The amount also was less than what Wall Street projected for the company’s revenue, $15.2 million.
In its report , the company cited several factors for the loss of revenue: for example contract renegotiations with an unnamed key pay-per-view customer, held late last year, resulting in less revenue from their pay TV segment. And in their film production segment, the company attributed losses to content delivery schedules, anticipating that completion of a 13-episode series would result in increased revenue in the second half of the year.
"On a consecutive quarter basis, we believe New Frontier Media is now returning to a growth trend both in terms of adjusted EBITDA [earnings before interest, tax, depreciation and amortization] and earnings per share,” New Frontier CEO Michael Weiner said. "We believe that our newly announced distribution and programming contracts will provide us with continued and material growth as we move into the second half of the fiscal year."
New Frontier operates primarily in pay TV, film production and Internet segments.
In the pay TV segment, the company reported an 18 percent decrease, from $12.2 million in the second quarter of 2006 to $10 million. The company stated that contract renegotiation, held late last year, with a “key” pay-per-view customer that effects distribution on three PPV networks resulted in a significant loss of revenue in this area.
However, a 12 percent increase in video-on-demand sales, from $4.2 million in 2006 to $4.7 million, was reported and attributed to improved broadcast services.
In the film production segment, New Frontier generates revenue primarily from production and distribution of original content, as well as licensing of third-party content to international markets.
Film production revenue decreased to $2 million, compared to $3.3 million for the same time period last year, representing a 39 percent decline. The company said that the decrease was due, in part, to delivery schedules for episodic content.
Also noted was an increase in operating expenses in film production, from $01.0 million to $04.0 million from last year, as well as $2.2 million spent to acquire content and produce owned content during the quarter. New Frontier also used $2.1 million to fund a “producer-for-hire” project during the quarter.
In the Internet segment, the company noted losses of 33 percent, of $600,000 in the second quarter of 2006, to $400,000. New Frontier stated that their primary source of revenue in the Internet was from membership fees from adult paysite TEN.com and that, currently, the company is working to improve all aspects of their Internet services, to promote increased traffic and encourage conversions.
The earnings report comes on the heels of an announcement by New Frontiers, in October, of a $10 million distribution deal with Penthouse to develop a linear channel for Penthouse TV, as well as distribute Penthouse-branded product through VOD, broadcast on satellite and cable networks within the U.S. The company anticipates operation of Penthouse’s linear channel to launch within 24 months.
And in August, the company announced an exclusive digital distribution deal with European-based content provider Private Media Group, for distribution of content over new media platforms, including VOD, PPV and IPTV, within the U.S.
Founded in 1988, New Frontier Media operates TEN.com, the Erotic Networks for online and mobile distribution, as well as MRG Entertainment, which broadcast original and licensed content through major cable and satellite PPV providers.
