Home Media Magazine - November 16-22, 2008 - (Page 32) NEWS www.homemediamagazine.com Feature Film DVDs Brighten Image By Erik Gruenwedel SUPPLIER Image Entertainment’s decision to focus on cast-driven feature films for DVD, digital and television continues to pay dividends. The Chatsworth, Calif.-based distributor narrowed its third-quarter (ended Sept. 30) fiscal-2009 loss to $465,000, compared to a loss of $3.6 million during the prior-year period. That loss reduction meant Image posted net income of $1.2 million for the first six months of the fiscal year, versus a loss of more than $6.2 million last year. Net revenue for the quarter jumped 50% to $32.4 million, from $21.6 mil- lion last year. “What’s especially encouraging … is that we are showing revenue increases across all formats, with our DVD sales up 53%, digital up 58% and TV sales up over 130% compared to last year,” president David Borshell said in a call with investors. Best-selling DVDs for the quarter include: Discovery Channel’s When We Left Earth: The NASA Missions and Shark Week: Ocean of Fear, and films Then She Found Me and The Secret. Digital revenue, primarily via Apple’s iTunes, increased to $1.7 million from $1 million last year. Gross margins for the quarter increased nearly 25%. Borshell said Image’s business thus far hasn’t been significantly affected by the economy, but management continues to monitor economic conditions. He said holiday sales would be driven by several non-theatrical releases, including Jeff Dunham’s A Very Special Christmas, Big Visions’ “Ghost Hunter” TV series, and The Criterion Collection’s Blu-ray releases. The distributor increased its annual net revenue guidance for fiscal 2009 to an expected range of $120 million to $130 million, up from its previous guidance of $115 million to $125 million. Aping Around Apes wandered around New York City last week to promote 20th Century Fox Home Entertainment’s Planet of the Apes: 40-Year Evolution Blu-ray Disc boxed set, which streeted earlier this month. Circuit City Undergoes Fiscal Restructuring Lionsgate Videos Ease Loss Continued from page 1 Beginning with the week ending Nov. 15 through Dec. 27, the retailer projects average weekly revenue of more than $310 million, or more than $2.1 billion through the end of the year. For the first six weeks of 2009, from Jan. 3 through Feb. 7, Circuit City projects 15% average weekly declines in same-store sales, with average weekly revenue of nearly $160 million, or more than $960 million total. The retailer expects to generate more than $3.4 billion in revenue over the 13-week assessment period, including $57.6 million in net available cash. It said it expects to spend $52.7 million on store-closing related expenses. Circuit City also said it owes home entertainment studios and related distributors more than $56 million in accounts payable for DVD movies and TV DVD programming, according to bankruptcy filings. Specifically, the retailer owes DVD and music CD distributor Alliance Entertainment $15.8 million, Paramount Home Entertainment $13.7 million, Warner Home Video $10.7 million, 20th Century Fox Home Entertainment $5.8 million, Walt Disney Studios Home Entertainment $3.7 million, Sony Pictures Home Entertainment $3.7 million and packaged-media distributor Navarre Corp. $2.5 million. Representatives from the studios and distributors were not available for comment by press time. Steve Beeks, president and COO of Lionsgate, said the mini-major had less than $500,000 in probable losses associated with the bankruptcy filing. The debt relatively paled in comparison to monies owed to several consumer electronics, TV and PC manufactur- ers, including Hewlett-Packard with $118.8 million, Samsung Electronics with $115.9 million, Sony Electronics with $60 million, Zenith Electronics with $41.1 million, Toshiba America with $17.9 million, Panasonic North America with $13.2 million, Microsoft Corp. with $8 million, Sharp Electronics with $7 million and Vizio with $6.9 million, among others. “No one in the industry likes to see what’s happening with Circuit City, and together we will all try to get through it,” said Andy Parsons, SVP, advanced product development, Pioneer Electronics, at the Nov. 11 HD-3 conference, presented by Home Media Magazine. Circuit City owes Pioneer $2.3 million in accounts payable. James Marcum, vice chairman and acting president and CEO, said the bankruptcy filing was in response to a “deteriorating liquidity position.” He said he regretted the fiscal impact the filing would have on sales associates at the chain’s 1,400 stores. Circuit City Nov. 7 released 700 employees at its corporate headquarters. Edward Woo, retail analyst with Wedbush Morgan Securities in Los Angeles, said the retailer’s strategy is to emerge as “Circuit City Lite,” operating fewer stores with less overhead and favorable leases. “With the economy and consumer spending in such bad shape, they have a tough road ahead,” Woo said. The bankruptcy was hardly an impulse decision, but was instead part of a coordinated plan by Marcum and dissident shareholder Mark Wattles, said Tom Arnold, professor of finance at the University of Richmond and longtime observer of Circuit City’s operations. Wattles, who co-founded and sold Hollywood Video to Movie Gallery for $1.1 billion in 2005, this year commandeered three appointees (including Marcum) to Circuit City’s board, resulting in the resignation of chairman and CEO Philip Schoonover. “After bankruptcy I believe Marcum will remain CEO with possibly some partial ownership of the new entity,” Arnold said. “I suspect Wattles will have some of the equity in the new entity as well.” Arnold isn’t sure how much of Circuit City will survive restructuring. He said bankruptcy allows management to expedite store closures and layoffs. “Even if more stores do not close, more management layoffs are likely,” he said. Separately, the New York Stock Exchange suspended Circuit City’s common stock effective immediately. Continued from page 1 $64 million at the box office since bowing Oct. 24, according to the studio. DVD and Blu-ray releases of The Bank Job, The Forbidden Kingdom, Meet the Browns and Rambo, among others, plus video-on-demand and digital, helped boost home entertainment revenue 32%, to $178.3 million, from $135.2 million last year. Strong DVD sales of the third season of television series “Weeds” ($6 million) and the first season of “Mad Men” ($5 million) also contributed to the quarter. The result was the strongest second-quarter result for home entertainment in the studio’s history. President and COO Steve Beeks said Lionsgate’s home entertainment market share topped 7.5%, the highest in company history. He said home video was on track to generate more than $700 million in revenue. Library revenue, which includes L ATE FL ASH ES I AC/DC BOOSTS WAL-MART Wal-Mart Stores’ exclusive music video release of AC/DC’s No Bull: The Director’s Cut on DVD and Blu-ray helped drive consumer traffic across multiple product categories (music and apparel) and positively impacted the bottom line, company officials said. With a strategic goal to grow its entertainment properties, Wal-Mart leveraged the rock act’s first studio album since 2000 to drive sales in young men’s apparel and video games. AC/DC is reportedly one of the few major music acts yet to make its content available on Apple’s iTunes. Bucking industry trends, Wal-Mart reported third-quarter (ended Oct. 31) operating income of $4.2 billion, up 7.3% from $3.9 billion during the previous year period. — Erik Gruenwedel I NETFLIX ADDS PETERS Netflix has named Gregory K. Peters to the position of VP of partner product development. Peters will be responsible for bringing to market consumer electronics devices capable of instantly streaming movies and TV episodes from Netflix. He will be based out of Netflix’s Los Gatos, Calif., headquarters. — Billy Gil international, home entertainment and TV, should approach $300 million, according to Beeks. The executive downplayed concerns about slowing DVD sales. “We see any recent softness to have been mostly limited to ‘G,’ ‘PG’ and non-genre ‘PG’-rated films that are not strong brand names,” Beeks said. He said Circuit City’s bankruptcy had exposed Lionsgate to less than $500,000 in possible losses. “They are 3% of our business, and while we want them to restructure and succeed, we feel that if there are further issues, other retailers will have no problem picking up that slack,” Beeks said. Despite home entertainment’s performance, Lionsgate released 17 employees, or 8% of its workforce, across the board at its corporate headquarters and eliminated 24 vacant positions. The studio employs 550 in Santa Monica. The staff reductions, which are expected to save about $10 million in overhead costs, constitute part of a company-wide hiring freeze initiated last summer, according to sources familiar with the company. Analysts remain upbeat about Lionsgate despite the theatrical missteps, which they say can be compensated for by home entertainment distribution. “We continue to believe [Lionsgate’s] assets are worth substantially more than its equity valuation, which should make it attractive to small-cap value investors,” Jeffrey Logsdon, analyst with BMO Capital Markets, wrote in a research note. Overall revenue climbed 8.2% to $380 million, from nearly $352 million last year. HOME MEDIA MAGAZINE (ISSN 1934-9882) is published weekly 52 times per year by Questex Media Group, Inc., 306 West Michigan Street, Suite 200, Duluth, MN 55802. 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Table of Contents Feed for the Digital Edition of Home Media Magazine - November 16-22, 2008 Home Media Magazine - November 16, 2008 Contents News HD-3 TV DVD Valentine’s Day Reviews Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced Home Media Magazine - November 16-22, 2008 Home Media Magazine - November 16-22, 2008 - Home Media Magazine - November 16, 2008 (Page Cover1) Home Media Magazine - November 16-22, 2008 - Home Media Magazine - November 16, 2008 (Page Cover2) Home Media Magazine - November 16-22, 2008 - Home Media Magazine - November 16, 2008 (Page 1) Home Media Magazine - November 16-22, 2008 - Home Media Magazine - November 16, 2008 (Page 2) Home Media Magazine - November 16-22, 2008 - Contents (Page 3) Home Media Magazine - November 16-22, 2008 - News (Page 4) Home Media Magazine - November 16-22, 2008 - News (Page 5) Home Media Magazine - November 16-22, 2008 - News (Page 6) Home Media Magazine - November 16-22, 2008 - News (Page 7) Home Media Magazine - November 16-22, 2008 - HD-3 (Page 8) Home Media Magazine - November 16-22, 2008 - HD-3 (Page 9) Home Media Magazine - November 16-22, 2008 - HD-3 (Page 10) Home Media Magazine - November 16-22, 2008 - HD-3 (Page 11) Home Media Magazine - November 16-22, 2008 - HD-3 (Page 12) Home Media Magazine - November 16-22, 2008 - HD-3 (Page 13) Home Media Magazine - November 16-22, 2008 - TV DVD (Page 14) Home Media Magazine - November 16-22, 2008 - TV DVD (Page 15) Home Media Magazine - November 16-22, 2008 - Valentine’s Day (Page 16) Home Media Magazine - November 16-22, 2008 - Valentine’s Day (Page 17) Home Media Magazine - November 16-22, 2008 - Valentine’s Day (Page 18) Home Media Magazine - November 16-22, 2008 - Valentine’s Day (Page 19) Home Media Magazine - November 16-22, 2008 - Reviews (Page 20) Home Media Magazine - November 16-22, 2008 - Reviews (Page 21) Home Media Magazine - November 16-22, 2008 - Reviews (Page 22) Home Media Magazine - November 16-22, 2008 - Reviews (Page 23) Home Media Magazine - November 16-22, 2008 - Top 20 DVD Sellers (Page 24) Home Media Magazine - November 16-22, 2008 - Top 20 DVD Sellers (Page 25) Home Media Magazine - November 16-22, 2008 - Top 20 Rentals and Top 10 Charts (Page 26) Home Media Magazine - November 16-22, 2008 - Top 20 Rentals and Top 10 Charts (Page 27) Home Media Magazine - November 16-22, 2008 - Top 20 Rentals and Top 10 Charts (Page 28) Home Media Magazine - November 16-22, 2008 - Top 20 Rentals and Top 10 Charts (Page 29) Home Media Magazine - November 16-22, 2008 - Just Announced (Page 30) Home Media Magazine - November 16-22, 2008 - Just Announced (Page 31) Home Media Magazine - November 16-22, 2008 - Just Announced (Page 32) Home Media Magazine - November 16-22, 2008 - Just Announced (Page Cover3) Home Media Magazine - November 16-22, 2008 - Just Announced (Page Cover4)
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