New Frontier Media, Inc. ( NOOF)

F3Q 2011 Earnings Call

February 4, 2011 11:00 am ET

Executives

Grant Williams – Chief Financial Officer

Michael Weiner -- Chief Executive Officer

Ken Boenish -- President

Marc Callipari --General Counsel

Scott Piper -- Chief Technology Officer.

Analysts

Presentation

Operator

Good day ladies and gentlemen, thank you for standing by. Welcome to the New Frontier Media Third Quarter fiscal 2011 Earnings Conference Call. (Operator instructions.) I would now like to turn the conference over to Chief Financial Officer, Mr. Grant Williams. Please go ahead, Sir.

Grant Williams

Thank you, good morning everyone and welcome to the New Frontier Media Fiscal 2011 Third Quarter results conference call. Joining me this morning are Michael Weiner, Chief Executive Officer of New Frontier Media, Ken Boenish, the company’s President; and Marc Callipari, the company’s General Counsel, and Scott Piper, the company’s Chief Technology Officer.

We will begin the call this morning with Michael’s comments on the third quarter results and strategic plans. And then I’ll discuss the detailed financial results before we open up the call for questions.

A replay of this conference call will be available for seven days at 1-800-406-7325, using the pass code 4406727. This call will be archived for 12 months on our website at noof.com under the Investor Relations, Calendar of Events tab. This call is also being webcast.

During the question-and-answer segment, those of you listening via the internet will be able to ask questions. Please submit your questions via e-mail to hpatton@noof.com. All information discussed during the conference call is current only as of today or as of the day of the applicable financial results and the company assumes no obligation to update information discussed during this conference call.

During this conference call, management may make forward-looking statements within the meaning of the Safe Harbor provided by the SEC for such statements, including statements regarding the company’s expected financial position and operating results, its business strategy, its financing plans and the outcome of certain contingencies.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by any forward-looking statements and should be considered in conjunction with the cautionary statements included in our press release and our most recent reports containing Risk Factors filed with the Securities and Exchange Commission, including our most recently filed Forms 10-Q and 10-K.

I’ll now turn the call over to the New Frontier Media’s Chief Executive Officer, Michael Weiner.

Michael Weiner

Thank you Grant, and good morning everyone. New Frontier Media maintained a solid financial position through Q3 of fiscal year 2011, and the company continues to improve its position in the marketplace. Within this transactional TV segment, we continue to have success with our international expansion. We are now distributing content in over 28 countries, and we expect that we will continue to grow revenue and expand our distribution in international markets.

In order to support this growth, we’re making investments in the business, including launching new channels in Latin America and Europe, developing new and unique content packages, and investing in technology that allows us to expand our international footprint and realize scalable efficiencies.

Domestically, we experienced the second consecutive quarter of VOD revenue, and we are continuing to implement new merchandising strategies for our future growth. We’re also focused on stabilizing the domestic pay-per-view revenue and believe many of our initiatives may improve revenue in the future.

Within the film production segment, we are pleased to announce the completion of a production for higher arrangement during the quarter, which resulted in $3.3 million incremental revenue. Additionally, we have made good progress with our distribution of mainstream content to domestic VOD, as well as retail VOD in other home video markets.

We’re focusing our efforts within this segment on the profitable components of the business, which has allowed us to take advantage of reducing the segment’s overhead and improve margins, which should become visible in fiscal 2012. Overall, New Frontier Media continues to expand the quality of content it distributes to customers as our customers dedicate more and more shelf space to our products.

We currently process up to 15,000 assets, or VOD films, a month through our digital broadcast facility, which is a year over year increase of 88%. As we previously announced in October 2010, and in order to address our future growth and improve our operational efficiency, we will be merging our corporate and digital broadcast facilities into a new combined facility. In connection with the move, we also plan to update certain aspects of our technology infrastructure, which would otherwise require replacement in the next 12 to 24 months.

By executing our equipment upgrades to current with the relocation, we expect to realize cost savings and minimize the operating risk that goes with such major upgrades. We originally expected to begin construction in fiscal year 2012, but due to timing and additional cost saving opportunities, we are beginning the relocation in Q4 fiscal 2011. We continue to focus our efforts on growing the company, and as discussed, we have been, and continue to make investments in the company that we believe support that growth.

We believe the future prospects of the company are good, and that our strategic objectives will generate shareholder value over the long term. Now I’ll turn over the call to Grant to discuss the financial results and related information in greater detail.

Read the rest of this transcript for free on seekingalpha.com