"New Frontier Media continued to advance its strategic objectives during the fourth quarter," said Michael Weiner, chief executive officer of New Frontier Media, Inc.
"We grew international revenue within the Transactional TV segment by over 250 percent as compared to the same prior year quarter through new launches, gains in shelf space and improved content performance. Our domestic Transactional TV business appears to have stabilized. Within the Film Production segment, our producer-for-hire arrangements generated approximately $3.9 million of revenue in the fourth quarter, and our distribution of mainstream content to cable platforms continued to provide meaningful growth for this segment."
According to the results, revenue was $15.1 million as compared to $13.6 million in the same prior year quarter.
Transactional TV segment revenue was $9.3 million as compared to $10.7 million in the same prior quarter year.
VOD revenue was $5.5 million compared to 6.1 million in the same prior quarter year and declined as a result of lower domestic revenue primarily because the prior year fourth quarter included $0.9 million of revenue from the settlement of certain paid and unpaid claims that didn’t recur in the 2010 quarter.
Revenue from the largest cable operator in the U.S. also declined. The company says it believes the decline is due to lower consumer discretionary spending in response to the economic downturn. The declines were partially offset by a $0.8 million increase in international VOD revenue.
Pay-per-view revenue was $3.6 million as compared to $4.4 million in the same prior year quarter and the decline in revenue is primarily due to the loss of a channel on the largest direct broadcast satellite provider in the U.S. in November 2009 and a reduction in existing consumer buys due to the economic downturn. The declines in revenue were partially offset by a $0.2 million increase in international PPV revenue.
Film Production segment revenue increased to $5.6 million from $2.6 million in the same prior year quarter.
Owned content revenue declined to $1.0 million from $2.1 million primarily because the prior year quarter included revenue from the partial delivery of the third installment of an episodic series, and no similar episodic series revenue recurred in the fourth quarter of fiscal year 2010.
Repped content revenue increased by $0.2 million to $0.5 million primarily due to higher revenue from the distribution of horror film content to home video and VOD platforms through the company’s arrangement with a mainstream film distributor and from the distribution of mainstream content through retail DVD markets.
Cost of sales increased to $7.4 million as compared to $4.3 million in the same prior year period primarily due to production costs realized in connection with producer-for-hire revenue.
Operating expenses increased to $12.6 million as compared to $5.5 million and were primarily impacted by non-cash impairment charges recorded within the Film Production segment including a $4.9 million goodwill impairment charge, a $1.2 million film cost impairment charge, and a $0.8 million recoupable costs and producer advances impairment charge; and a $0.5 million increase in Transactional TV segment expenses associated with business development consulting fees as well as additional advertising and promotion costs.
The loss from continuing operations for the quarter, which included approximately $7.1 million in non-cash goodwill and other impairment charges, was $4.8 million, or $0.25 per share, as compared to income from continuing operations of $2.2 million, or $0.11 per share, in the same prior year quarter.
"Looking forward, we expect to continue our international success by expanding our footprint through new launches in new markets and improving our content performance and shelf space on existing international platforms,” Weiner added.
“In addition, we believe our efforts to improve consumer value domestically within the Transactional TV segment have stabilized the domestic revenue. For the Film Production segment, we expect to deliver our fourth installment of an episodic series and are optimistic that we will also complete a new producer-for-hire arrangement in fiscal year 2011. We also believe the momentum we established with our distribution of mainstream content to cable platforms and to retail DVD markets will continue into fiscal year 2011 and drive growth for our repped content. Overall, we expect our strong cash position and ability to execute our strategic objectives will result in a solid year for New Frontier Media in fiscal 2011."
