The resulting entity will serve as a full-service end-to-end digital releasing studio capable of acquiring and distributing content theatrically and digitally.
The joint venture has already acquired three films from Sundance and SXSW – The Invisible War, Citadel and In Our Nature.
Cinedigm has agreed to acquire New Video, a leading digital aggregator and distributor, for $14m in upfront consideration plus additional earn out potential of up to $6m over three years tied to the future financial results of the Cinedigm Entertainment Group.
The upfront consideration will be paid with $10m of cash from Cinedigm’s balance sheet and $4m of Cinedigm stock issued at the trailing 10-day volume weighted average price. The acquisition is expected to close on Apr 20.
Cinedigm has also announced an underwritten public equity offering of common stock with B Riley & Co acting as sole book-running manager and Merriman Capital acting as co-manager of the offering.
“Cinedigm is now a fully integrated distributor of independent films and specialty content,” chairman and CEO Chris McGurk said. “Over the past year, we have analysed many companies in the digital distribution space for home and mobile entertainment and determined that New Video is the best partner for us. New Video’s highly regarded management team, led by Susan Margolin and Steve Savage, is entrepreneurial, forward-looking and innovative.”
McGurk continued: Our new distribution capabilities will provide a unique, one stop end-to-end digital distribution solution for independent content providers and financiers. And for our shareholders, this accretive acquisition solidifies Cinedigm’s stated goal to expand our low risk, high reward fee-for-service content distribution business to complement our industry leading VPF servicing and software businesses.”
“This combination creates a very powerful distribution machine at a time when the industry is at the crossroads of profound change and real strategic opportunity,” Steve Savage, co-president of New Video, said. “Cinedigm is the perfect partner for expanding the market for feature film and entertainment content, while exploiting every opportunity for innovation in VOD, digital and mobile distribution.
“Filmmakers and content creators will greatly benefit from our leading-edge digital distribution strategies,” added Susan Margolin, New Video co-president said. “Steve and I and the entire New Video team look forward to expanding on what has already proven to be a fruitful and promising partnership with Cinedigm.”
Effective immediately Savage and Margolin will become co-presidents of Cinedigm’s entertainment group, which includes New Video as well as the pre-existing theatrical marketing and booking services at Cinedigm. They will report directly to McGurk. Aimee Connolly, New Video’s COO, will assume the same position for the Cinedigm entertainment group.
New Video was represented in the transaction by Stephen Einhorn.