Rentrak Corporation (RENT)
Q3 2013 Earnings Call
February 07, 2013, 05:00 pm ET
Bill Livek - Vice Chairman & CEO
David Chemerow - COO & CFO
Cathy Hetzel - Corporate President & President, AMI Division
Marty Graham - President, Home Entertainment Division
Matt Chesler - Deutsche Bank
Todd Mitchell - Brean Capital
Rich Tullo - AFCO
Christopher Ferris - Noble Financial
……..Fiscal 2013 Third Quarter Financial Results Conference Call.
During the call the company will be making forward-looking statements that are subject to certain risks and uncertainties. Please refer to the Safe Harbor statement contained in today's press release and also to Rentrak’s periodic filings with the SEC for a complete discussion of those risks and uncertainties that could cause actual results to differ materially from those you might perceive today.
Additionally, Rentrak will be discussing certain non-GAAP financial results. The news release issued earlier today contains a reconciliation of these non-GAAP financial results to their most comparable GAAP measures. These reconciliations can also be found on the company's website at www.rentrak.com. The website also contains supplemental financial information that provides historical trend data in Rentrak’s various lines of business.
Now I would like to turn the call over to Bill Livek, Vice Chairman and CEO of Rentrak. Please go ahead sir.
Thank you operator and thank you everyone for joining us today. I am here with David Chemerow, our COO and CFO from whom you will be hearing from shortly as well as a number of our executive management team are also here to participate in the question-and-answer session later.
Rentrak is the census like currency for precisely measuring the movies and TV Everywhere. By linking viewership information with information about the products that consumers consume and prefer only Rentrak can provide clients with the knowledge necessary to manage their businesses and more precisely target their advertising with the largest multi-screen coverage anywhere Rentrak is uniquely positioned to track shifting consumer habits everywhere whether that's being viewed through broadcast, cable television, OnDemand, mobile or over-the-top TV; Rentrak is measuring it all. I am proud to report that our third quarter consecutive quarter of year-over-year consolidated revenue growth this quarter coming in at 12%.
Now I would like to review each line of business starting with Home Entertainment. This quarter as anticipated, we saw a reversal of some of the challenges in our Home Entertainment business. At our Investor’s Day, we told you we would reverse this trend and we have. In addition to adding new stores to our Pay-Per-Transaction or PPT service Warner Brothers has resumed providing store based retailers with release content on the initial release date with kiosk and by mail retailers receiving content 28 days later. Warner Brothers did not play a substantial role in our third quarter results, but we anticipate a growing contribution because of this change in the fourth quarter and moving forward.
We are looking forward to some big releases in our fourth quarter, including Skyfall, Argo and the last installment of the Twilight Series. This also will bode well for our Home Entertainment division. As you know, I have never viewed our Home Entertainment business as a legacy business, but rather as a significant generator of cash and operating income. It's a business that our investors should love. It generates cash that we have used for our very high growth and high margin movie and TV measurement businesses.
Now I will move to our Television Everywhere business. As with the movies, we follow TV consumption wherever it occurs. Consumers are watching a record amounts of television, but not just on live television, but via OnDemand and through many platforms. Our most recent clients such as CBS Distribution and The Weinstein Company, RADiUS-TWC recognize the importance of following the consumer across all platforms.
OnDemand TV viewing is becoming increasingly important to the industry and Rentrak is capturing that information about what is being viewed from a variety of sources including all cable MSOs, digital download measurement in over 120 countries from sites like iTunes, Xbox and Amazon and from various websites that stream entertainment content among others.
Many TV shows now build a considerable audience from the day the show airs through in past one month worth of live viewing. This area of TV viewing known as free OnDemand has been growing 20% each year over the last few years; it’s very exciting to win from this growth and know that Rentrak’s census based measurement will play a very large role as the appetizing market continues to develop a lot OnDemand viewing. Our ability to provide this type of information is critical to the television advertising business as they discover how to monetize the reach of the consumer watching outside of the live TV window.
In the next few days Rentrak will be releasing the industry’s first total television viewing report which will show the sites of time shifted viewing on TV hour and video OnDemand up to 20 days after the first live television airing of ad supported primetime network and cable programs. For example, our research shows that primetime network programs can get up to almost 50% of their 28 day total audience within this window, as was the case for Vampire Diaries or almost 40% for Grey’s Anatomy as a result of the additional DVR and video OnDemand viewing. In cable for example, that number increased to over 60% for Hot in Cleveland. Rentrak is clearly in the middle of helping the industry monetize how consumers are increasingly changing their viewing habits.
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