RLJ Entertainment Posts Q2 Loss, Reports Continued Growth in Digital

RLJ Entertainment reported a net loss of $2 million in the second quarter of 2018, compared to a loss of $0.9 million in the previous-year period.

The loss was a result of higher investment in content and marketing expenses, as well as $1 million of transaction costs incurred to respond to AMC Networks’ merger proposal offset by the improvement in gross profit generated by the digital channels segment, according to the company.

AMC Networks announced it would buy a majority interest in RLJE Aug. 1.

RLJE’s revenue increased 14% to $21.5 million in the second quarter over the previous-year period, primarily driven by a $3 million increase in digital channels segment revenues.

Digital channels, which includes over-the-top services Acorn TV (British TV) and The Urban Movie Channel, grew paying subscribers 49.1% from the second quarter of 2017 to more than 820,000. Digital channels segment revenues increased 46% to $9.4 million from $6.4 million in second quarter of 2017.

Gross profit increased 15.3% to $11.2 million and gross margin increased approximately 60 basis points to 52.3% in the second quarter of 2018 from the previous-year period. Continued growth in the digital channels segment, which represents a larger portion of total revenues, drove the improvements in gross profit and gross margin, according to the company. Adjusted EBITDA increased to $4.5 million from $3.9 million in the second quarter of 2017 primarily due to the growth of higher-margin digital channels segment revenues.

Equity earnings from Agatha Christie Limited increased 48.2% year-over-year to $1.3 million driven by the segment’s film and publishing business segments. RLJE owns 64% of Agatha Christie Limited.

“The OTT landscape continues to represent a tremendous growth future as viewership increases and new platforms emerge,” said Robert L. Johnson, chairman of RLJ Entertainment, in a statement. “With our differentiated targeted brands, Acorn TV and Urban Movie Channel, that fulfill consumers’ demands and preferences, we continue to expand our position, delivering a strong value proposition to subscribers.”

“Subscriber growth was strong in second quarter 2018, gaining momentum as our increased investments in unique and original content, broader distribution across multiple recognized platforms and heightened consumer awareness continue to pay off,” said Miguel Penella, CEO of RLJ Entertainment, in a statement. “Digital channel subscribers grew past the 820,000 mark, our wholesale business remains a strong, increasingly profitable contributor, and Agatha Christie Limited’s performance yields both highly demanded content and strong dividends in our IP segment.”

“RLJ Entertainment’s revenue gains and profitability expansion continued in the quarter as we execute consistently on increasing our strategic investments in growth and controlling costs carefully,” said Mark Nunis, principal financial and accounting officer of RLJ Entertainment, in a statement.

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