After a 12-month period in which its stock has lost more than 66% of its value, data firm Helios and Matheson Analytics should be all smiles about its agreement to pay $27 million for a 51% stake in MoviePass — the company that enables subscribers to see a movie a day.
The news contributed to a 7.9% lift in its stock price today.
When the deal closes, H&M will loan MoviePass about $5 million, the data firm says in an SEC filing. It also will swap $10 million worth of its shares for MoviePass ones.
MoviePass will forfeit 20% of the H&M shares if it doesn’t have 100,000 subs at least one day in the year after the deal closes — or if it can’t be publicly traded by the end of January 2018.
H&M will give MoviePass $2 million worth of additional shares if it gets 150,000 subs within 15 months after the deal closes.
To help its cause, MoviePass lowered its base subscription price to $9.95 a month from $14.95.
The subscriptions work at movie theaters that accept debit cards. MoviePass pays the full ticket price for its subscribers to see one movie a day on a conventional 2D screen — not 3D or Imax.
The sale to H&M, and price drop, empower MoviePass to offer a service “that completely disrupts the movie industry in the same way that Netflix and Redbox have done in years past,” says CEO Mitch Lowe, who co-founded Netflix and became president of Redbox.
H&M CEO Ted Farnsworth says the data his firm can glean about MoviePass users make the firms “a perfect fit.”
MoviePass COO Stacy Spikes adds that the company can “be the catalyst needed to reinvigorate the film industry…. Our data continues to reinforce the amazing benefits of subscription for customers, theaters and studios. For our industry to remain relevant, we must be bold and experiment with wild new ideas.”
B. Riley analyst Eric Wold notes that studios and exhibitors “are NOT taking a discount under the MoviePass model. We understand that MoviePass is absorbing the ticket discount and hoping to make up the discount through monetizing the data… and the breakage (from those consumers that do not use it to the full extent each month). The exhibitors get full price for their tickets and the studios get their usual film rent splits.”
As of December, MoviePass had about 20,000 subscribers, he says.
Although the analyst says that MoviePass’s lower price should help theaters, the leading chains once again touched 52-week lows: AMC Entertainment is -2.6% in afternoon trading with Imag -1.5%, Regal -1.3%, and Cinemark -0.6%.
H&M also owns RedZone Map. It monitors cellphone activity to tell its app users when crowds pose “potential threats to their personal safety and to inform law enforcement and government officials of the location and migration patterns of known criminal or terrorist individuals and groups,” the company says.