Business
RLJ Entertainment reports financial results for Q3 ending September 30, 2013
(iii) higher than expected returns from a former U.S. distribution partner, which was terminated in the second quarter of 2013, and from the company’s Canadian distributor.
Partially offsetting the declines in revenue for the three months ended September 30, 2013 was growth in both the Company’s direct-to-consumer segment, which increased 7.7 percent or US$549,000 for the quarter, and the Company’s UK wholesale distribution business, which increased 12.6 percent or US$283,000. The company experienced growth in its proprietary network, Acorn TV. As of October 31, 2013, the pay subscribers for Acorn TV have grown by 100% to over 40,000 compared to December 2012.
For the nine months ended September 30, 2013, RLJ Entertainment net revenue declined US$13.8 million to US$107.3 million compared to pro forma net revenue of US$121.2 million for the nine months ended September 30, 2012. The decline was driven by a decrease in the Company’s wholesale distribution segment, primarily within the US market, due to:
(i) the full release of five high-profile releases in 2012 (“The Double,” “All Things Fall Apart,” “Beneath the Darkness,” “The Tall Man,” and “Doc Martin 5”) versus only two high-profile releases in 2013 year-to-date (“The Numbers Station” and “Day of the “Falcon”),
(ii) a significant reduction in rebates and sales return reserves in 2012 that did not repeat in the current year, and
(iii) higher than expected sales returns from a former distributor and from the Company’s Canadian distributor. These declines were partially offset by solid growth in both our direct-to-consumer segment, which increased 9.6 percent or US$2.1 million for the nine months ended, and our UK wholesale distribution business, which grew 7.3 percent or US$546,000 year-to-date versus the same period for the prior year.
The Company experienced growth in its proprietary network, Acorn TV. Acorn TV contributed US$485,000 in increased revenues for the nine months ended September 2013.
Adjusted EBITDA increased US$8.3 million to US$3.7 million for the three months ended September 30, 2013, compared to the same period in 2012. The increase in Adjusted EBITDA for the three months ended September 30, 2013, is primarily attributable to reduced expenditures for investments in content. In 2012, the company made significant expenditures related to its production of Foyle’s War 8, which was released in the first quarter of 2013. The company is now just starting preproduction for Foyle’s War 9.
