May Cut Entertainment Spending NPD study says 37% of consumers plan to spend less this year By Chris Tribbey RESEARCH A new consumer survey study on entertainment spending from The NPD Group shows current economic concerns may take a toll on a category that’s usually recession-proof. Only 18% of the more than 11,000 consumers surveyed said they plan on spending more on entertainment this year compared to 2007. Thirtyseven percent said they plan on spending less, while roughly half of consumers said they would spend the same. The full results will be published in NPD’s upcoming “Entertainment Trends in America” report. Consumer spending on DVDs and Blu-ray Discs is up in the first three months of 2008 compared to the same period in 2007, according to Home Media Research. But the NPD study suggests that may not hold all year. Adams Media Research also projects a downturn in software spending (see chart). Consumers who said they planned on spending more on entertainment are focused on obtaining new hardware, not new content, NPD reports. “This finding indicates that the industry will have to work harder to successfully market entertainment content to this group of consum- ENTERTAINMENT SPENDING PROJECTIONS PACKAGED VIDEO RETAIL 2007 2008 2009 2010 2011 (RENTAL NOT INCLUDED) Total DVD Units Sold (Mil.) 1,090 1,009 899 803.6 688.3 to Consumers DVD ST Consumer (Mil.) $15,633 $14,349 $12,540 $10,933 $9,093 Spending Total BD Units Sold (Mil.) 5.2 33.7 93.9 185.3 317.4 to Consumers BD ST Consumer (Mil.) $165.09 $960.7 $2,445.3 $4,428.1 $7,032.7 Spending TOTAL A LA CARTE VIDEO (DOWNLOAD-TO-OWN, VOD/RENTAL, SUBSCRIPTION) PPV, NVOD, VOD, (Mil.) $1,750.2 $2,329.1 $2,915.2 $3,508.3 $4,191.3 Internet Source: Adams Media Research ers,” a summary of the report read. “The uncertain state of the U.S. economy, and worries about disposable income had little to do with these consumers’ entertainment spending outlook.” “Entertainment has historically been a reasonably recession-proof spending category,” said Russ Crupnick, entertainment industry analyst for NPD. “But in the 2001 recession there were a spate of new gaming platforms, DVD was a relatively new format, and music CDs hadn’t yet suffered the full onslaught of digital downloading. “It appears from our recent consumer surveys that the current economic climate might be more challenging for those who make and sell entertainment products.” I EMA TO HONOR JAGLOM Independent filmmaker Henry Jaglom will receive the Independent Career Achievement Award at the Entertainment Merchants Association’s Home Media Expo June 24-26 in Las Vegas. The award will be presented June 24 during the Home Entertainment Awards ceremony at the Palms Casino Resort. “Henry Jaglom’s career epitomizes the best of independent filmmaking,” said Bo Andersen, EMA president. – Kyra Kudick PEOPLE I BEST BUY NAMES CFO Best Buy promoted James Muehlbauer to the position EVP of finance and CFO. Muehlbauer, who joined the Minneapolis-based retailer in 2002, has been interim CFO since 2007. – Erik Gruenwedel Wattles Urges Circuit City to Heed Suitors By Erik Gruenwedel RETAIL Dissident shareholder Mark Wattles last week asked the board of Circuit City Stores to open its books to potential acquisition partner Blockbuster Inc., in addition to seeking third-party suitors. Blockbuster recently made public its $1.35 billion cash offer for Circuit City after the Richmond, Va.-based consumer electronics retailer failed to grant it access to due diligence information and commence good-faith negotiations. Circuit City responded by demanding a “viable financing structure” from Blockbuster to allow further due diligence. In a statement, the No. 2 electronics retailer said its financial advisor, Goldman, Sachs & Co., believed that Blockbuster could not consummate the proposed transaction in light of the difficult current financing environment. Circuit City and top executive Philippe Schoonover have been under fire to stymie mounting losses juxtaposed against the comparative success of rival Best Buy. Wattles, co-founder and former CEO of Hollywood Video, in a letter delivered via his investment company, Wattles Capital Management LLC, said Blockbuster posed no competitive threat to Circuit City I BLOCKBUSTER PROMOTES TWO, HIRES THREE Blockbuster Inc. has promoted Anuraj Goonetilleke to VP of finance and strategic analysis, budgeting and planning. He will be in charge of customer analytics, budgeting, planning and finance for Blockbuster’s North American and international ventures. James Whatley, former VP of franchise operations and administration, has been promoted to VP of global franchise and international corporate operations. In his new position, in addition to directing operations for the company’s 900 U.S. franchise stores, he will also be responsible for the corporate, franchised and licensed operations for about 3,000 Blockbuster stores in the 19 international markets outside North America. Two former 7-Eleven executives, Kathleen Walsh and Michael Debnar, have been hired as VP of corporate services, and VP of retail applications, respectively. Kim Alleman, fomerly of Buck Consultants, has been hired as SVP of human – Ruby Cardenas resources. and that the DVD rental company’s board member and largest individual shareholder Carl Icahn appeared willing to back the deal financially. Wattles, who sold Hollywood Video to Movie Gallery for $1.25 billion in 2005, is chief executive for Ultimate Electronics, a Denver-based consumer electronics chain. The executive also owns 11 million shares, or 6.5%, of Circuit City stock. He said Circuit City shareholders would benefit from the $6- to $8-pershare cash offer, which he believed represented a significant premium on the stock’s current value. Wattles said Circuit City’s board should not take any actions aimed at further rebuffing Blockbuster, including adopting plans that make a change of control more costly. “We pointed out that on two separate occasions in the last five years, Circuit City’s board has rejected what appeared to be legitimate interest in acquiring the company,” Wattles said in the letter. The executive said it was the board’s failure to respond to those acquisition offers that prompted him last month to nominate a slate of directors for election at the company’s annual shareholder meeting later this summer. Blockbuster said it continued to explore funding options, including bor- rowing from its own $247 million debt facility or using Circuit City’s available cash, receivables, tax refunds and related assets, including sale of its Canadian operations, to help finance the transaction. It is the latter strategy that has Circuit City doubting the viability of Blockbuster’s offer. Analysts continued to condemn the deal. Even comedian Bill Maher lampooned both companies, saying “lame companies are not allowed to merge.” Blockbuster CEO Jim Keyes told The Wall Street Journal the rental company was not prepared to engage in a hostile takeover and would only continue with the merger if conditions warranted the effort. RENTAL DECLINES HIT HASTINGS By Erik Gruenwedel iting a weaker box office slate and consumer preference to buying DVD movies rather than renting, Hastings Entertainment Inc. reported a 4.8% decline in fiscal 2007 DVD rental revenue (ended Jan. 31) at stores open at least a year, according to an April 21 regulatory filing. The Amarillo, Texas-based retailer, which reported quarterly earnings last month, is one of the last entertainment retail chains to rent DVD movies and video games. Rental revenue for the year decreased nearly $4.6 million to $89.6 million, compared to $94.1 million during the same period the previous year. Rental profit margins actually increased to 65.3%, up from 64% in fiscal 2006. Comp sales of DVDs increased 4% in fiscal 2007 from the previous year, primarily due to strong sales of used DVDs along with increased sales of next-generation formats, led by Blu-ray. In fiscal 2006 comp sales were up 13% from the year prior. Total fiscal-2007 revenue remained relatively flat at $547.6 million, compared to $548.3 million the previous year. Hastings operated 154 stores as of the end of fiscal 2007. April 27–May 3, 2008 Home Media Magazine http://www.homemediamagazine.com
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