Company Now Owns One of World’s Largest,
Independent TV and Film Libraries
and Direct-to-Consumer Online Video Platform
with 15 Million Active Users
Chicken Soup for the Soul Entertainment, Inc. (“CSS Entertainment”)
(Nasdaq:CSSE), a fast-growing provider of positive and entertaining
video content, today announced the completion of the acquisition of
Screen Media Ventures, LLC (“Screen Media”). The transaction was
completed after the market close on Friday, November 3, 2017.
The Screen Media acquisition dramatically
enhances the value of CSS Entertainment’s portfolio of assets, as
well as CSS Entertainment’s capacity to drive revenue and profit
growth.
“Screen Media’s assets are an extraordinary
addition to our growing portfolio of highly-valuable media assets,”
said William J. Rouhana, Jr., chairman and chief executive officer.
“As we have regularly communicated to the investment community, our
intention has always been to identify potentially transformative
opportunities that enable us to achieve our ambitious growth
plans.”
The Screen Media content library of over 1,200
television series and feature films is one of the largest,
independently-owned libraries of filmed entertainment in the world.
Through direct worldwide relationships, this content is distributed
across all media, including theatrical, home video, pay-per-view,
free cable and paid television, video-on-demand and existing and
emerging video platforms.
The Screen Media assets also include the
direct-to-consumer Popcornflix online video platform. This platform
is comprised of five digital streaming channels. The Popcornflix
direct-to-consumer platform is available in 56 countries and has
current rights to over 3,000 films and approximately 60 television
series (representing 1,500 episodes). The Popcornflix app has been
downloaded approximately 24 million times on iOS and Android
smartphones and other devices. For the 12 months ended September
30, 2017, Popcornflix had 15 million active users.
“The Screen Media acquisition accomplishes
numerous strategic objectives in a single transaction,” added Mr.
Rouhana. “Objectives we have emphasized to investors include:
building our portfolio of assets; expanding our content
distribution capabilities; deploying our ad sales capabilities to
maximize monetization of acquired content; expanding and
diversifying our sources and timing of revenue (including realizing
our revenue more evenly throughout all four quarters of the year);
and accelerating tangible growth in shareholder value. We are
thrilled to be checking all of these boxes in a single
transaction.”
Screen Media is expected to generate
approximately $12 million in revenue and approximately $5 million
in EBITDA for the full year 2017. A 2017 appraisal valued the
Screen Media library and Popcornflix direct-to-consumer platform at
approximately $25 million. As required, CSS Entertainment is
securing a new independent asset appraisal which will be reflected
(along with additional financial information) in an amendment to
the Form 8-K being filed today with the SEC. The amended Form 8-K/A
is required be filed within 75 days of the closing of the Screen
Media acquisition.
“We have been highly disciplined in reviewing
numerous opportunities and pursuing those that can dramatically
accelerate the implementation of our strategic plan and provide
greater diversity of our revenue streams, allowing us to prioritize
the timing of various initiatives,” said Scott W. Seaton, vice
chairman and chief strategy officer. “Our recent IPO has provided
us with the necessary capital resources to diversify our revenue
both organically and through acquisitions.”
At September 30, 2017, as set forth in our
quarterly report also being filed today with the SEC, CSS
Entertainment had in excess of $15 million in liquidity and no
debt.
Mr. Seaton added, “We continue to have a strong
balance sheet with no debt and substantial liquidity, including
cash on hand, an unused line of credit and positive operating cash
flow. We now expect our Q4 2017 Adjusted EBITDA to substantially
exceed $10 million.”
The purchase price of Screen Media was comprised
of approximately $4.9 million in cash, the issuance of 35,000
shares of CSS Entertainment’s Class A common stock and CSS
Entertainment’s Class Z warrants exercisable into 50,000 shares of
CSS Entertainment’s Class A common stock at $12 per share.
“We are extremely fortunate to have had the
opportunity to acquire Screen Media’s valuable assets at a
significant discount to their appraised value, intrinsic value and
replacement cost,” stated Mr. Rouhana. “We had been following
Screen Media closely and were patient in waiting for an attractive
opening to acquire these assets. Given our familiarity with Screen
Media, our strong balance sheet with ample liquidity and no debt,
we were well positioned to move forward quickly with the
purchase.”
CSS Entertainment’s management will host a
conference call this morning, November 6, 2017, at 8:30 a.m. ET. To
participate on the conference call, please dial toll-free (833)
832-5128 approximately 10 minutes prior to the start of the
conference call. International callers may dial (484) 747-6583.
Please reference conference ID # 8672469.
The conference call is also being webcast with
an accompanying presentation, which can be accessed through the
investor relations section of CSS Entertainment’s
website, http://www.cssentertainment.com/. Please access the
website 15 minutes prior to the start of the conference call to
download and install any necessary audio software and download the
presentation.
An archived replay of the conference call will
also be available through the investor relations section of CSS
Entertainment’s website approximately one hour following the
completion of the call and will be made available for a period of
12 months.
ABOUT CHICKEN SOUP FOR THE SOUL
ENTERTAINMENTChicken Soup for the Soul Entertainment, Inc.
is a fast-growing provider of positive and entertaining video
content that brings out the best of the human spirit. The company
is aggressively growing its business through a combination of
organic growth, licensing and distribution arrangements,
acquisitions, and strategic relationships. Chicken Soup for the
Soul Entertainment is also expanding its partnerships with
sponsors, television networks and independent producers. The
company will make its video content available to consumers globally
through television and online networks, including its online
affiliate APlus.com. The company is a subsidiary of Chicken Soup
for the Soul, LLC.
USE OF NON-GAAP FINANCIAL MEASURES
This press release contains a non-GAAP financial
measure (EBITDA), which is not recognized under GAAP, as a
supplemental indicator of our operating performance. This non-GAAP
financial measure is provided to enhance the readers understanding
of our historical and current financial performance. EBITDA means
earnings before interest, taxes, depreciation and amortization.
Management believes EBITDA to be a meaningful indicator of our
performance that provides useful information to investors regarding
our financial condition and results of operations. The most
comparable GAAP measure is operating income.
FORWARD LOOKING STATEMENTSThis press release
includes forward-looking statements that involve risks and
uncertainties. Forward looking statements are statements that are
not historical facts. Such forward-looking statements are
subject to risks (including those set forth in the offering
circular) and uncertainties which could cause actual results to
differ from the forward looking statements. The company expressly
disclaims any obligations or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in the company’s expectations with
respect thereto or any change in events, conditions or
circumstances on which any statement is based. Investors should
realize that if our underlying assumptions for the projections
contained herein prove inaccurate or that known or unknown risks or
uncertainties materialize, actual results could vary materially
from our expectations and projections.
MEDIA CONTACTJeanene TimberlakeRooneyPartners
LLCjtimberlake@rooneyco.com(646) 770-8858
INVESTOR RELATIONSSanjay M. Hurry/Jody
BurfeningLHA Investor RelationsCSSEnt@lhai.com(212) 838-3777
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