Cinedigm Invests In Shout! Factory Planning Online Channel Revamp

Here’s a deal that should interest fans of TV oldies including Father Knows Best, Secret Agent, Newhart, The Dick Van Dyke Show, and The Twilight Zone — and catch the eye of investors concerned about Cinedigm’s cash flows.

The shows run on Shout!Factory TV, a video streaming channel that’s  due to be revamped by year end following Cinedigm’s new minority investment in Shout! Factory. The agreement extends their DVD and video distribution deal. The companies’ announcement didn’t disclose the length of the new agreement, or the dollar amount. I hear Cinedigm paid less than $5 million for senior convertible preferred securities with an opportunity to benefit if Shout!Factory TV thrives.

The channel currently is ad supported. When updated there’ll also be an ad-free subscription version — price still undetermined — with additional content.

The change “extends our distribution arrangement with a profitable and growing content and marketing company and helps us to advance the ball quite a bit in our [streaming] channel” strategy, Cinedigm CEO Chris McGurk says. It opens cross-promotion and advertising opportunities for Cinedigm’s other video services including Docurama, ConTV, and the upcoming Dove Movie Channel.

Cinedigm could use some good news. Its stock price has depreciated 50.6% so far in 2015, to about 82 cents a share. Most of the downturn took place in April after it announced a complicated $60 million convertible note offering. In discontinuing coverage of the company, B. Riley analyst Eric Wold said that month that he believed its narrowcast streaming channels present an “attractive opportunity…with more recurring, high-margin revenue streams.” But he was concerned that the company’s cash needs suggested “a ramp timetable that is longer and more dilutive than we have been incorrectly projecting.”

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