Private's 2nd-Quarter Earnings Up After GameLink Purchase

"We have been transitioning our business model from linear to digital content production and distribution over the last 18 months and this has affected our margins," Private Media Group CFO Johan Gillborg said. "As DVD and magazines sales have rapidly declined, we have made great progress moving to digital business with significant new media distribution deals and the monetization of our expansive library of content."

For the three months ending June 30, Private reported net sales of $8.7 million, compared to net sales of $7.3 million for the same period last year. This represents an increase of $1.4 million, or 19 percent. The increase in sales was attributed to increased Internet sales, offset by decreases in sales of DVDs, magazines and broadcasting.

Internet sales increased by $3.37 million to a total of $4.78 million, an increase of 232 percent compared to last year. The increase in Internet sales was attributed to the acquisition of GameLink.

"We are now a leading adult content provider on all major digital platforms in Europe, and as they continue to build out and get larger, we project significant growth in both sales and net income." Gillborg said. "Specifically, we project the biggest gains to be achieved through Internet, broadcasting and wireless. During the three-month period ending March 31, these platforms were responsible for 80 percent of our sales.

"The acquisition of GameLink is a significant development that will substantially contribute to our growth, while creating economies of scale. The combined content assets of Private and core competencies of GameLink offer a compelling new business model," Gillborg said. "Additionally, we will be developing improved interactive functionality for new media platforms such as IPTV and mobile, and maximizing our content monetization with the existing Private library as well as aggregation of select international studios offering a wide range of content and genres for all platform needs."

Barcelona-based Private Media Group produces and distributes content globally via IPTV, mobile, Internet, cable and satellite, DVDs and magazines. Private Media Group owns the worldwide rights to its archive of content, and also licenses its Private and “Silver Girls” trademarks for consumer products. The company is listed on Nasdaq.