Hollywood Media Corp. (HOLL, Financial) filed Quarterly Report for the period ended 2011-06-30.
Hollywood Media Corp. has a market cap of $35.93 million; its shares were traded at around $1.5 with and P/S ratio of 8.99.
On March 14, 2011 the Company delivered to Key Brand a closing statement setting forth Hollywood Media s calculation of Theatre Direct s working capital on December 15, 2010, (the “closing date”) determined in the manner described in the Purchase Agreement. Pursuant to the closing statement, Hollywood Media accrued $3,702,620 as a working capital adjustment as of December 31, 2010 under the Purchase Agreement which included $530,102 related to the estimated working capital adjustment delivered at closing to Key Brand. The accrual was included in “Accrued expenses and other” in our consolidated balance sheets as of December 31, 2010. This working capital adjustment of $3,734,106 was paid on March 22, 2011 and included $31,486 of interest which is included in “Gain on sale of discontinued operations, net of income taxes” in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2011.
On August 21, 2008, Hollywood Media entered into a purchase agreement (the “R&S Purchase Agreement”) with R&S Investments, LLC (“Purchaser” and “R&S Investments”) for the sale of the Hollywood.com Business. The Purchaser is owned by Mitchell Rubenstein, Hollywood Media s Chief Executive Officer and Chairperson of the Board, and Laurie S. Silvers, Hollywood Media s President and Vice-Chairperson of the Board. Pursuant to the R&S Purchase Agreement, Hollywood Media sold the Hollywood.com Business to Purchaser for a potential purchase price of $10.0 million, which includes $1.0 million in cash which was paid to Hollywood Media at closing and potential earn-out payments totaling $9.0 million. During the six and three months ended June 30, 2011, Hollywood Media recorded $357,518 and $151,956, respectively, in earn-out income under this agreement. As of the filing of this Quarterly Report on Form 10-Q, the earn-out receivable was collected in full in accordance with the payment terms. As of June 30, 2011, there remains $7,468,861 in potential earn-out payments pursuant to this agreement. The Hollywood.com Business included the Hollywood.com website and related URLs and celebrity fan websites and Hollywood.com Television, a free video on demand service distributed pursuant to annual affiliation agreements with certain cable operators. For additional information about this transaction, see Note 3 “Discontinued Operations” on the Notes to the Unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
Total net revenues were $2,086,694 for Y2-11 as compared to $2,007,701 for Y2-10, an increase of $78,993 or 4% and $1,115,821 for Q2-11 as compared to $938,435 for Q2-10, an increase of $177,386, or 19%. The increase in net revenue for Y2-11 as compared to Y2-10 was primarily due to the result of a $194,539 increase in Intellectual Property revenue offset by a $115,546 decrease in Ad Sales revenue. The increase in net revenue for Q2-11 as compared to Q2-10 is primarily the result of a $253,954 increase in Intellectual Property revenue offset by a $76,208 decrease in Ad Sales revenue.
Ad Sales division net revenues were $1,397,571 for Y2-11 as compared to $1,513,117 for Y2-10, a decrease of $115,546 or 8%, and such net revenues were $655,346 for Q2-11 as compared to $731,554 for Q2-10, a decrease of $76,208 or 10%. The decrease in Ad Sales net revenues for Y2-11 as compared to Y2-10 is attributable primarily to a decrease in U.K. advertising sales of $115,546, which includes: a decrease in plasma advertising revenue of $70,859 and a decrease of $44,687 in brochure and web advertising. The decrease in Ad Sales net revenues for Q2-11 as compared to Q2-10 was primarily attributable to a decrease in U.K. advertising sales of $76,208, which includes: a decrease in plasma advertising revenue of $37,532 and a decrease of $38,676 in brochure and web advertising. These decreases are primarily attributable to the adverse economic conditions in the U.K.
Net revenues from our Intellectual Properties division were $689,123 for Y2-11 as compared to $494,584 for Y2-10, an increase of 39% or $194,539, and such net revenues were $460,475 for Q2-11 as compared to $206,881 for Q2-10, an increase of 123% or $253,594. The increase in net revenues from our Intellectual Properties division in Y2-11 as compared to Y2-10 and Q2-11 as compared to Q2-10 was attributable to the timing of royalty payments received. The Intellectual Properties division generates revenues from several different activities including intellectual property licensing and book development. Revenues vary quarter to quarter depending on the timing of delivery of manuscripts to the publishers. Revenues are recognized when the earnings process is complete and the ultimate collection of such revenues is no longer subject to contingencies. This division does not include NetCo Partners, which is reported separately; see “Equity in Earnings (losses) of Unconsolidated Investees” below.
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Hollywood Media Corp. has a market cap of $35.93 million; its shares were traded at around $1.5 with and P/S ratio of 8.99.
Highlight of Business Operations:
Pursuant to the Purchase Agreement, at the closing of the Broadway Sale, (a) Hollywood Media received (i) $20,530,102 in cash (including $530,102 pursuant to the estimated working capital adjustment described in the Purchase Agreement), (ii) a $8,500,000 note (the “Loan”) from Key Brand pursuant to a Second Lien, Security and Pledge Agreement, dated as of December 15, 2010 (the “Credit Agreement”), pursuant to which Key Brand is obligated to pay Hollywood Media interest at a rate of 12% per annum, with the loan maturing on December 15, 2015, which Loan is collateralized on a second lien basis by all stock and assets of Theatre Direct and its subsidiaries, and (iii) a warrant to purchase 5% of the outstanding shares of common stock of Theatre Direct as of the closing date on a fully diluted basis at an exercise price of $.01 per share (the “Warrant”), and (b) Key Brand assumed $1,600,000 of liabilities associated with employment agreements with certain employees of Theatre Direct. In addition, Hollywood Media is entitled to receive earn-out payments (the “Earn-out”) of up to $14,000,000 contingent upon Theatre Direct and its subsidiaries achieving certain revenue targets during the period from the closing date through the end of the 10th full fiscal year following the closing date as set forth in the Purchase Agreement. As collectability of the Loan, Earn-outs and Warrant is not reasonably assured, they are not included in the “Gain on sale of discontinued operations, net of income taxes” in the accompanying condensed consolidated statement of operations. Hollywood Media received payments of $512,883 and $257,833 of interest from Key Brand during the six and three months ended June 30, 2011, respectively, in accordance with the terms of the Loan which was included in “Interest, net” in the accompanying condensed consolidated statements of operations for the six and three months ended June 30, 2011.On March 14, 2011 the Company delivered to Key Brand a closing statement setting forth Hollywood Media s calculation of Theatre Direct s working capital on December 15, 2010, (the “closing date”) determined in the manner described in the Purchase Agreement. Pursuant to the closing statement, Hollywood Media accrued $3,702,620 as a working capital adjustment as of December 31, 2010 under the Purchase Agreement which included $530,102 related to the estimated working capital adjustment delivered at closing to Key Brand. The accrual was included in “Accrued expenses and other” in our consolidated balance sheets as of December 31, 2010. This working capital adjustment of $3,734,106 was paid on March 22, 2011 and included $31,486 of interest which is included in “Gain on sale of discontinued operations, net of income taxes” in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2011.
On August 21, 2008, Hollywood Media entered into a purchase agreement (the “R&S Purchase Agreement”) with R&S Investments, LLC (“Purchaser” and “R&S Investments”) for the sale of the Hollywood.com Business. The Purchaser is owned by Mitchell Rubenstein, Hollywood Media s Chief Executive Officer and Chairperson of the Board, and Laurie S. Silvers, Hollywood Media s President and Vice-Chairperson of the Board. Pursuant to the R&S Purchase Agreement, Hollywood Media sold the Hollywood.com Business to Purchaser for a potential purchase price of $10.0 million, which includes $1.0 million in cash which was paid to Hollywood Media at closing and potential earn-out payments totaling $9.0 million. During the six and three months ended June 30, 2011, Hollywood Media recorded $357,518 and $151,956, respectively, in earn-out income under this agreement. As of the filing of this Quarterly Report on Form 10-Q, the earn-out receivable was collected in full in accordance with the payment terms. As of June 30, 2011, there remains $7,468,861 in potential earn-out payments pursuant to this agreement. The Hollywood.com Business included the Hollywood.com website and related URLs and celebrity fan websites and Hollywood.com Television, a free video on demand service distributed pursuant to annual affiliation agreements with certain cable operators. For additional information about this transaction, see Note 3 “Discontinued Operations” on the Notes to the Unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
Total net revenues were $2,086,694 for Y2-11 as compared to $2,007,701 for Y2-10, an increase of $78,993 or 4% and $1,115,821 for Q2-11 as compared to $938,435 for Q2-10, an increase of $177,386, or 19%. The increase in net revenue for Y2-11 as compared to Y2-10 was primarily due to the result of a $194,539 increase in Intellectual Property revenue offset by a $115,546 decrease in Ad Sales revenue. The increase in net revenue for Q2-11 as compared to Q2-10 is primarily the result of a $253,954 increase in Intellectual Property revenue offset by a $76,208 decrease in Ad Sales revenue.
Ad Sales division net revenues were $1,397,571 for Y2-11 as compared to $1,513,117 for Y2-10, a decrease of $115,546 or 8%, and such net revenues were $655,346 for Q2-11 as compared to $731,554 for Q2-10, a decrease of $76,208 or 10%. The decrease in Ad Sales net revenues for Y2-11 as compared to Y2-10 is attributable primarily to a decrease in U.K. advertising sales of $115,546, which includes: a decrease in plasma advertising revenue of $70,859 and a decrease of $44,687 in brochure and web advertising. The decrease in Ad Sales net revenues for Q2-11 as compared to Q2-10 was primarily attributable to a decrease in U.K. advertising sales of $76,208, which includes: a decrease in plasma advertising revenue of $37,532 and a decrease of $38,676 in brochure and web advertising. These decreases are primarily attributable to the adverse economic conditions in the U.K.
Net revenues from our Intellectual Properties division were $689,123 for Y2-11 as compared to $494,584 for Y2-10, an increase of 39% or $194,539, and such net revenues were $460,475 for Q2-11 as compared to $206,881 for Q2-10, an increase of 123% or $253,594. The increase in net revenues from our Intellectual Properties division in Y2-11 as compared to Y2-10 and Q2-11 as compared to Q2-10 was attributable to the timing of royalty payments received. The Intellectual Properties division generates revenues from several different activities including intellectual property licensing and book development. Revenues vary quarter to quarter depending on the timing of delivery of manuscripts to the publishers. Revenues are recognized when the earnings process is complete and the ultimate collection of such revenues is no longer subject to contingencies. This division does not include NetCo Partners, which is reported separately; see “Equity in Earnings (losses) of Unconsolidated Investees” below.
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