McGurk touts 'war chest' of some $20 million
Digital cinema group Cinedigm saw revenue surge and red ink nearly dry up in the last quarter as movie theaters converted to digital at a frenetic pace ahead of a fall 2012 deadline. The company also saw sales surge by 200% at its high-margin software biz.
Chairman-CEO Chris McGurk told Variety that Cinedigm “has amassed a little war chest” through asset sales and a $7 million private stock placement and is looking to buy indie film companies and new software applications to bolster its core operations. Given its deals to date, he likely has about $20 million to play with.
Net losses shrank to under $228,000 in the fiscal second quarter from $10.8 million the year before. Revenue surged to $24 million from $15 million.
McGurk is attempting to transform Cinedigm, shedding its pre-show advertising biz Unique Screen Media and its physical delivery businesses to focus on software deals and actual content to fill the dead time in movie theaters Monday through Thursday. It’s a wide-open space that a number of companies, led by NCM Fathom of Metropolitan Opera fame, are looking to cash in on.
Unlike other alternative content programmers, McGurk wants Cinedigm’s films and theatrical events to travel through ancillary windows like pay TV, homevideo and DVD, with Cinedigm splitting the profits along the way with exhibitors. Ideally, Cinedigm would look to acquire a distribution company that already has some of those deals in place, he said.
Current agreements include a nine-picture deal with Arc Entertainment that launched with the Sarah Palin documentary “Undefeated.” McGurk said he’d like to expand the kids’ business based on the successful Kidtoons program.
Meanwhile, in its digital conversion business, the company reported a record 1,427 screen deployments last quarter, up 122% from the previous quarter, which was also a record. Execs said exhibs are rushing to complete digital installations ahead of a studio-imposed deadline of September 2012 — after which theater owners will have to shoulder the full cost of conversion.
As of Sept. 30, Cinedigm had 9,667 screens under license agreement and 7,988 installed.