CIDM: Cinedigm Announces Acquisition of Future Today

By Lisa Thompson



Today Cinedigm (NASDAQ:CIDM) announced it entered into a definitive agreement to buy Future Today, Inc. for $60 million comprised of $45 million in cash and $15 million in Cinedigm stock (or approximately 8.3 million shares.) We expect this deal to close mid-May or thereabouts. In calendar year 2018, Future Today generated $23.9 million in revenues up 150% from the year before. It has positive net income and cash flow and is expected to be immediately accretive to Cinedigm. Approximately a quarter of its revenue has been generated from its own proprietary content that has never been distributed elsewhere. The company is located in Menlo Park, California and has an office in India. It employs eleven people and uses 20 contractors in India.

Bison Capital will be providing the funding to complete the deal by a combination of buying Cinedigm equity and providing a loan. We expect to see full audited financials on Future Today after the deal closes at which point we will update our model.

Future Today is an OTT platform provider and a large AVOD channel network. It owns and operates more than 700 content channels with more than 60 million app installs, and manages more than 200,000 film, television and digital content assets that currently receive more than 85 million video views per month in a variety of categories including entertainment, movies, food and lifestyle, animation, and kids. Its largest channels are focused on general entertainment movies and television shows, and, the number one free kid’s channel providing age-specific edutainment. We believe this family-friendly fare will fit well with Cinedigm’s Dove channel offering and the content from both companies will be able to be distributed through each of their respective channels. Future Today also has a complementary technology platform providing capabilities not found on Cinedigm’s and visa versa. More than 350 content owners, producers, distributors, and major media companies use Future Now’s platform including Filmrise and WatchFreeFlix. Both companies will be able to cross sell new services to their customers.

View Exhibit I

Since the deal should close mid-May and Future Today generated $24 million in 2018, we expect it could add $30 million or more to Cinedigm’s FY 2020 revenues pushing total revenues in FY2020 to over $70 million and up 25% year over year. This would reverse the multi year decline in revenues and solve one problem investors had with the company. Management believes the deal will be accretive including all the increase in interest expense and equity dilution but until we see terms and financials we cannot be sure by how much. At any rate being a much bigger player with a doubling of content revenues should ultimately increase the company’s valuation. We had been expecting $15 million in OTT streaming and digital distribution revenues in FY 2020, but that could now be as much as $45 million.

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