Cinedigm reported its Q3 Fiscal 2011 quarter ended December 31, 2010 this morning. The numbers were pretty much all as expected. The press release has all the specific details. In summary, they reported just over $21M in revenues (up 7% YoY), $12.9M Adjusted EBITDA and a large GAAP loss, owing to major depreciation and interest expense.
Operationally, Cinedigm completed 604 new “Phase II” digital deployments and added 614 to its backlog. (So a book to bill of just over 1, for those who think about it in those terms.) Cinedigm has over 1270 screens in backlog, so even if book to bill fell below 1 for a quarter or two, it wouldn’t make a difference. However, they are working on closing the few thousand more screens to bring them under agreement and add to backlog.
There were clearly signs that “the real story”, as we see it for Cinedigm, is beginning to unfold. Specifically, they announced that they have signed a deal with some partners in India to bring their technology and services platform to that country. Details won’t be available until they can put out a full press release and have it approved by their partners, but it’s significant because it will increase the recognition of Cinedigm as a technology provider and not as a financing company. This is a key transition for the company, and while this deal alone may or may not be a catalyst for a change in the mainstream view, it’s likely to help.
Secondly, this was the first call with the new CEO, Chris McGurk. To his credit, he stepped up to the plate on the call and didn’t hover in the background, which is what some newcomers do on their first call. McGurk made it clear he’s serious about alternative content, even though most are quite skeptical. On his side of the ledger, though, is a good deal of experience and a large network of relationships to leverage in order to revisit the alternative content model more completely and as a real business. How well they address alternative content and new business models is the next next chapter for the company, so a good strategy now is important.
Cinedigm became a research client of ours a few months ago, and we have published a few posts (listed below) on them already, as we complete our research for a full report. The digital entertainment space is undergoing a major overhaul, and we see Cinedigm as a key player in this area that will emerge over time as more of a technology, service and content provider in this transition.
[Disclosures: Cinedigm is a corporate research client of Research 2.0, and some Research 2.0 employees may own positions in the stock at the time of this writing (positions that were owned prior to engaging with Cinedigm). Additional information about our disclosures and policies can be found on our website on the legal page.]