Shares of cable programming pioneer Robert Johnson’s RLJ Entertainment opened up more than 26% this morning after it disclosed that AMC Networks has loaned it $65 million — and picked up stock warrants that could give it control.
RLJ owns subscription streaming services UMC (the Urban Movie Channel) and Acorn TV, which specializes in British mystery dramas. Johnson founded BET.
RLJ plans to use the cash to refinance its debt, lowering interest rates, and to give itself additional operational flexibility by revising covenants that lenders have on the company. CFO Nazir Rostom told investors in August that RLJ was looking at “various avenues” to accomplish those goals.
The company had $61 million in debt at the end of June. It lost $13.6 million on revenues of $33.5 million in the first half of this year.
Acorn TV and UMC “appeal to consumers with quality programming that represents diverse voices,” AMC chief Josh Sapan says. “Our investment is a strategic opportunity to provide capital and additional resources to RLJ Entertainment as they continue to explore their many opportunities for growth, and while we consider the many potentially powerful synergies with our innovative partners at the BBC, and our own WE tv network.”
Johnson says that RLJ “will be able to further develop and grow with the capital and support of AMC Networks.”
Acorn TV has more than 370,000 paying monthly subscribers, up 92% in 2016. And UMC “is quickly becoming a leading destination for African American and urban viewers, with a rapidly growing fan base seeking diversity of creative voices,” the company says..