TiVo Narrows Q2 Fiscal Loss

DVR pioneer TiVo is in the process of transitioning its hardware and intellectual property (i.e. patents) into separate operating businesses.

In the meantime, the current combined company continues to right its fiscal ship — narrowing the second-quarter (ended June 30) net loss nearly 54% to $9.54 million from a net loss of $20.5 million during the previous-year period.

Total revenue increased nearly 2% to $176.1 million from $172.8 million last year. Through the first six months of the fiscal year, TiVo revenue is down about 8% at $334.4 million from $362.6 million.

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The bulk of revenue comes from TiVo’s portfolio of IP patents enabling third-party pay-TV operators to offer subscribers on-demand content, video recording, content recommendation and related viewership data.

Indeed, TiVo said it has expanded its third-party advertising functionality to include promotions surrounding VOD movie transactions.

 

The company said promo campaigns deliver strong performance results, including an 81% increase in digital transactions for a Hollywood studio using the software over three weekends to promote a new movie title.

Licensing, services and software revenue increased 3% to $174.4 million, while hardware sales fell about 50% to $1.67 million.

CEO Dave Shull said TiVo remains on track to separate the businesses.

“Based on my experience with strategic transactions and operational transformations, we are making great progress on the separation of TiVo’s Product and IP Licensing businesses,” Shull said in a statement. “We remain on track to complete the separation in the first half of 2020.”

GameStop Calls Off Company Sale, Stock Plummets

Shares of GameStop were down more than 23% in early trading Jan. 29 after the company announced it was canceling efforts to sell the world’s largest video game retailer.

The Grapevine, Texas company, which operates more than 5,800 retail locations in 14 countries, said is continuing the search process to appoint a permanent CEO and is working with an executive search firm.

In June 2018, GameStop’s board began discussions with third parties regarding a potential sale of the company. The board terminated sale efforts due to the lack of available financing on terms that would be commercially acceptable to a prospective acquirer.

GameStop earlier this year sold its Spring Mobile business generating about $735 million in cash. It plans to use the funds pay down outstanding debt, fund share repurchases, and reinvest in core video game and collectibles businesses.

As of Nov. 3, 2018, GameStop had $820 million of outstanding debt, $350 million of which carries a 5.50% interest rate and is due on Oct. 1, 2019. The elimination of that debt will represent annualized savings of roughly 14 cents per share, according to Wedbush Securities digital media analyst Michael Pachter.

“GameStop should be a primary beneficiary from the console refresh in 2020 or 2021, and it remains the dominant force in the video game industry’s pre-owned segment,” Pachter wrote in a Jan. 29 note.

Earlier this month, GameStop reported a 5% decline in global 2018 winter holiday revenue to $2.63 billion, compared to the nine-week holiday period ended Dec. 30, 2017.

 

Netflix Posts Record Q4 Subscriber Growth

Netflix Jan. 17 reported it added 7.3 million net new paid subscribers internationally in the fourth quarter (ended Dec. 31, 2018) — which was above company projections of 6.1 million. In the United States, Netflix added 1.53 million paid subs, compared to projections of 1.5 million.

Netflix no longer combines new subs on trial basis with paid additions. As a result, Netflix said it had 2.07 million new trial subs in the U.S., in addition to 7.13 million internationally.

The service ended the period with 139 million paid subscribers, up 9 million paid members from the start of the quarter and 29 million from Jan. 1, 2018. Netflix added 22 million subs in 2017.

The SVOD pioneer grew quarterly revenue 35% to $16 billion, nearly doubling operating income to $1.6 billion.

Netflix said that through its first four weeks, original movie Bird Box, starring Sandra Bullock, was streamed by more than 80 million household worldwide.

The service said its original feature films continue to generate audiences in the home and in theaters. Five weeks after its debut, Roma from director Alfonso Cuaron is still playing on 900 screens worldwide — including some 70mm format projections.

Netflix said it service commands about 10% of all TV screen time in the U.S., and about half as much on mobile devices.

“There are thousands of competitors in this highly fragmented market vying to entertain consumers,” wrote CEO Reed Hastings and CFO Spencer Neumann in the investor letter. “Our growth is based on how good our experience is to subscribers … not on Disney+, Amazon Prime Video or others.”

Finally, Netflix ended the period with 2.7 million disc renters — down from 3.3 million during the previous-year period. The legacy segment generated $51.4 million operating profit on revenue of $85.1 million. That compared to operating profit of $62.6 million and revenue $105.1 million last year

Netflix Tops Q3 Sub Growth Forecast with Nearly 7 Million Additions

Netflix Oct. 16 returned to business as usual, reporting record third-quarter (ended Sept. 30) global subscriber growth of nearly 7 million, including 1 million in the United States – beating company projections. The service ended the period with 137 million subs, including 130 million paid.

The SVOD pioneer generated nearly $4 billion in revenue, up 34% from the previous-year period of nearly $3 billion. Net income tripled to $403 million from $130 million last year.

“Our broad slate of original programming helped drive a solid quarter of growth,” CEO Reed Hastings wrote in the shareholder letter. “We’re thrilled to be growing Internet entertainment across the globe.”

On the flip side, free cash flow ballooned 85% to $859 million from $465 million as Netflix continues to spend large on original content. Third-party streaming content obligations reached $18.6 billion compared to $17 billion last year.

Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. In other words, FCF is the cash left over after a company pays for its operating expenses and capital expenditures.

“We recognize we are making huge cash investments in content, and we want to assure our investors that we have the same high confidence in the underlying economics as our cash investments in the past,” CEO Reed Hastings wrote in the shareholder letter. “These investments we see as very likely to help us to keep our revenue and operating profits growing for a very long time ahead.”

Indeed, Netflix believes negative free cash flow will be closer to $3 billion than $4 billion for the full year 2018 as the FCF deficit year to date is negative $1.7 billion.

Finally, Netflix ended the period with more than 2.8 million by-mail disc subscribers, compared with 3.5 million last year. The packaged media unit generated $51.6 million operating profit on revenue of $88.7 million. That compared to operating income of $63.1 million and revenue of $110.2 million last year.

Disc Sale Declines Undermine BBC Worldwide Fiscal Revenue

BBC Worldwide July 11 said it generated £1.04 billion ($1.38 billion) in fiscal year revenue, ended March 31. That compared to revenue of £1.05 billion ($1.39 billion) during the previous-year period.

The BBC, which combined BBC Worldwide with BBC Studios in April into a single entity, attributed the revenue dip in part to declining packaged media sales, including DVD.

Regardless, pre-tax earnings increased 42% to £118.3 million ($157 million) from £83.5 million ($110 million) last year. The BBC said the increase reflected strong content sales, cost efficiencies across branded services and overhead savings.

Other highlights included BritBox, the North American SVOD service partnership with ITV, ended the fiscal year with 250,000 subscribers after bowing service in Canada.

BBC Worldwide entered into several new global deals during the fiscal year, including with Shanghai Media Group Pictures (a leading Chinese media company), which will see an expansion of the “Doctor Who” brand in China and partnerships with Foxtel, ABC, Sky and Fetch were cemented with new or continued deals in Australia and New Zealand.

Original program, “Blue Planet II,” proved a major success with international audiences, with the premiere becoming the most-watched ad-supported nature episode in nearly eight years on BBC America. “Planet Earth: Blue Planet II” amassed more than 250 million views on Chinese VOD platform Tencent in Q4, ending Dec. 31, 2017.

 

GameStop Q1 Profit Declines 52%; Company Names Interim CEO

GameStop May 31 reported first-quarter (ended May 5) profit of $28.2 million, down 52% from profit of $59 million during the previous-year period. Revenue declined 5.4% to $1.9 billion from $2 billion last year.

The nation’s largest video game retail chain attributed the decline in large part to year-over-year comparisons with Nintendo’s bow of the Switch platform.

New hardware sales decreased 7.9%, while new software sales decreased 10.3%. Software sales were impacted by the strength of titles across platforms that launched in the prior fiscal year. Pre-owned sales declined 5.8% and worldwide omnichannel sales decreased 46% due to limited allocation of the Nintendo Switch at launch, which drove 93% increase in omnichannel sales in the first quarter of fiscal 2017.

Digital sales increased 29.6%, excluding the first quarter 2017 revenue from Kongregate, which was sold in July 2017. On a reported basis, digital sales decreased 2.5% to $43.0 million.

Collectibles sales increased 24.4% to $142.4 million, driven by continued expansion of licensed merchandise offerings and unique product offerings.

Technology Brands sales decreased 16.1% to $169.0 million, primarily due to less promotional activity and the overlap of the previously disclosed change in AT&T’s dealer compensation structure from the previous year. Technology Brands operating earnings reached $9.8 million. Technology Brands operating earnings, excluding store closure and other charges, were $11.2 million compared to $18.4 million in the prior-year quarter.

Separately, GameStop announced that Shane Kim, currently a board member and former Microsoft executive, will serve as interim CEO until a permanent CEO is named. Rob Lloydwas promoted to COO and CFO. Previous interim CEO Dan DeMatteo will continue serving as executive chairman of the board.

“We are fortunate to have Shane assume the role … and welcome his insight as a video game industry veteran,” DeMatteo said in a statement. “Shane has been an actively engaged member of the board since 2011, and will bring additional executive focus, energy and passion to the organization during this time of transition.”

Warner Bros. Ups Q1 Home Entertainment Revenue

Warner Bros. Home Entertainment April 26 reported first-quarter (ended March 31) revenue of $396 million from the sale of packaged media and digital movies. The tally was up 7% from revenue of $368 million in the previous-year period.

Home entertainment sales of TV content, which includes HBO, declined 14% to $75 million from $87 million last year.

Specifically, Warner Home Video benefitted from strong retail sales of horror film, It, which has generated $31.5 million in combined DVD/Blu-ray Disc sales since its Jan. 9 retail release, according to The-Numbers.com. The title — based on Stephen King’s novel about pre-teens fighting an evil demon that poses as a child-killing clown — ranks No. 2 in disc sales in 2018 after Disney/Pixar’s Coco with $33.1 million.

Other top-selling Warner disc in the quarter included Oscar winners Blade Runner 2049 ($22.5 million since Jan. 18 street date) and Dunkirk ($7.6 million). The Christopher Nolan war film has generated $29 million in disc sales since its Dec. 17, 2017 retail bow.

Overall, Warner said operating income decreased 34% ($168 million) to $322 million primarily due to revenue declines – the latter decreasing 4% ($127 million) to $3.2 billion, due to lower television and theatrical revenue.

The decline in television revenue was primarily due to the comparison to the domestic licensing of certain library series in the prior-year quarter. Theatrical revenue decreased due to the mix and timing of releases, as the prior-year quarter included the releases of Kong: Skull Island and The Lego Batman Movie compared to the late quarter release of Ready Player One in the current year, partially offset by higher international licensing revenues.

From its opening on March 29 through April 24, Ready Player One grossed over $525 million at the worldwide box office and is Warner’s highest-grossing film ever in China.

Warner Bros. Television shows “The Big Bang Theory,” “Young Sheldon” and “Mom,” as well as “The Voice,” “The Bachelor” and “Ellen’s Game of Games.”

 

Paramount Posts First Quarterly Profit Since 2015

Paramount Pictures April 25 reported second-quarter (ended March 31) operating income of $9 million on revenue of $741 million. It was Paramount’s first quarterly income since Sept. 30, 2015. The studio reported a $66 million loss on revenue of $895 million during the previous-year period.

Theatrical revenue decreased 79% to $50 million, primarily due to fewer titles in the quarter and a modified release strategy that resulted in certain legacy slate titles moving from theatrical to licensing distribution. Domestic and international theatrical revenues decreased 64% and 86%, respectively.

Licensing revenue grew 37% to $477 million, primarily driven by the release of The Cloverfield Paradox on Netflix, as well as Paramount Television product, including “The Alienist.” Domestic licensing revenue increased 46% while international licensing revenue grew 31%.

“Turnaround efforts have firmly taken hold as the studio improved margins and returned to profitability. This month’s outstanding box-office performance of A Quiet Place, the first film produced and released under the new team at Paramount, is a clear sign of our progress,” Bob Bakish, CEO of parent Viacom, said in a statement.

Paramount Pictures Home Media Distribution posted revenue of $163 million, which was down 18% from revenue of $198 million last year. The home entertainment unit has generated $346 million through six months of the fiscal year, down 22% from $441 million last year.

Domestic home entertainment revenue decreased 29% while international home entertainment revenue increased 13%. Ancillary revenue decreased 54% to $51 million, with domestic and international ancillary revenue down 63% and 11%, respectively.

Overall studio revenue topped $1.2 billion through six months, down 23% from revenue of $1.65 billion through the same period last year.

 

Universal Pictures Q1 Profit Falls 45%

The movie business is often a financial rollercoaster, with release slates and fickle box office turning previous successes into future fiscal headaches.

Universal Pictures said first-quarter (ended March 31) revenue dropped 16.3% to $1.6 billion from $1.9 billion in the previous-year period, primarily due to lower theatrical revenue. The studio includes Universal Pictures Home Entertainment.

Theatrical revenue decreased 35% due to the higher number of movies in release in last year’s first quarter, including comparing financial results from Fifty Shades DarkerSingSplit and Get Out in last year’s quarter against performances of Fifty Shades Freed, Pacific Rim Uprising, Darkest Hour and Pitch Perfect 3 in this year’s first quarter.

Fifty Shades Darker generated $114.5 million at the previous-period domestic box office compared to $100 million for follow-up Fifty Shades Freed this year.

Animation hit, Sing, generated $634 million globally, including more than $270 million domestically. It also generated almost $63 million in combined DVD/Blu-ray Disc sales in 2017, according to The-Numbers.com. That’s more than the combined box office tally from Pitch Perfect 3, Darkest Hour and Pacific Rim Uprising.

Studio pre-tax income fell 45.2% to $203 million from $370.4 million in the previous-year period, reflecting the decline in revenue, partially offset by lower programming and production costs.

Netflix Crushes Q1 New Subscriber Estimates

Netflix April 16 said it added record 7.4 million new subscribers in the first quarter (ended March 31) – topping Wall Street estimates of 6.5 million. The service added 5.4 million subs internationally, compared to 1.96 million (1.45 million forecast) in the United States.

International operations now account for 50% of revenue and 55% of memberships. Netflix has 125 million members globally. Netflix added 1.98 million domestically in the fourth quarter, underscoring the service’s maturity in the U.S.

Financially, the SVOD service generated $290 million net income on revenue of more than $3.7 billion. That compared to net income of $178 million and revenue of $2.63 billion during the previous-year period.

Netflix generated $56.3 million contribution income from its legacy by-mail disc rental unit. Revenue topped $98.7 million, compared to revenue of $120.3 million during the previous-year period. The business ended the period with more than 3.1 million subscribers, down from 3.94 million subs last year.

In the shareholder letter, CEO Reed Hastings and CFO David Wells reiterated Netflix would spend upwards of $8 billion on original content in 2018.

Scripted original series debuts in Q1 included coming of age story The End of the F***ing World and sci-fi thriller Altered Carbon as well as returning seasons of “Marvel’s Jessica Jones,” “Grace and Frankie,Santa Clarita Diet” and “A Series of Unfortunate Events.”

“Last year, we expanded our efforts in original programming to unscripted shows across several genres. Our output in this area is now comparable to similarly-focused domestic cable networks,” Hastings and Wells wrote.

The executives said the surprise launch of sci-fi movie, The Cloverfield Paradox on Super Bowl Sunday underscored a “tight” coordination between original film, product, marketing and PR teams.

“The event showcased how a big branded film can be marketed and delivered to consumers instantaneously across the globe without a wait for the theatrical window,” Hastings and Wells wrote.

Netflix continues to generate controversy releasing original feature films worldwide concurrent with any theatrical distribution. The service is skipping the Cannes Film Festival competition since its movies in France must first be screened theatrically for 36 months.

“We would never want to do that to our French members,” wrote the executives.

Hastings and Wells heralded Netflix’s first Oscar win for bike racing doping documentary Icarus.

“We’re thrilled when the creators with whom we partner are recognized for their exceptional work,” they wrote.