MoviePass Parent Spinning Off Ticket Subscription Service

Helios and Matheson Analytics, the fiscally-challenged parent of MoviePass, Oct. 23 announced that its board of directors has approved a plan to spin off the money-losing theatrical ticket subscription service.

To do this, HMNY is creating a new subsidiary named MoviePass Entertainment that would take ownership of MoviePass and other film related assets, including MoviePass Ventures, Moviefone and MoviePass Films.

“Since we acquired control of MoviePass in December 2017, HMNY largely has become synonymous with MoviePass in the public’s eye, leading us to believe that our shareholders and the market perception of HMNY might benefit from separating our movie-related assets from the rest of our company,” Ted Farnsworth, CEO of HMNY, said in a statement.

Indeed, with HMNY’s stock valued at 3 cents per share and facing delisting by Nasdaq, Farnsworth said the plan is to make MoviePass Entertainment a separate publicly-held company.

If permitted to do so under Delaware law, HMNY would distribute a minority of the outstanding shares of MoviePass Entertainment common stock as a dividend to stockholders of HMNY, with the company retaining control of MoviePass Entertainment.

HMNY debt holders would be entitled to participate in any distribution of MoviePass Entertainment shares to the extent required by the terms of such notes and warrants.

Following any distribution of shares of MoviePass Entertainment and/or MoviePass Entertainment becoming a separate public company, HMNY plans to continue focusing on data analytics and consumer centric technologies.

“We believe this new vertically integrated entertainment ecosystem, if achieved, would provide a sharper market focus, and that the combination of these four business lines under the MoviePass Entertainment umbrella would produce substantial synergies that we believe will generate value for our shareholders, subscribers, and business partners,” said Farnsworth.

CNBC: NY Attorney General Investigating MoviePass Parent

The New York Attorney General’s office reportedly has opened an investigation into fiscally-challenged Helios and Matheson Analytics, corporate parent of theatrical ticket subscription service MoviePass.

CNBC, citing a source familiar with the investigation, reported NY AG Barbara Underwood is investigating whether HMNY mislead investors about its fiscal health – a situation underscored by the company’s stock currently trading at 2 cents per share, despite a recent 1-for-250 shares reverse stock split.

“We are aware of the New York Attorney General’s inquiry and are fully cooperating,” Helios and Matheson said in a statement to CNBC. “We believe our public disclosures have been complete, timely and truthful and we have not misled investors. We look forward to the opportunity to demonstrate that to the New York Attorney General.”

Notably, HMNY has yet to mention the investigation on its website despite the fact it is seeking shareholder support for another reverse stock split, this one combining 500 shares into one.

A stock split is typically used by publicly traded companies seeking to lure investors (by reducing the cost of shares) or artificially buttressing a stock’s valuation – the latter employed by HMNY to push shares above Nasdaq’s minimum $1 valuation and avoid being delisted.

HMNY’s fiscal woes have been driven by MoviePass offering subscribers daily access to a theatrical screening for $9.95 monthly fee – a disrupting business model that is financially unsustainable. MoviePass now limits subscribers to three screenings monthly.

Regardless, HMNY has continually told investors its finances are sound and that steps have been taken to reduce costs. The company’s most-recent regulatory filing tells a different story.

HMNY reported a $109 million net loss in the fiscal period ended June 30, with just $15 million in cash available.

MoviePass Owner Names New Communications Director

Fiscally challenged theatrical ticket subscription service MoviePass needs a new message and corporate owner Helios and Matheson Analytics needs a financial miracle.

The two entities Oct. 17 announced the appointment of Maayan Nave as executive director and president of global communications. Nave will lead all marketing, strategic communications and public relations initiatives for HMNY, MoviePass, MoviePass Films and MoviePass Ventures with existing communications teams in New York and California.

Nave, owner of a marketing communications agency operating in Tel-Aviv and New York, previously spearheaded all global communications for the sparkling water brand SodaStream, where he reportedly oversaw more than 60 PR, social media and guerilla marketing agencies in 45 markets around the globe.

Nave’s marketing activities have been recognized by some of the world’s top marketing competitions awarding SodaStream with the Euro Effie 2017, Golden Drum 2016, Sabre Award 2017, PR Daily’s Campaign of the Year and others.

“Maayan is an inspirational strategic leader, his global experience and proven success are a major asset to HMNY’s and MoviePass’ disrupting mission,” Ted Farnsworth, CEO of HMNY, said in a statement.

“Maayan is an epic disrupter with vast experience in both financial and consumer worlds and the right person to lead our marketing and communications efforts,” added Mitch Lowe, CEO of MoviePass.

All skills will be required as MoviePass attempts to resurrect a $9.95 monthly subscription service that has downsized from one-movie-per-day access to three titles monthly. In the process, HMNY has seen its stock freefall to less than a handful of pennies per share – despite a reverse stock split. A second reverse stock split is now planned.

AMC Theatres Ticket Service Tops 400,000 Subs

AMC Theatres Stubs A-List subscription ticket service has topped 400,000 monthly members less than 100 days after launching service.

Adam Aron, CEO of the nation’s largest theatrical chain, disclosed the benchmark after the $19.95 monthly service achieved 80% of its first-year subscriber projections.

“While we do not plan to issue A-List enrollment statistics on a weekly basis, our hitting more than 400,000 enrolled members only three months and a week after launching the program is an enormous milestone,” Aron said in a statement.

Indeed, A-List was projected to reach 500,000 subs after 12 months; and 1 million in two years.

“This all bodes well for the future of increased moviegoing in America,” Aron said.

The success of A-List comes as MoviePass corporate parent Helios and Matheson Analytics remains defiant in the face mounting fiscal woes.

CEO Ted Farnsworth told an industry confab this week HMNY had secured an additional $65 million in funding – despite the company’s stock trading slightly above 1 cent per share.

HMNY is now planning a second reverse-stock split in an attempt to bring shares above the Nasdaq required minimum $1 per share price.

 

MoviePass Films Partners with Neon for Indie Releases

MoviePass Films, the production company co-owned by MoviePass parent Helios and Matheson Analytics (HMNY), has partnered with independent distributor Neon for upcoming releases of Sundance award-winner Monsters and Men and Cannes award-winner Border, both of which are anticipated to open in the U.S. in the next few weeks.

Neon, which distributed Oscar-nominated I, Tonya, Three Identical Strangers and Ingrid Goes West, shares equity ownership in Monsters and Border.

HMNY launched MoviePass Films as an ancillary revenue stream – streaming, DVD sales, transactional sales, international rights, retail – from its branded theatrical subscription ticket service.

“The films are high-caliber, prestige titles and are great fits for the MoviePass audience,” MoviePass Films CEO Randall Emmett, said in a statement.

The partnership kicks off with the New York City premiere of Monsters and Men on Sept. 25, ahead of the drama’s New York and Los Angeles opening on Sept. 27. The film will be available in theaters nationwide in mid-October.

Border, which was selected as Sweden’s entry for best foreign-language film at the Academy Awards, took home the top prize in the Cannes Film Festival’s Un Certain Regard category earlier this year.

Fiscally-challenged MoviePass will make the films available to subscribers as bonus movies, which will not count toward monthly in-theater movie allotments. Select subs will also have a chance to attend the film’s red-carpet premieres and receive other special perks throughout the duration of the partnership.

“It’s great to see the different Helios media companies coming together and working towards generating more business for each other,” said Helios CEO Ted Farnsworth.

Farnsworth could use all the synergies he can find. HMNY shares are currently trading at 1.6 cents, with the stock in threat of being delisted by Nasdaq. HMNY has a market cap around $10.5 million.

MoviePass Films’ partnership with Neon follows just-wrapped production on 10 Minutes Gone, starring Bruce Willis. Previously, MoviePass Films produced Gotti, The Row, co-acquired American Animals through MoviePass Ventures, and claims to have a slate of 10 films being prepared for production.

 

 

MoviePass Parent Board Member Quits, Citing Lack of Financial Disclosures

Helios and Matheson Analytics, parent of ticket subscription service MoviePass, Aug. 30 disclosed that a member of its board of directors has resigned under protest.

Carl Schramm, in an Aug. 25 letter to Ted Farnsworth, CEO of HMNY, said he was resigning as a director, including positions on the audit committee, compensation committee, nominating and corporate governance committee and the pricing committee, citing a failure to receive necessary financial information on the company and subsidiary MoviePass.

Schramm served on the board since Nov. 9, 2016.

“I have sought, often unsuccessfully, information about the company’s financial status and operations, and explanations of company strategy,” Schramm wrote. “I have objected to the manner in which a number of business decisions have been presented to the board by management, without sufficient time for the board to examine complex documents, to review significant transactions, or to discuss how the proposed actions fit into the company’s strategic plan.”

Indeed, HMNY and MoviePass have engaged in numerous strategic moves aimed at buttressing the latter’s business model enabling subscribers daily access to a theatrical screening for $9.95 monthly fee.

With the service losing millions of dollars more per month than it generates, HMNY’s stock valuation has plummeted to 2 cents per share – after a 1-for-250 shares reverse stock split. A subsequent price hike was scuttled, with subscriber restrictions put in place instead.

In response, HMNY said it was unaware of any unanswered requests for information by Schramm. It said the board and committees of which Schramm was a member have met at least 25 times thus far in 2018.

HMNY contends it has kept the board “fully informed” and has provided all information needed for members to exercise their responsibilities.

HMNY said that since acquiring 92% stake in MoviePass, it has experienced unprecedented and unanticipated growth – including issues that have placed significant demands on management and the board, as evidenced by the number of board and committee meetings.

“But the company firmly believes all board and committee meetings have been duly noticed and held, and no material information has been withheld from any board member,” Farnsworth wrote in a filing.

MoviePass Annual Subs Now Limited to Three Movies Monthly

With its stock hovering around two cents per share, Helios and Matheson Analytics — corporate parent of MoviePass — is now restricting annual subscribers to three theatrical screenings per month — down from a daily screening.

In an email to the service’s $89.95 annual subscribers, the company said the switch would help maintain lower overhead costs, while affording subs with greater access to content.

“After experimenting with different models and options, we believe that our current monthly plan captures the need of our community — keeping prices low while continually striving to offer a wider selection of films,” said MoviePass.

In effect, MoviePass is now subjecting annual subscribers to the same three-title screening restrictions it imposed upon month-to-month subs earlier this year. Subs are also restricted to select titles and screening titles.

The company is allowing annual subs to cancel their membership for a prorated refund if they choose.

Departing annual subs is the least of MoviePass’ issues, which have dogged the once-promising service after Wall Street grew leery of a business model that enables subs to essentially watch a theatrical screening daily for free.

After cutting the monthly subscription price to $9.95 a year ago, MoviePass took off among consumers, attracting three million subs. At the same time, the service was unable to leverage its sub base with exhibitors in exchange for lower ticket prices.

With MoviePass paying exhibitors face value for every ticket consumed by subscribers, fiscal losses have mushroomed – more than $200 million through June 30.

Despite a 1-for 250 shares reverse stock split and the company buying/selling hundreds of millions of shares to boost the stock price, HMNY’s stock continues to plummet – leaving initial investors with virtually nothing except a desire for revenge.

Numerous shareholder lawsuits have been filed against HMNY, and founder/CEO Ted Farnsworth, among others.

Shareholder Lawsuits Filed Against MoviePass Owner

As expected, two shareholder class action lawsuits have been filed against Helios and Matheson Analytics, parent of ticket subscription service MoviePass, alleging officers in the company engaged in a “scheme to deceive the market and a course of conduct that artificially inflated the company’s stock price, and operated as a fraud or deceit on acquirers of the company’s common stock.”

HMNY is 92% owner of MoviePass which enables subscribers daily (now three times monthly) access to a theatrical screening for $9.95 monthly fee.

The cases include Chang v. Helios and Matheson Analytics Inc., 18-cv-06965, and Braxton v. Benson, 18-cv-07242 – both filed this month in U.S. District Court, Southern District of New York.

Defendants named include Ted Farnsworth, CEO of HMNY, and Stuart Benson, CFO.

In recent weeks as shareholders have jettisoned HMNY stock – now worth pennies despite a 1-for-250 shares reverse stock split – as financial disclosures reveal an untenable business model that borders on a pyramid scheme.

HMNY this week said its ability to continue as a “going concern” remains in doubt without additional funding.

During the same time law firms specializing in securities litigation have flooded the market soliciting potential plaintiffs against HMNY.

Plaintiff Jeffrey Chang claims the Farnsworth and Benson (Mitch Lowe, CEO of MoviePass, was not named in the suit) as officers of a publicly traded company had a responsibility to “disseminate prompt, accurate and truthful information” regarding the HMNY fiscal condition.

Instead, the complaint alleges Farnsworth, Benson (and Lowe) misrepresentations and omissions during the class period violated these specific requirements and obligations.

Specifically, the complaint alleges the executives are liable for making knowingly false statements through so-called “group-published” information. To buttress its case, the filing included every HMNY/MoviePass press release since it acquired majority control of the ticket service on Aug. 15, 2017.

Chang seeks a jury trial and unspecified compensatory damages and legal costs.

A HMNY representative was not immediately available for comment.

MoviePass Missteps No Laughing Matter

Fiscally challenged MoviePass caught a break when it ditched a planned price hike and instituted a limit on the number of theatrical movies subscribers could see in a month.

The new rule limiting the service’s 3 million subs to three screenings (instead of daily access) should go far staunching the reported $45 million monthly cash burn that has sent investors fleeing and left analysts scratching their heads.

But is it enough? Shares of MoviePass corporate parent Helios and Matheson Analytics are trading around 9 cents per share. The stock has become a day-trader’s punching bag with more than 460 million shares trading hands Aug. 6.

Throughout it all MoviePass CEO Mitch Lowe and HMNY CEO Ted Farnsworth have maintained high profiles in corporate and fiscal mismanagement.

Lowe, the former Netflix executive and Redbox boss, has a reputation as an industry visionary/disruptor. Following HMNY’s 92% acquisition stake in MoviePass last August (the service was founded in 2011 by African American businessmen Stacey Spikes and Hamet Watt), Farnsworth and Lowe slashed the $50 monthly fee to $9.95 and went on the PR offensive.

Consumers noticed, and the subscriber base ballooned from 20,000 to 600,000, and then 1 million as the concept of essentially watching a theatrical movie for free 30 out 31 days caught fire.

Lowe and Farnsworth predicted MoviePass would hit 5 million subs by the end of the year and be profitable. At the same time, the duo got cocky.

MoviePass would do more than facilitate increased exhibitor foot traffic, it expanded into indie film acquisitions (American AnimalsGotti) and acquired ’90s holdover Moviefone (largely for Verizon’s minority investment).

Lowe and Farnsworth hyped MoviePass’ user data, and what it could mean to marketers. And that’s when things veered off the rails.

As first reported in March by Stephanie Prange at Media Play News, Lowe, speaking at an industry event, bragged the service knew a lot of details about its subscribers.

“We know all about you,” Lowe said at the self-serving keynote, “Data is the New Oil: How Will MoviePass Monetize It?”

“We get an enormous amount of information,” he said, noting the company knows subscribers’ addresses and can glean demographic information based on where they live. The company also can track subs via the app and a phone GPS.

“We watch how you drive from home to the movies,” he said. “We watch where you go afterwards.”

The reaction was swift. Like an exploding Orwellian timebomb, media pundits, including social, jumped all over Lowe’s bravado, forcing the executive to clarify his comments. MoviePass quickly hired a VP of customer service to assuage any subscriber concerns.

That didn’t stop Farnsworth from perpetuating the service’s data prowess – at the same time MoviePass continued to hemorrhage money.

“Boggles my mind,” Farnsworth told Media & Entertainment Service Alliances’ Smart Content Summit in New York last month, contending studios knew little about the people who watch their movies.

Actually, studios and exhibitors know a lot about their customers, according to Adam Aron, CEO of AMC Theatres, the nation’s largest movie theater chain – and major beneficiary of MoviePass paying face value for every ticket redeemed by subscribers (see photo above).

Indeed, Aron said AMC applied its consumer insight when launching A-List, a $19.95 rival service enabling subs to see three movies weekly on any AMC screen, including Imax and Real3D.

“What gives us confidence that $20 [subscription fee] is the right level for AMC is, it was more than double what anybody else [i.e. MoviePass] was charging,” said Aron.

With his back against the wall, and HMNY’s stock about to be de-listed, Lowe admits management made mistakes.

“I should have accelerated the process of reducing the burn faster in hindsight,” Lowe told The Wall Street Journal. “We’ve been whipsawing people back and forth. I think we’ve got it now.”

Wishful thinking, as more than 302 million HMNY shares traded hands Aug. 7, with the stock falling to 7 cents per share.

 

 

MoviePass Claims Box Office ‘Power’ as Stock Continues to Tank

With its penny stock cratering — down 49% in mid-morning (Aug. 1) trading at 25 cents per share — Helios and Matheson Analytics, parent of ticket subscription service MoviePass, is on a last-gasp PR offensive hoping to reassure fleeing investors.

HMNY said it paid back an emergency $6 million loan taken out last week to keep select operations (i.e. paying exhibitors for tickets redeemed by subscribers) running.

The firm issued an Aug. 1 regulatory filing outlining MoviePass’ contributions to studios and the domestic exhibition market — notably that MoviePass subs on average saw six more movies in the past six months than non-subscribers.

“It is incredible to see the power MoviePass has achieved with its sub base in eleven months,” Ted Farnsworth, CEO of HMNY, said in a statement. “MoviePass is one of the top contributors to the film industry without owning a single theater.”

HMNY said MoviePass accounted for 22.7% of opening weekend box office for Lionsgate’s Blindspotting; and 12% of the total box office for Magnolia Pictures’ U.S. Supreme Court documentary, RBG.

Other benchmarks included 16.8% of July 26 previews for Paramount Pictures’ Book Club; 13% of Warner Bros.’ Tag opening weekend domestic box office; and 5% of Universal Pictures’ The First Purge opening weekend. MoviePass said it paid for more than 150,000 tickets subscribers redeemed for First Purge.

The service said 30.8% and 25.4%, respectively, of its subs saw Oceans 8 and Game Night (Warner Bros.), compared to 4.9% of the U.S. moviegoing population. Another 17.7% (2.3%) saw Blockers (Universal Pictures) and 12.8% (1.6%) watched Hereditary (A24).

Indeed, with more than 3 million subscribers, MoviePass has had a major impact on exhibitor foot traffic. But its hemorrhaging money in the process. With subs paying just $9.95 monthly for daily access to a theatrical screening, attendance is up as subs flock to free screenings.

That could change as MoviePass implements a 50% price hike to $14.95 and restricts access to movies releases on 1,000+ screens.

MoviePass CEO Mitch Lowe says the company has learned “a few points” about the film industry over the past 12 months — which apparently didn’t involve overhead costs.

HMNY is spending millions more per month than it recoups in subscriber revenue — a fiscal reality that continues to spook investors — but not HMNY management.

“We are able to create immense value with our film partners by driving traffic to their films and effectively increasing the valuation of their films on the back-end deals they create,” Lowe said. “Not only do we want to provide an amazing deal for our subscribers, but we also want to be a positive force in Hollywood.”

“We are also beginning to see the benefits of our acquisition and integration of Moviefone.com (acquired from Verizon for an equity stake) into the MoviePass family, with new revenue being generated from studios and brands,” added Khalid Itum, VP of business development.