Private Media Group Reports 1st Quarter 2008 Results

Tod Hunter
BARCELONA, Spain — Adult producer Private Media Group has announced its fiscal results for the three months ending March 31.

Sales decreased 3 percent to $8.36 million for the three-month period ended March 31, compared to the same period in 2007. The decrease was primarily due to decreased DVD and magazine sales, although Internet, wireless and broadcasting sales increased as the company continued its transition to digital content distribution, the company said

The weakening U.S. dollar had a negative impact on sales as well. The quarterly average dollar-to-euro exchange rate for the 2008 compared to 2007 decreased 12 percent, which reduced sales in dollars by the same percentage.

Internet sales increased 7 percent to $1.73 million. Broadcasting sales increased 21 percent to $2.05 million. The increase attributed to growth in Video-on-Demand via IPTV in Europe. Wireless sales increased 5 percent to $946,984. Combined new media sales increased 12 percent to $4.73 million and represented 57 percent of total net sales.

The transition and increase in new media sales reflects the continuing implementation of Private's digital strategy. The company expects Internet, wireless and broadcasting sales to increase significantly.

DVD and magazine sales decreased by 18 percent to $3.47 million due to an industry wide decrease in DVD sales.

The company reported a net loss of $1.26 million for the three months ended March 31 compared to a net loss of $946,984 for same period last year. The increase in net loss was primarily the result of decreased gross profit from DVD and magazine sales. Traffic to Private's websites increased by 85 percent to 20 million unique visits in 2007, primarily because of the re-launch of the affiliate program PrivateCash which is now Private's biggest source of traffic. In the second quarter of 2008, the company plans to launch niche sites focusing on specific genres and stars. In addition to catering to a wider clientele and creating more shelf space on the web, this will increase the affiliate program as webmasters will have more tools at their disposal to drive traffic. Also, it will enable the company to take advantage of additional up-selling and cross-selling opportunities.

For more information, visit Private Media Group's investors page.