MRG produces and distributes softcore adult features, and also distributes a full range of independently produced motion pictures and mainstream films to markets around the world.
Concurrent with the announcement came news that publicly traded New Frontier finished the third quarter flat, with net income of $2.9 million, or 12 cents per share. The company, which operates several pay-per-view and video-on-demand channels, reported nearly the same income last year, shortly after CEO Michael Weiner admitted its hold of the market was shrinking but that industry growth was expanding.
“Playboy, Hustler and even Playgirl have made inroads to the video-on-demand sector,” Weiner said in May during a conference call. “It is going to stay competitive for the next 24-36 months.”
Nonetheless, New Frontier has continued its strength in the hotel category and VOD represents 36 percent of the company’s net income. Wiener said the MRG buy would gives the company “a strong, established beachhead in a range of international markets and provides us with a library of content that we can profitably monetize through our extensive distribution networks.”
Despite the company’s flat earnings, New Frontier raised its outlook for the year to between 44 and 47 cents per share, up from 39 to 43 cents, on revenue of $47-48 million, up from its previous target of $44.5-46 million.
