Redbox Reports Poor Q4 Results, Stock Plummets

Redbox Entertainment said its fourth-quarter results (ended Dec. 31, 2021) were negatively impacted by the ongoing pandemic that saw the kiosk vendor have access to fewer new-release titles than expected. The news sent shares of the company plummeting more than 50% in premarket trading.

In a Feb. 2 regulatory filing, Redbox said it received 24 new titles in the quarter, far below management expectations.

“Redbox rentals have not recovered to the extent expected and, notwithstanding the year-over-year increase in new releases, were lower than the fourth quarter of 2020,” the company said in the filing.

Redbox has expanded its business model in recent years. In addition to offering consumers DVD/Blu-ray Disc rentals at kiosks, the company offers content through PVOD/EST, ad-supported streaming and SVOD. 

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Redbox reported an increase in marketing and on-demand expenditures. Costs also increased as Redbox purchased more digital content. During that period, increased costs have not been offset by an increase in revenue. Redbox also reported that its business has experienced an increase in competition from new and existing competitors.

The company reported that on Jan. 28 it borrowed the remaining availability under its revolving credit facility.

Redbox’s primary sources of liquidity are cash on hand, cash flow generated from operations, and amounts available under its revolving credit facility. Management is actively taking steps to decrease monthly costs, delay capital expenditures and increase revenues, according to the filing. Redbox is also evaluating a variety of strategic alternatives.

Michael Pachter, media analyst at Wedbush Securities in Los Angeles, said he believes Redbox can turn its fiscal condition around as it gets access to more packaged-media content.

“As its members return to the kiosk more regularly, that will give Redbox the opportunity to upsell its 39 million loyalty members to its digital products,” Pachter wrote in a Feb. 3 note. “Its members are late technology adopters, and some may opt for Redbox’s simple and inexpensive transition to streaming.”

Netflix: ‘We Slightly Over-Forecasted’ Q4 Sub Growth, Missed Projection by 200,000

Netflix Jan. 20 said it added 8.3 million subscribers worldwide in the fourth quarter, ended Dec. 31, 2021. The tally was off less than 3% (200,000 subs) from the streamer’s projection of 8.5 million net paid additions, but enough of a miss to send the streamer’s stock tumbling. Netflix ended the quarter with 222 million subs globally.

“We slightly over-forecasted paid net adds in Q4,” Netflix co-CEOs Reed Hastings, Ted Sarandos and CFO Spence Neumann co-wrote in the shareholder newsletter. “While retention and engagement remain
healthy, acquisition growth has not yet re-accelerated to pre-Covid levels. We think this may be due to several factors including the ongoing Covid overhang and macro-economic hardship in several parts of the world like Latin America.”

Indeed, the streamer added 200,000 fewer subs (1 million) in South America than in the previous-year period at 1.2 million, for more than 39.9 million total subs at the end of 2021.

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The SVOD pioneer added 1.2 million subs in North America, its biggest domestic sub growth in the region since the early days of COVID-19 in 2020. The region ended the quarter with 75.2 million subs.

In the Asia Pacific region, Netflix increased paid memberships by 2.6 million (up from 2 million in the year ago quarter) with strong growth in both Japan and India — to end the year with 32.6 million.

In Europe, Middle East and Africa, Netflix added 3.5 million subs vs. 4.5 million in the prior year period. The region, which ended 2021 with 74 million subs, delivered record quarterly revenue, exceeding $2.5 billion for the first time.

For the year, Netflix added 18 million vs. 37 million in 2020 during the height of the pandemic.

Meanwhile, the streamer had a strong quarter with new releases, including a new season of “The Witcher” (484 million hours viewed), “You” (468 million hours viewed), “Emily in Paris” (287 million hours viewed) and on Dec. 31, 2021, a new season of “Cobra Kai” (274 million hours viewed), as well as the critically acclaimed limited series “Maid” (469 million hours viewed).

Netflix later this year will launch a Korean adaptation of its popular Spanish “La Casa de Papel” aka “Money Heist” (6.7 billion hours viewed over its lifetime). The new series, “Money Heist: Korea — Joint Economic Area,” aims to expand the LCDP universe outside of Europe.

“Over the years, we’ve learned that big hits can come from anywhere in the world (with great subtitles and dubbing) … but our goal with non-English originals is to first and foremost thrill audiences in their home country,” wrote Hastings, Sarandos and Neumann.

Cinemark Narrows Q3 Fiscal Loss to $78 Million

Moviegoers may be returning to the box office, but the fiscal impact remains a mixed bag.

Cinemark Nov. 5 reported a third-quarter (ended Sept. 30) loss of $78 million on revenue of $435 million. That compares with a loss of $148 million on revenue of $35 million in the previous-year period when most U.S. theaters were shuttered or operating under limited seating capacity due to the pandemic.

Cinemark, along with AMC Theatres and Regal, ranks among the largest exhibitors in the world. It operates 5,872 screens across 42 states and several international markets.

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“We are highly encouraged by sustained positive trends in escalating consumer demand for theatrical moviegoing and growing momentum at the box office,” CEO Mark Zoradi said in a statement.

Zoradi said the chain saw a 61% quarter-over-quarter growth in worldwide attendance, which he said helped decrease the net loss by $64.7 million dollars from the second quarter (ended June 30).

“We expect a continued ramp-up in box office performance over the course of the coming months, and October already delivered the best monthly box office results since the onset of COVID-19,” he said. “As the pandemic further subsides, we remain confident in the future of theatrical moviegoing based on a robust content lineup in the fourth quarter.”

HBO, HBO Max Near 70M Global Subs, Despite Estimated 5M Sub Loss Due to Amazon Channels Exit

AT&T Oct. 21 announced that WarnerMedia’s branded HBO property had 69.4 million HBO Max and HBO combined subscribers globally at the end of the third  quarter (ended Sept. 30). That tally is up 12.5 million subs from the previous-year period of 56.9 million. Domestic subs topped 45.2 million, up 7.1 million, from 38.1 million a year ago.

Notably, AT&T said Max subs increased 1.9 million from the second quarter (ended June 30), but were offset by an estimated 5 million sub loss due to Max’s departure from the Amazon Channels platform affording Prime members direct access to third-party SVOD apps. AT&T made the decision to withdraw due to Amazon’s margins on Max subs, among other issues. Other high-profile SVOD exits from Amazon Channels include Netflix and Disney+.

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AT&T said the average revenue per HBO/HBO Max sub is $11.82 monthly, with total WarnerMedia revenue up 14.2% to $8.4 billion. Overall direct-to-consumer subscription revenue is up about 25%.

WarnerMedia assets include Warner Bros. Pictures, HBO and Turner.

“We continue to execute well in growing customer relationships, and we’re on track to meet our guidance for the year,” John Stankey, CEO of AT&T, said in a statement.

Netflix Q3 Financials Eyeing ‘Squid Game’ Largesse

NEWS ANALYSIS — When Netflix reports third-quarter fiscal results after market close on Oct. 19, expect the streamer to have gotten a boost from “Squid Game,” the new South Korean horror/thriller that has captivated subscribers worldwide.

The show involves heavily indebted people who compete in children’s games for a chance to win big cash prizes, though the challenges come with fatal consequences.

The nine-episode series, which debuted Sept. 17, is reportedly projected to generate a near $900 million windfall for the Netflix, which tracks a program’s “impact value” analyzing how often it’s watched by new and existing subscribers in relation to the program’s production cost.

“Squid Game” had a reported $2.4 million episodic production cost, which translates to $21.4 million for the first season.

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Netflix said 132 million subs streamed at least two minutes of the show in its first 28 days of release, which topped the previous record of 82 million set by Shonda Rhimes’ “Bridgerton.” The streamer contends that 89% of viewers streamed at least 75 minutes of the series; 66% of viewers finished the series in the first 23 days.

Seeking Alpha contends Netflix subs spent more than 1.4 billion hours watching the show, which is more than double the total hours watched for “Bridgerton.”

The series has already sent Netflix shares of 7% since its debut. Wall Street films believe the streamer added 3.5 million subs in Q3 (ended Sept. 30), and will add 8.5 million subs in the fourth quarter. The streamer added just 1.5 million subs in Q2 — its lowest quarter of additions since 2013.

Cinedigm Slashes Fiscal Debt, Ups Q4 Revenue, Enters ‘NFT’ Distribution Space

Distributor Cinedigm announced it has reduced its fiscal debt more than 75% while increasing fourth-quarter (ended March 31) revenue 7% to $8.3 million, from $7.7 million in the previous-year period, according to unaudited results released in a regulatory filing.

Quarterly growth was driven by a 25% surge in content and entertainment revenue of $7.2 million and was partially offset by decline in legacy digital cinema projection equipment revenue. Cinedigm reached an agreement with AMC Entertainment to sell its projection equipment for a net gain of $10.8 million over two years. The sale contributed to Cinedigm reducing total debt by $37.3 million to $11.9 million, from $49.1 million in the prior fiscal year.

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Streaming/digital revenue grew to 75% of the company’s total revenue in the quarter versus 48% in the prior-year quarter. Streaming/digital revenue increased 66% over the prior year quarter and 27% sequentially over Q3. Ad-supported streaming channel (AVOD) revenue increased 331% over the prior-year quarter, subscription streaming channel revenue increased 117% over the prior-year quarter and 65% sequentially over last quarter.

Streaming digital content licensing and sales, driven by partners such as Amazon Prime Video, Apple iTunes and Tubi, generated record digital billings growth for the fourth consecutive quarter.

“We have now successfully completed the transition of Cinedigm from its legacy digital cinema equipment business to a high-growth, independent streaming entertainment channel and content company,” CEO Chris McGurk said in a statement. “We believe our current strategy puts us one step ahead of potential competitors as it enables us to acquire accretive independent streaming assets while rapidly growing the business organically.”

Total streaming minutes in the quarter were about 1.16 billion, a new company record, up 285% versus the prior-year quarter. Monthly ad-supported streaming channel viewers rose to 23.6 million, up 248% over the prior-year quarter. Streaming advertising demand partnerships rose 178% to 64, up from 23 in the prior-year quarter.

Cinedigm said it grew its film and television library for linear streaming, a key growth area, by 88% to 6,591 titles, up from 3,502 titles in the prior-year quarter. Streaming platform partnerships increased 82% to 31 versus 17 in the prior-year quarter, including new linear distribution partnerships and channel expansions with Roku and TCL, among others.

Total SVOD subs exceeded an estimated 683,000 in June 2021, up an estimated 414% over the same period in the prior-year due to rapid expansion of third-party subscriber and wholesale partner relationships. Total streaming minutes in June reached approximately 504.1 million, the highest on record to date and the first month Cinedigm surpassed the half-billion minutes streamed milestone.

“Given our continued subscriber and viewership growth, and with major increases across the board in distribution, platform expansions and partnerships, we delivered an estimated 197% increase in streaming revenue,” said Erick Opeka, chief strategy officer. “Our success is now attracting an even higher caliber distribution deals, ad partners, and most importantly, premium brand and content partners. Given this dynamic, we expect to continue our accelerated growth trajectory over the next twelve months as we focus on the rapid expansion of our business.”

Separately, Cinedigm is entering the non-fungible token (NFT) distribution space with its first film releases under the Fandor Selects label, dedicated to releasing limited editions of classic, contemporary and world cinema to individual parties. Cinedigm acquired Fandor in January.

An NFT is a digital asset (i.e. movie) bought and sold online with cryptocurrency to individual parties for distribution. Film director Kevin Smith (Clerks) earlier this year made news becoming one of the first in Hollywood to release a feature film (Killroy Was Here) as an NFT.

“Our success is now attracting even higher caliber distribution deals, ad partners, and most importantly, premium brand and content partners,” Opeka said.

Hasbro’s eOne Posts Q4 Profit, Ups Revenue Despite Pandemic

Hasbro’s Entertainment One (eOne) subsidiary Feb. 8 reported fourth-quarter (ended Dec. 27, 2020) operating income of $46 million, compared with an operating loss of $34.8 million during the previous-year period, (ended Dec. 29, 2019) based on an adjusted pro-forma basis. Revenue increased 10% to $259.6 million, from $235.2 million. Hasbro acquired eOne for $4 billion in Q1 2020.

Revenue increased in the quarter as live-action TV and film production resumed. 2020 operating profit included $34.7 million of acquisition and related charges, and $25.5 million of purchased intangible amortization associated with the fair value of acquired intangible assets.

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Hasbro’s film and TV production revenue declined 15% to $110 million, from $130.2 million in the previous-year period on lower consumer products revenue as well as lower entertainment revenue, partially offset by growth in digital gaming. The previous 2019 quarter included Bumblebee movie revenue in partnership with Paramount Pictures. Operating profit decreased due to lower revenue, partially offset by growth in licensed digital gaming and cost management.

“Throughout 2020, the global Hasbro team did an excellent job executing in a challenging environment,” CFO Deborah Thomas said in a statement. “In the fourth quarter, we grew revenues and adjusted operating profit, overcoming tough comparisons within the partner brand category and last year’s theatrical releases.”

Analyst Predicts 1 Million Fewer New Q4 Netflix Subscribers

Netflix is projecting subscriber growth of six million for the fiscal period ended Dec. 31, 2020 — topping 201 million subs worldwide. Michael Pachter, media analyst with Wedbush Securities in Los Angeles, said he believes that tally will come in about 1 million less at 5 million, including 300,000 in North America, largely due to recent price hikes.

“We think this is likely given the price increase implemented in late October … [where] standard monthly subscription fees went to $14 from $13 and premium fees went to $18 from $16,” Pachter wrote in a Jan. 14 note. The analyst contends the price hike will up revenue to $6.6 billion from guidance of $6.57 billion.

The longtime Netflix bear notably marveled at Netflix’s ability to keep the content pipeline fresh during the pandemic when most production in Hollywood was shut down. Specifically, Pachter cites Netflix adding foreign content across markets, cross-promoting new genres to audiences, and purchasing/reviving dormant franchises such as “The Karate Kid” (“Cobra Kai”) and “Full House” (“Fuller House”), among others.

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“Netflix’s experience in adapting foreign content to new markets has resulted in the company maintaining its content quantity lead over its competitors,” Pachter wrote. “We expect that lead to be sustained for the foreseeable future.”

If there was a silver lining during the pandemic, shuttered content production accelerated Netflix’s path to generating positive free cash flow — long a sore spot for Pachter. Free cash flow typically represents the cash a company generates after accounting for fiscal outflows to support operations and maintain capital assets. Pachter is guiding $2 billion free cash flow in fiscal 2020.

But the flush FCF could be quickly erased after Netflix announced production/distribution of more than 70 original movies in 2021 — enough content to release at least one new original movie every week.

“This is an ambitious and costly goal, particularly as the service is touting its ‘A’-List-driven content,” Pachter wrote. As a result, the analyst expects Netflix to reach break-even by fiscal year 2022 as content consumption normalizes, subscribers grow and content spend again ramps higher.

Netflix reports Q4 results at market close on Jan. 19.


FuboTV Teases Strong Year-End Revenue, Sub Growth

FuboTV, the upstart publicly-traded online sports-themed streaming service, hasn’t announced when it would report fourth-quarter fiscal results. But that didn’t stop the New York-based service from disclosing upbeat year-end revenue and subscriber growth numbers.

The platform said it expects Q4 total revenue to be between $94 million  and $98 million, a 77% to 84% increase from the previous-year period. Prior guidance was $80 million to $85 million.

Paid subscribers at the year’s end are expected to exceed 545,000, an increase of more than 72% year-over-year. Prior guidance was 500,000 to 510,000 subscribers.

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“FuboTV’s strong preliminary fourth quarter 2020 results exceeded what was already expected to be a record year for the company, and demonstrate continued consumer excitement for the company’s live TV streaming offering,” co-founder/CEO David Gandler said in a statement. “In 2021, we will continue to be laser focused on executing our growth strategies, which include continuing to grow advertising revenues, working to implement sports wagering into our product and further establishing FuboTV as a leader in sports and live streaming.”

Gandler made no mention on the company’s projected profit/loss. In Q3, FuboTV reported a net loss of $274 million on revenue of $61 million. The company launched an IPO in October that saw shares skyrocket 400% following investor excitement over a live-sports themed online streaming service. Shares have been falling ever since, down more than 60%.

All Eyes on Netflix Satellite As It Orbits Fiscal Sun

Netflix Oct. 20 will release fiscal third-quarter (ended Sept. 30) results after the market closes. While a traditional flag bearer among media/tech companies during financials, this 90-day period brings added scrutiny. Netflix has been on a tear. Its stock has catapulted 75% since mid-March when the pandemic started — reaching a near all-time high Oct. 16.

But can the SVOD pioneer sustain its skyrocketing subscriber growth during the pandemic, and, secondarily, can it overcome the media/legal fallout from criminal charges alleging the service streamed “lewd material of children” in the French-language movie Cuties?

To be sure, Netflix has tempered its own fiscal expectations, projecting 2.5 million total sub additions worldwide. That’s less than the market consensus of 3.26 million subs. Wedbush Securities media analyst Michael Pachter said he believes the SVOD giant added just 250,000 domestic subs and 2.3 million internationally in the quarter. Netflix added a record 25.9 million subs in the first six months of the year — more than it did for the entire 2019.

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Analysts expect operating income of $1.29 billion, while Netflix is projecting $1.24 billion. Over the past 2 years, Netflix has topped earnings-per-share estimates 75% of the time, while trumping revenue projections 75% of the time.

While industry scuttlebutt suggests Netflix lost millions of subs in the quarter due to the controversy over Cuties — a fictional movie about an 11-year-old Senegalese girl coming of age in 21st century Paris against the backdrop of a religious mother and peer pressure from a young female dance troupe — Pachter thinks increased content demands from housebound subs drove churn higher.Follow us HERE on Twitter!The analyst contends that with the increased numbers of consumers still largely confined to home entertainment due to COVID-19, the lack of new original content on Netflix will increase service dissatisfaction.“The extraordinary level of consumption of Netflix content multiplied by its large subscriber base suggests to us that some meaningful percentage of subscribers will ‘finish’ Netflix before a large quantity of new content can be produced,” Pachter wrote in a note.The analyst said Netflix is facing a potential loss of 2 million subs per quarter going forward without a significant increase in original content. Indeed, recent data from Nielsen found that among Netflix’s most-popular shows, 50% were network reruns.“The law of large numbers suggests to us that if the rate of subscriber churn grows by ‘only’ 1%, Netflix could face an uptick loss of subscribers per quarter beginning later this year or early next year,” Pachter wrote. “We suspect that this phenomenon has already begun and led to the company’s lackluster guidance for Q3 net additions.”