BOULDER, Colo. - Despite a drop in revenues during the 2009 fiscal third quarter, adult broadcaster New Frontier Media reported growth in its transactional TV segment and other areas as a sign that it will weather the recession.
"We believe that our strong balance sheet, our reputation and ability to move quickly when opportunities present themselves will enable us to emerge successfully from this difficult economic environment," CEO Michael Weiner said Monday in a conference call to investors.
New Frontier's transactional TV segment encompasses PPV and VOD deals with cable and satellite providers around the world. The company signed an exclusive deal in 2007 to bring the branded PenthouseTV and PenthouseHD channels to millions of homes across the United States.
New Frontier reported a six percent increase in this division for the third quarter, buoyed by rising international revenue. A large percentage of that figure is related to content launched in November; the company expects those numbers to grow in the coming year.
"Even in a very challenging economic environment, New Frontier Media grew its core transactional TV quarterly revenue and maintains a solid financial foundation," Weiner said. "During the quarter, we continued to build on our previous successes in the transactional TV segment and launched our content to more than two million international pay-per-view network homes and over 5.5 million international video-on-demand network homes."
Weiner also told investors that New Frontier has closed a deal to distribute video-on-demand content to more than three million network homes in the United States. The company hopes to launch content on the as-yet unnamed platform during the fourth quarter of fiscal 2009.
New Frontier launched content to more than 2 million international pay-per-view network homes and more than 5.5 million international video-on-demand network homes, Weiner said. He added that the marketing of the company's IPTV services in the U.S. continues, and while operations have slowed in the U.K., there are still plans to expand elsewhere in Europe.
“The reason why we’ve decided to sort of cast a wider net and include all of Western Europe is that because of our server location in Amsterdam, we are really able to easily serve all of Europe," said company president Ken Boenish. "And we really don’t see a reason why we should constrict our activity just to the U.K. at this time.”New Frontier reported $12.6 million in revenue for the quarter, down 29.6 percent compared to $17.9 million for the same period in 2008. Third-quarter net income dipped nearly $8.9 million in the red, in contrast to a $3.1 million profit last year.
For the fiscal year, New Frontier reported revenue of $39 million, down 10 percent from $43.3 million a year ago, and a net loss of $6.4 million compared to a gain of $6.8 million a year ago.
The company attributed $11.1 million in losses to "goodwill impairment charges" related to production company MRG Entertainment Inc., which New Frontier acquired in February 2006.
Although film production and sales are suffering due to the current recession, the decline was partially offset with a $300,000 increase in costs associated with a direct-to-consumer set-top box test initiative.
New Frontier plans to repurchase 2.6 million shares of its stock, with a total value of roughly $4 million.The company is listed on Nasdaq under NOOF.