AMC Networks Pulls Trigger on RLJ Entertainment Merger

AMC Networks has agreed to buy majority (50.1%) interest in RLJ Entertainment, including over-the-top video properties Acorn TV and Urban Movie Channel (UMC), for $65 million in cash.

AMC’s $6.25 per share offer represented a 47% increase from its $4.25 per share offer in February. In 2016, AMC entered into a merger-agreement with RLJE, giving $65 million in loans (now valued at $78 million) with the option to acquire the Bethesda, Md.-based home entertainment distributor.

AMC’s move puts a value of $274 million on RLJ Entertainment, which was created in 2012 by Robert L. Johnson through the merger of Image Entertainment and Acorn Media Group. Johnson, who founded and sold Black Entertainment Television (BET) to Viacom, retains a 17% stake in RLJ Entertainment, which becomes a private subsidiary of AMC.

“[Bob Johnson’s] management team is extraordinary, having successfully transitioned Acorn TV from a home video and DVD business to a leading direct-to-consumer subscription service,” Josh Sapan, CEO of AMC Networks, said in a statement.

Acorn TV was launched in 2011 by Acorn Media Group as a competitor to Netflix streaming British TV shows and movies over the Internet. Together with UMC, the two OTT video services have a combined 800,000 monthly subscribers – up 100,000 subs since the end of 2017.

While Sapan appears confused about Acorn TV’s history as a distributor of packaged media (it wasn’t), the CEO is spot on recognizing the value of RLJE’s majority stake in the Agatha Christie library — a brand filled with IP opportunities.

In 2013, RLJE licensed the film rights to Christie’s Murder on the Orient Express to 20th Century Fox, which released a new feature film co-starring and directed by Kenneth Branagh in 2017.

Murder on the Orient Express, which starred Johnny Depp, Michelle Pfeiffer, Judi Dench, Penelope Cruz, Willem Dafoe and Michael Pena, among others, generated $352 million at the global box office. The title generated more than $9 million in combined DVD/Blu-ray Disc sales.

“This acquisition furthers AMC Networks’ digital strategy by meaningfully accelerating our interests in direct-to-consumer ad-free subscription services that we own and control, in addition to providing us with access to strong IP as we continue to diversify our revenue opportunities, placing AMC Networks in a stronger position over the long term,” Sapan said.

RLJ Entertainment in May reported a first-quarter net loss of $6.5 million, compared with a net loss of $6.1 million during the previous-year period. Revenue increased 34% to $18.5 million, from $13.8 million a year ago.

 

 

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