RLJ Entertainment, the entertainment company distributing content mainly in North America, the U.K. and Australia whose chairman is BET founder Robert Johnson, on Monday reported its third-quarter financials, including a narrowed loss.
RLJ Entertainment's quarterly loss of $5.4 million, or $1.17 per share, compared with a year-ago loss of $8.2 million, or $1.92 per share.
Its loss from continuing operations, net of income taxes, reached $3.0 million, or 97 cents per share, compared with a loss of $5.6 million in the year-ago quarter, or $1.1.56. Revenue dropped 29 percent to $18.4 million. The company lauded its "improvement in gross margin," saying it was "primarily attributable to the growth of our SVOD channels, which deliver a higher profit margin and lower inventory and content impairments."
RLJE's businesses include branded OTT channels Acorn TV, focused on British TV, and UMC, the Urban Movie Channel. As of Sept. 30, Acorn TV had a paid subscriber base of 375,000, up 125 percent from the year-ago date and up 17 percent over the previous quarter. UMC had 17,000 subscribers.
On an earnings conference call, management said the company expects to end 2016 with 400,000-plus and 20,000-plus subscribers, respectively, with a longer-term goal of reaching 1 million subscribers.
The latest financial report comes after the company's recent announcement that it has finalized a $65 million investment deal that gives AMC Networks the option to take a controlling stake in the company down the line. AMC Networks is providing a $60 million seven-year term loan and a $5 million one-year term loan to the company.
"AMC and RLJE are working together to deliver synergistic and transformational benefits," the company said Monday.
"I am pleased that RLJE management continues its strong focus on developing our proprietary SVOD channels, investing in talent-driven television and independent feature films, and at the same time balancing our content cash investments in a manner that continues to delever the company's existing debt. I am confident that this balanced strategy will move the company forward towards profitability," said Johnson.
He added: "The media landscape is ripe for targeted content and with AcornTV and UMC, we are growing these brands at the right time and at the right pace."
Said CEO Miguel Penella: "We remain focused on developing RLJ Entertainment into a premium digital network company serving distinct audiences. With the announcement of our recent strategic relationship and refinancing of our senior debt with AMC Networks, we expect to further enhance our brand and accelerate the acquisition of content to advance our position in the OTT space."
On Monday's call, Penella said his team plans to make Acorn and UMC household names, expand UMC's programming and develop more originals for Acorn and UMC, with AMC Networks being a possible co-production partner. The two are now discussing "content acquisition and development" to see where they can partner, he said, mentioning that "right now we are starting to think about the Agatha Christie library - the stories, the programs, the characters - and looking to see if there are stories that we can develop jointly."
He said joint projects could mean bigger programming coming to RLJ Entertainment's services and exploiting content more efficiently across various platforms.
Penella said that UMC could ultimately become bigger than Acorn, and he highlighted the willingness of African-American consumers to spend money on video services.