Hollywood Media Corp. (HOLL)
Q2 2010 Earnings Call Transcript
August 24, 2010 4:30 pm ET
Mitchell Rubenstein – Chairman and CEO
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Greetings and welcome to the Hollywood Media 2010 second quarter financial results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Mitchell Rubenstein, Chairman and Chief Executive Officer for Hollywood Media. Thank you. You may begin.
Okay. Thank you, Jen. I would like to welcome everyone to today's conference call to discuss Hollywood Media's 2010 second quarter financial results. Today's press release is available for viewing on the Investor Relations section of our website at hollywoodmedia.com.
After my prepared remarks, we will host a Q&A session. This presentation may contain, in addition to historical information, forward-looking statements reflecting expectations that are subject to risks and uncertainties that may cause actual outcomes to differ materially from such expectations.
Many potential risks and uncertainties are discussed in Hollywood Media's Form 10-K Report for 2009 and other filings with the SEC. These filings can be accessed through the Investor Relations section of the Hollywood Media website at hollywoodmedia.com or from the SEC’s Edgar database at sec.gov.
Because forward-looking statements are subject to risks and uncertainties, we caution you not to place undue reliance on any forward-looking statements. Forward-looking statements made during this presentation speak only as of the date of this presentation. All written or oral forward-looking statements by Hollywood Media or on its behalf are qualified by these cautionary statements.
Today's press release contains additional data including information about the EBITDA results for Hollywood Media and its segments. On today's call, I would like to briefly comment on our financial performance before opening up for any questions.
Please note that as announced on December 29th, 2009, we entered into a definitive agreement for the sale of our Broadway Ticketing division. We cannot provide any additional detail or comment on timing related to the proposed transaction other than what's disclosed in our public filings, including the press release and 8-K filed on December 29th, 2009 and in the most recent preliminary proxy statement filed on April 29th, 2010.
Turning now to results from the second quarter, our Broadway Ticketing business, which represented 97% of our revenue mix for the period, generated a 12% increase in revenues. This increase resulted in 11% top line growth for the company as a whole in the second quarter versus the prior year. Broadway Ticketing revenues are benefiting from a few noteworthy factors, including the successful re-launch in mid-2009 of our Broadway.com website, our increased focus on inventory management, and robust tourism in New York City.
In addition to top line growth, we benefited from a 44% increase in ad sales on Broadway.com from Broadway shows, which is reported as a reduction in cost of revenues ticketing. So far, ad sales on Broadway.com remain strong in the third quarter, up over 200% in the month of July 2010 compared to the same period last year.
During the second quarter, profitability for the period was impacted by the following items; approximately $200,000 in legal expenses related to the proposed sale of the Broadway Ticketing business, a $150,000 increase in inventory reserve to reflect our decision to carry more ticketing inventory to meet future demand, and an early termination fee of approximately $100,000 on an office lease in order to downsize our corporate offices in Boca Raton, and approximately $100,000 in Broadway Ticketing payroll costs also related to the proposed sale.
We do not view these costs as reflective of our typical operating model. These expenses offset the significant progress we made in growing our top line in the period. As a result, net income for the second quarter 2010 was approximately $200,000 or $0.01 per diluted share, which was flat with prior year's results, after excluding the $5 million impairment charge recorded in the 2009 period.
EBITDA for the 2010 second quarter, for the company as a whole, was approximately $500,000, with Broadway Ticketing EBITDA contributing $2.1 million in the 2010 second quarter compared to $2.2 million last year.
Within our Intellectual Property division, we are pleased that "Death's Excellent Vacation," one of our book projects developed under our Tekno Books subsidiary and edited by Charlaine Harris and Toni Kelner, reached number eight on The New York Times Hard Cover Fiction Bestseller List, currently posted on The Times website at nytimes.com and to be published in this Sunday's print edition of The New York Times Book Review. The HBO series True Blood is based on a series of novels by Charlaine Harris.
As a reminder, Tekno Books typically develops and executes book projects with best selling authors or celebrities and then licenses the projects to publishers. While a very small component of our revenue mix today, we are pleased with the return to the bestseller list with this project after a dry spell and we are currently developing several e-book initiatives in this division.
MovieTickets.com, in which we own a 26.2% interest, continues to perform well. During the second quarter, MovieTickets.com reached a major milestone as it added its 200th theater chain as a partner.