New Frontier Media Sees Gain in Profit, Says It Awaits Playboy ‘Shakeout’

BOULDER, Colo. — New Frontier Media Inc. saw net income inch up to $12.3 million from $11.3 million as it reported Tuesday in its 2007 fiscal year end results.

But the cable and satellite TV adult channel operator, which reaches 24 million homes and hundreds of thousands of hotel rooms, saw fourth-quarter profit fall 48 percent to $1.7 million from $3.3 million.

New Frontier saw the fourth-quarter decline in profit, despite reporting a 10 percent increase in fourth-quarter revenue to $14.2 million from $12.9 million for the same quarter a year ago.

“Our most recently concluded quarter was impacted by a number of one time charges, as well as an anticipated seasonal decline in our film production segment’s results,” New Frontier Media CEO Michael Weiner said in a conference call Tuesday morning.

The Boulder, Colo., company said Tuesday it incurred a litigation charge of about $500,000 and an impairment charge of about $100,000 for the latest quarter, which ended March 31. The period also includes an increase of about $200,000 in New Frontier's tax reserve.

“While our core business is increasingly competitive, we believe that New Frontier Media’s superior performance will work to the company’s advantage as an expected competitive shakeout occurs over the next two years,” Weiner said.

Weiner was referring to a possible shakeout relative to chief competitor Playboy Enterprises, which distributes a collection of Playboy-branded channels, including the Club Jenna channel, Fresh!, Shorteez and Spice Xcess, on hundreds of cable networks and DirecTV.

Weiner, in the conference call, said that if investors were to read the details of Playboy’s deal with DirecTV, they would find that Playboy could be subject to refund its license fee to the satellite operator if it didn’t reach certain minimums.

“Basically, Playboy will be giving away [its product] for free,” Weiner said. “Playboy will be forced to turn back license fees.”

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