Revenue-sharing revenue down for Rentrak

Growth in data tracking brings company to black

By Jennifer Netherby -- Video Business, 6/11/2008

JUNE 11 | Strong growth in its media intelligence business and a favorable tax adjustment pulled Rentrak into the black in its fiscal fourth quarter despite a sharp drop in the company's video revenue-sharing business.

Rentrak's net income rose 6% to $1.7 million for the quarter ended March 31, the company reported Tuesday. Fourth-quarter revenue dropped 21% to $22.3 million.

The majority of Rentrak’s revenue comes from its PPT, or DVD revenue-sharing business, which saw revenue shrink 25% to $19.5 million in the fourth quarter due to the loss of two major studio suppliers last year.

The company has been shifting its business toward its Advanced Media Information division, which includes entertainment point-of-sale tracking services such as Home Entertainment Essentials, on which VB’s Top DVD Rentals and Top DVD Sales charts are based. In the fourth quarter, AMI revenue grew 29% to $2.8 million, helping to offset PPT losses.

For the full fiscal year, Rentrak's revenue slid 12% to $93.2 million, which the company blamed on the loss of the two major suppliers for its PPT business. PPT revenue declined 15% to $82.8 million for the full year.

Net income for the year was off 22% to 4.6 million.

Walt Disney Studios Home Entertainment and Warner Home Video, identified by Rentrak in its earnings call only as its “fifth- and sixth-largest product suppliers,” both ended their revenue-sharing distribution deals with Rentrak last year. The company has since re-signed Warner, though in a deal that is expected to generate lower revenue than in the past, execs said.

Rentrak chief financial officer Mark Thoenes said the company expects 2009 PPT revenue to hold steady with those of 2008.

Rentrak expects revenue from its AMI division, which the company sees as its future, to increase “substantially” over the next year.

The company said it has signed a deal with Cox Communications to track video-on-demand sales. Rentrak said it expects to launch TV measurement service TV Essentials in the first quarter of 2009, with trials now on 2 million set-top boxes.

Rentrak also plans to begin tracking mobile and broadband video and is in a trial with multiple studios on Digital Download Essentials, which will track movie and TV download sales and rentals.

“We remain confident in Rentrak's ability to meet the evolving needs of the entertainment industry and are well positioned to drive increasing value to all of our stakeholders through continued innovation, hard work and determination,” CEO Paul Rosenbaum said.