Tag - Media

The McClatchy Company (NYSE:MNI) shares dropped to a 52-week low Tuesday after the newspaper company was downgraded from “hold” to “sell” by Deutsche Bank. Also, on Monday it was announced the Sacramento-based company had been removed from the Russell 1000 index. The newspaper company’s shares fell to $5.95, a low for the year, on Tuesday. McClatchy has felt the pinch of the newspaper industry and has plans for job cuts as ad revenues have declined. McClatchy shares have lost 49% since January.

www.rhitv.com
(Nasdaq:RHIE)
Scheduled for the week of June 16
$212.5 million estimated proceeds
$380.8 million estimated post-money valuation

It’s a story ripped from the headlines: scrappy company faces down worst IPO market in years and succeeds beyond its wildest dreams in a heartwarming tale of triumph over long odds. You’ll laugh, you’ll cry, but will you make money? If you watch Lifetime, you know RHI Entertainment. The company produces made-for-TV movies and miniseries, and then sells them on DVD after their network runs. It was originally owned by Hallmark, of greeting-card fame, and known as Hallmark Entertainment. In 2006, it was acquired by an investment group led by a father and son television production team, Robert Halmi, Sr. and Robert Halmi, Jr. They also acquired domestic DVD rights to the Hallmark Channel’s library, and they continue to make movies for the Hallmark Channel.

The company has since branched out beyond the Hallmark Channel to make and distribute programs for a range of other television outlets including pay-per-view and direct-to-video options. It plans to have 40 new productions in 2008 alone. The value of the deal is in the assets, though, because RHI is losing money on a net income and cash flow from operating activities basis; it had positive EBITDA in 2007 but not in 2006. Much of this is due to interest expense, $38.3 million in 2007, which should be eliminated after this transaction. With the interest expense gone, RHI should post solid profits. Like other entertainment companies, RHI is allowed to capitalize its production costs, though, which may lead to some overstatement of profits. The business has to be valued on a cash-flow basis by an investor who feels comfortable . . .

New Frontier Media, Inc. (Nasdaq:NOOF) CEO Michael Weiner said growth in its international and set-top businesses will work to augment slower growth rates in the domestic market. Weiner made the comments during a midday conference call held by the producer and distributor of adult-themed entertainment.

While the company does not provide specific guidance, CFO Grant Williams laid out New Frontier’s area of focus for 2009. The company expects to experience some growth in its core transactional TV segment due to its Penthouse-branded content, Williams said. He said New Frontier also expects to increase transactional TV revenue by expanding into international markets, including South America, Europe and Canada. The firm plans to increase its film production revenue in 2009 by increasingly focusing on mainstream content, the chief financial officer said.

The company plans to grow its direct-to-consumer business through a redesigned website and the testing and deployment of IPTV set-top box technology.

“We are optimistic that this test will be successful and will contribute to revenue during the latter half of fiscal year 2009,” Williams said.

The company expects cost of sales and operating expenses to grow during the year due to growth initiatives, he said.

“We will invest selectively in these initiatives but additional investment by the company will be necessary to support our efforts to grow the business,” William said. “Also, we expect to incur additional capital expenditures in fiscal 2009 to build out an infrastructure to support these growth initiatives.”

Even with higher expenses, Williams said New Frontier anticipates positive cash flow from operations in fiscal 2009. However, the CFO said the firm expects lower . . .

So what jingle-linga-ling brings your cell phone to life? Beethoven’s 5th? Your sweetheart’s favorite love song? Some Grateful Dead?

That’s ringtone. But what about the beeps and blips that someone hears while waiting for you to pick up? That’s ringback.

In an impersonal world, consumers enjoy personalizing mobile phones in many ways, and adding ringback tones appears to be a growing fad — plus there’s a potential for video content. NMS Communications Corp. (Nasdaq:NMSS) is making some noise about becoming a leading player in this blossoming market, and has made some strategic changes to its business model while serving up a suite of added services.

Investors in NMS Communications might like the sound of that, since this Framingham, Mass., company has posted losses for the past two years. Now this 20-year-old company is feeling the Groove (as in Groove Mobile; more on this later).

NMS Communications is transitioning from a nuts-and-bolts, equipment and products sort of company, to a company with a services-oriented focus. And it could lead to a divorce of its NMS Communications voice, video and data platform business from its LiveWire Mobile suite of managed personalization services.

Of the four analysts surveyed by Thomson Reuters, three have NMS Communications as a “buy,” with another calling the stock a “hold,” with a median price target of $2.50.

NMS appears to be pinning its future on the cutting-edge mobile media services field. Shares hit a 52-week low of $1.16 on Friday, three days after NMS reported first-quarter results. The stock traded as high as $1.97 last June 4, but has not . . .

Blockbuster Inc. (NYSE:BBI) CEO Jim Keyes said the movie rental company will not buy Circuit City Stores (NYSE:CC) unless the deal makes financial and strategic sense and “also returns significant value for our shareholders.” Keyes made the comments during a morning conference call with investors and Wall Street analysts.

“We remain confident that our core business is healthy and we remain confident in our ability to transform Blockbuster with or without this transaction,” Keyes said. “We see it as a potential accelerator for our stated strategy but the transaction is not critical to our continued transformation.”

On April 14, Blockbuster disclosed its offer to buy Circuit City for up to $1.3 billion. Circuit City said it plans to evaluate Blockbuster’s unsolicited offer. On May 9, Circuit City said it would open its books to Blockbuster and billionaire investor Carl Icahn, Blockbuster’s largest shareholder.

“We’re all interested in a timely resolution of this process,” Keyes said. “It is our hope that due diligence will validate the strength we see in the possible combination but if it does not, I can assure you we will move on and focus on the continued improvement of our store and our online businesses.”

The Dallas-based company reported early Thursday that it swung to a first-quarter profit of $45.4 million, or $0.20 per share, versus a year-earlier loss of $49 million, or $0.27 per share. Wall Street analysts expected earnings of $0.15 per share. The movie rental company attributed the improved performance to strength in its core . . .

This week, we examine a pair of small-cap media plays in China: a broadcaster (providing financial content) and a recruitment firm that publishes one of China's leading newspapers and websites for job seekers.

"With a recession nipping at our heels here at home, is it even possible to find an undervalued, bubble-proof Chinese stock these days?" asks Jonas Elmerraji in The Penny Sleuth.

"One company is looking pretty salacious for the American investment dollar right now: Xinhua Finance Media Limited (Nasdaq:XFML)," he says. The stock has a market cap of $282 million.

The company, he says, is a media operation that creates and broadcasts finance and entertainment content to millions of Chinese people. But, he adds, "Here's the kicker: the company targets high net worth individuals in China. We're talking professionals who can give advertisers the most bang for their buck (or yuan, as the case may be)."

XFML is an "interesting story," he says, because it takes middle-class Chinese consumers on "from all sides," including print, TV broadcasts, online ads and mobile devices that reach more than half a billion people.

"And management's no slouch either. Their CEO was chosen as one of The Wall Street Journal's Top 50 Women in 2004," Elmerraji says.

The company has only been listed here in the United States for the past year, but he says it’s already posted positive earnings, a double-digit profit margin, and some impressive net assets on the books. "How impressive?” he asks. “More . . .

The McClatchy Co. (NYSE:MNI) CEO Gary Pruitt said the newspaper company expects the advertising environment to continue to be weak. The Sacramento, Calif.-based firm projects second-quarter revenue to be somewhat better than first-quarter advertising revenue. The newspaper company’s first-quarter ad revenue slumped 17% to $128.4 million compared with $154.4 million a year ago. Pruitt made the comments during an afternoon conference call.

In 2008, Pruitt said the company will focus its efforts in four main areas. First, improving revenue performance with particular attention to Internet advertising is a goal. The second objective is to provide high-quality public service journalism in both print and online. The third aim is to grow McClathy’s audience. Fourth, McClatchy plans to reduce and restructure its costs.

“We are working hard to position the company to benefit from a stronger economy once it turns,” Pruitt said. “Given the revenue trends, we’re simply going to have to reduce costs and we do believe we can sustain a good record on cost throughout this year. We face increasing newsprint prices later in the year, but on the . . .

SmallCapInvestor.com reporter Jennifer Schonberger is reporting from the 20th Roth Capital Partners Annual OC Growth Stock Conference this week in Dana Point, Calif. The conference features presentations from more than 300 small-cap companies.

After 40 years of being reliant on analogue for film production, IMAX Corp. (Nasdaq: IMAX) has converted its antiquated business model to digital and formed joint ventures with movie studios and theaters that, according to IMAX’s CEO, will turn around the ailing company next year.

With its analogue model, the maker of digital and film-based motion picture technologies and large-format two-dimensional and three-dimensional film presentations had astronomical costs upfront that made it difficult to expand its movie offerings.

“IMAX film prints were the size of Volkswagons and they weighed about 400 pounds,” said Richard Gelfond, CEO of IMAX, in a presentation yesterday at the Roth OC Growth Stock Conference in Dana Point, Calif. “More importantly, they cost $25,000 per print 2D and $40,000 per print in 3D. In the digital world, it’s a hard drive and the cost of the print rounds out to free.”

Last year was a transitional one for the company, in which IMAX committed its resources to amending its business model for the transfer to digital.  

“Going digital will enable IMAX to cut costs, expand film offerings and boost revenues and earnings,” Gelfond said. “We will be cash-flow positive this year. The third and fourth quarters next year will see a real turnaround with sales of digital picking up.”

Radio One, Inc. (Nasdaq: ROIAK) shares are plunging after the radio broadcasting company posted a fourth-quarter loss of $386.4 million, or $3.91 per share, down substantially from a loss of $25.5 million, or $0.26 per share, a year earlier. Wall Street analysts were expecting Radio One to earn $0.03 per share.

Quarterly revenue totaled $78 million, down 5% from $82.3 million during the year-ago period. Analysts, on average, predicted revenue of $83.7 million.

“As predicted, the industry experienced a soft fourth quarter, with the markets in which we operate down 5% year to year,” CEO Alfred Liggins said in a statement. “The market continues to be challenging, particularly at the national level; however, we are seeing some good local revenue numbers and are optimistic that there may be a halt to the overall revenue decline in first quarter.”

In afternoon trading, ROIAK shares are down 19.88%, or $0.33, at $1.33. Over the last 52 weeks, shares have ranged from $1.32 to $7.73.

Rimage Corp. (Nasdaq: RIMG) CEO Bernie Aldrich said the provider of CD and DVD publishing systems sees significant untapped opportunities in a number of large business service markets. The chief executive said some of these untapped markets include media and broadcasting, law enforcement, education, government, software and professional services. Aldrich made the comments during a morning conference call.

“We believe business service applications will drive a significant portion of our growth over the next few years,” Aldrich said. “We intend to devote considerable resources building positions in these areas similar to what we have achieved in the retail and medical markets.”

Aldrich said the Edina, Minn.-based firm’s profitable growth over the last two years has been driven by its ability to penetrate the retail and medical imaging markets. Rimage’s equipment has become the retail industry standard for on-demand publishing systems for CDs, DVDs and Blu-Ray discs, he said.

“We continue to see good opportunities in these markets both here and overseas that we will pursue aggressively in the years ahead,” Aldrich said.

He said Rimage is also moving into mammography imaging in the medical market.

Before the opening, Rimage posted fourth-quarter earnings of $4.5 million, or $0.45 per share, up 25% from $3.6 million, or $0.34 per share, a year earlier. Wall Street analysts expected earnings of $0.32 per share.

Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) shares are rising after the media and merchandising company reported that it bought the rights to the Emeril Lagasse franchise of cookbooks, kitchen products and TV shows. The New York City-based firm said it paid $45 million in cash and $5 million in stock for the rights. The price could rise to $70 million if certain benchmarks are achieved.

"Emeril brings talent, energy and legions of fans to the Martha Stewart family, along with a powerful brand and an attractive, profitable business franchise," CEO Susan Lyne said in a statement. "Emeril's high-quality food-related content and product lines complement our own, and offer multi-platform expansion opportunities. This acquisition is a significant one strategically as we expand and diversify our business by applying our expertise in managing multi-platform lifestyle brands."

Lyne said the purchase will contribute “immediately” to the company’s performance.

Lagasse’s 11 restaurants will be unaffected by the transaction.

Also on Tuesday, Martha Stewart Living Omnimedia announced it agreed to buy 40% of the online wedding planning site WeddingWire. Under the agreement, WeddingWire will provide its tools to Martha Stewart’s website.

Investors are reacting positively to the transactions as MSO shares are up 15.82%, or $0.97, at $7.10 in afternoon trading. Over the last 52 weeks, shares have ranged from $5.22 to $19.50.

Shares of IncrediMail Ltd. (Nasdaq: MAIL) are sinking to a 52-week low after the Internet content and media company said this morning that Google will terminate its AdSense partnership with IncrediMail.

As a result, Google is disabling ads to search result pages displayed through the company's account. Search revenues powered by Google’s AdSense program made a significant contribution to the company’s results in 2006 and 2007.

The company noted it is currently exploring alternative relationships with Google and other vendors.

Shares of IncrediMail (MAIL) tumbled 44.64%, or $2.04, to $2.53 out of the gate. Shares of IncrediMail have been trading in the range of $4.46 to $10.69 for the past 52 weeks.

What is so exciting about font?

If the above sentence hasn't convinced you that a lot of people take the print on their computer or cell phone screen very seriously, consider this: college dropout and Apple Inc. (Nasdaq: AAPL) founder Steve Jobs believes that a calligraphy class he audited years ago might have led to the most valuable lesson learned during his short stint at Reed College.

Years later, during a commencement address at Stanford University, Jobs waxed nostalgic about all the different typefaces he learned, how different space sizes between letters completely changed the look and the feel of the printed word, and how this knowledge came in handy when he was working on the design of the first Macintosh computer.

Monotype Imaging Holdings Inc. (Nasdaq: TYPE) of Woburn, Mass., is a company that gets the importance of typeface. The small cap, which went public last year, specializes in text imaging technology that can bring higher-quality and more varied fonts to a range of electronic devices like laser printers, digital copiers, mobile phones and digital televisions.

It emerges as a publicly traded company at a time when more and more people are recognizing — either consciously or subconsciously — the importance of type to make work documents look more professional, cell phone address books prettier and MySpace pages more eye-catching.

Beasley Broadcast Group, Inc. (Nasdaq: BBGI) shares are soaring despite any major news from the 46-year-old radio station operator. After plummeting to an all-time intraday low of $4.86 on Dec. 19, shares of the Naples, Fla.-based company have been picking up steam.

The turnaround may be fueled by a cash dividend announced on Dec. 14. The dividend, $0.0625 for each share of common stock, is payable on Jan. 18 to shareholders of record on Dec. 31.

The stock’s previous plunge was prompted by a C.L. King analyst who said the radio industry’s revenue may have dipped 4% to 5% during November.

"After six consecutive monthly decreases, it appears November continued the difficult months for radio," C.L. King analyst James Boyle wrote to clients. “Not enough larger groups are changing much to stem audience erosion or ad share attrition or to prop up rate card discipline and surmount the biggest problem, weak advertiser demand, we suspect," he said.”

In afternoon trading, BBGI shares are up 23.28%, or $1.20, at $6.35. Over the last 52 weeks, shares have ranged from $4.60 to $9.63.

Shares of Sun-Times Media Group, Inc. (NYSE: SVN) are gaining ground in pre-market trading after the newspaper publisher of publications such as the Chicago Sun-Times and Post Tribune said it will reduce operating costs next year by $50 million.

The plan, which will be implemented during the first half of 2008, includes $10 million of expected savings, according to the company.

Sun-Times said further details will be announced as additional elements of the plan are implemented.

Shares of Sun-Times Media (SVN) popped 8.33%, or $0.10, to $1.30 in pre-market. Shares of Sun-Times Media have been trading in the range of $0.85 to $6.94 for the past 52 weeks.

ValueVision Media, Inc. (Nasdaq: VVTV) shares are up despite the direct marketer’s third-quarter loss of $5.7 million, or $0.16 per share, worse than analyst estimates of losing $0.13 per share and compared with a loss of $3.1 million, or $0.09 per share, a year earlier.

The Eden Prairie, Minn.-based firm’s quarterly revenue totaled $184.8 million, in line with analyst estimates of $184.9 million and compared with $184.9 million a year earlier. ValueVision’s total operating expenses rose 6% to $72.4 million, from $68.3 million during the same period of 2006. Subtracting restructuring and costs associated with hiring a new CEO, ValueVision’s operating expenses were $69.4 million. William Lansing, ValueVision’s former CEO, inexplicably stepped down on Oct. 26 and was replaced by John Buck, who presently serves as the interim CEO.

“Our results for the third quarter were certainly below our expectations, but there were several factors that were encouraging as we look more closely at the results,” CEO John Buck said in a statement. “Although sales equaled last year's quarter, the comparison was adversely affected by a change in our merchandise mix. High ticket LCD TV sales, which drove sales growth in 2006, were down significantly for the current quarter.”

Shares of VVTV closed at $5.41 today. Over the last 52 weeks, shares have ranged from $4.45 to $14.09.

Hollywood Media Corp. (Nasdaq: HOLL), provider of news, information and ticketing covering the entertainment and media industries, reported a third-quarter loss from its continuing operations a penny wider than analysts on Wall Street had forecasted.

For the three months ended Sept. 30, the Boca Raton, Fla.-based company reported a loss from continuing operations of $2.2 million, or $0.06 on a per share, a penny wider than the net loss of $0.05 per share three analysts polled by Thomson Financial were on average expecting. The current quarter’s operating results narrowed from a $2.5 million loss, or $0.08 per share from continuing operations in the third quarter of 2006.

Net income, which includes discontinued operations, for the third quarter was $8.1 million, or $0.24 per share, compared with a net income of $15 million for the third quarter of 2006, or $0.45 on a per share basis.

Hollywood Media previously reported in August that it sold its Source business unit to West World Media, LLC, and that in August 2006 the firm sold its Baseline StudioSystems business unit to The New York Times Company.

Hollywood Media's net revenues, which exclude the sale and operating results of the company’s discontinued operations, increased 15.6% to $28.2 million, compared with $24.4 million for the third quarter of 2006. Three analysts polled by Thomson Financial were on average anticipating revenue of $30.08 million.

Shares of Hollywood Media (HOLL) were halted in pre-market trading.

012 Smile.Communications LTD
www.012.net
NASDAQ: SMLC
Scheduled for Oct. 29
$375.7 million post-money valuation

Is it 1999 all over again? No matter how mature the Internet seems, investors want stock in it. Hence, Internet Gold - Golden Lines Ltd. (Nasdaq: IGLD), an Israeli telecommunications and Internet company, is spinning off its 012 Smile.Communications subsidiary, which operates a broadband Internet service, VoIP-based telephone and business services, and a network of Wi-Fi Internet access spots throughout Israel. After the deal closes, Internet Gold will own 73.3% of the 012 Smile.Communications business and all of its Smile.Media business, which provides online content, advertising, commerce and search services.

Internet Gold hopes to net about $91.3 million from the offering of 6,675,000 shares at a price between $14 and $16 per share. (All numbers are in U.S. dollars on U.S. GAAP.) Of the proceeds from the offering, $41.0 million will go to pay off debt, debentures, and a contingent payment stemming from its December 2006 acquisition of 012 Golden Lines, an Internet service provider (ISP) that was rolled into Smile.Communications. The rest of the funds will go to general corporate purposes, possibly including acquisitions. Acquisitions aside, the big source of growth will be telephone services. Israel is a tiny country. Its citizens come from all over the world, and its businesses (including Internet Gold) rely on customers and partners all over the place. Hence, it’s easy for people to run up big long-distance bills, and that makes alternatives attractive. Already, the company captures 34% of incoming and outgoing international call minutes within Israel.

Although 012 Smile.Communications is the second largest ISP in Israel with about a third of the market, it generated just $244.4 million in revenue from one million residential and business customers in 2006 on a pro-forma basis. To put that in perspective, Comcast Corporation (Nasdaq: CMCSA), which is the second largest ISP in the United States with about 12% of the market, brought in over $24.9 billion in total revenue last year, although the company did not break down how much of those sales came from its 11 million Internet subscribers and how much came from customers using television and telephone services.

Media General, Inc. (NYSE: MEG) CEO Marshall Morton said a separation of the company into a separate newspaper and television company does not make sense operationally, strategically or financially. Morton made the comments during a midday conference call.

“Financially, we believe a separation of our print and television operations would not be value enhancing for a number of reasons. Creating two, separate smaller companies—each with its own capital structure—would likely result in lower credit ratings for each and a higher cost of capital than Media General currently enjoys,” Morton said. “Separation of Media General’s print and broadcast businesses would also have serious implications if the current FCC review process results in a change in the current ban on cross ownership.”

CFO John Schauss said the Richmond, Va.-based company may sell its share of SP Newsprint Co., a general partnership between Cox Enterprises , Knight Ridder and Media General that operates newsprint mills in Georgia and Oregon, after a strategic review is completed. A sale would generate proceeds for debt reduction, the company said in a press release. There’s been “plenty” of interest from potential buyers of SP Newsprint, Morton said.

“One thing that had been goofing things up substantially has been the uneasy debt markets,” the chief executive said. “That issue has seemed to have corrected itself and has been reflected in the interest we’re seeing from potential buyers.”

Media General expects fiscal 2008 to be stronger than 2007 due to expected political and Olympic revenues, operating synergies at four new NBC stations, cost reductions, online growth and new products and services.

Media company 4Kids Entertainment, Inc. (NYSE: KDE) reported this morning that it will provide programming for The CW Network’s Saturday morning kids block for five years beginning with the 2008-2009 broadcast season.

4Kids will supply five hours of children's programming per week to The CW Network block, which will be broadcast Saturday mornings between 7 a.m. and 12 p.m. 4Kids said it will also sell national commercial advertising for the Network's kids block.

Shares of 4Kids Entertainment (KDE) were halted ahead of the opening.

Shares of Xinhua Finance Media Ltd. (Nasdaq: XFML) are rising following news before the start of trading that investment firm The Yucaipa Companies, LLC bought a stake in the Chinese media company.

Los Angeles-based Yucaipa, which lists former U.S. President Bill Clinton as an advisor, signed an agreement to purchase a block of existing shares from certain shareholders who have come out of IPO lockup, Xinhua announced in a statement today.  Some buyers of IPO shares are obligated by a “lockup” agreement to hold the stock for a specific minimum period of time.

As part of the deal, David Olson, a Yucaipa partner, will join Xinhua’s board.  Xinhua is a financial and entertainment media company that distributes its content in China through television, print and radio.

“The addition of David as an independent board member will increase the strength of our corporate governance and strategic development,” said Fredy Bush, CEO and chairman of Beijing-based Xinhua.  “We are thrilled to be forging this new relationship with a world-class firm like Yucaipa.”

The financial parameters of the transaction were not disclosed.

The Yucaipa Companies was founded in 1986 by billionaire Ronald Burkle.  The investment firm has since completed mergers and acquisitions of over $30 billion, primarily by buying stakes in supermarket chains and grocery stores.

At 12:53 a.m. ET, Xinhua (XFML) shares were up $1.25, or 16%, to $9.13.

You don’t have to wait for the initial public offering  of Classmates.com or Facebook to get in on the booming growth in Web 2.0 and social networking-related interactive media companies.

Little-followed IncrediMail Ltd. (Nasdaq: MAIL) quietly came public in early 2006 in a small IPO. Since then, the microcap play has continued to fly below Wall Street’s radar, all the while posting impressive growth and continued profitability.

Founded during the first dot com boom, $75 million market capitalization IncrediMail survived the tech crash and has emerged as a leading provider of Internet consumer products and services. The Israel-based company is named after its flagship multimedia entertainment-geared email program. This consumer-oriented email program is compatible with leading email services such as Hotmail, Gmail and Yahoo, and is best known for its vast selection of fun emoticons, email backgrounds, sounds and animations.

IncrediMail has been profitable as a company since 2002 and expects to have 11 million active users by the end of the year. IncrediMail’s revenue model is a blend of one-time fees and subscriptions (for premium versions of its products) and, increasingly, advertising. In addition to its flagship IncrediMail product, the company’s other major product is Magentic, a free program which offers an extensive selection of wallpapers and screensavers. In early August, IncrediMail introduced a closed beta version of a new instant messaging product that will integrate with existing instant messaging applications like Windows Live Messenger. In a bid to further leverage its user base, IncrediMail also plans to introduce a new Web 2.0 community website called IncrediWorld by year end.

In July, rumors swirled that IncrediMail had been approached by red-hot social networking media company Facebook as a potential acquisition target. IncrediMail denied the talks, but has said that it regularly holds discussions with various parties. With nearly $29 million in cash on hand, no debt, and solid profitability, IncrediMail  appears to be in a strong bargaining position, but seems happy being independent.

Merriman Curhan Ford Wednesday reiterated its “buy” rating on digital media company ROO Group, Inc. (OTC:RGRP) based on a deal with Universal Music UK.

Universal chose ROO Group to launch 130 online video players that will feature exclusive Universal video content from its artists. As a result of the deal, ROO plans to launch its video players across all of Universal’s major sites, including Universal’s portfolio of label sites such as Mercury Island, UCJ and Polydor Records.   

 “[The deal] should be meaningful for ROO Group,” Merriman Curhan Ford analyst Richard Fetyko wrote in a research note. “We believe that ROO Group remains positioned to capture meaningful share of the online video market, which remains in nascent stages.”

According to Fetyko, this backlog represents a multimillion-dollar annual revenue opportunity for ROO. “ROO has bagged [the deal] but needs to push across the finish line,” Fetyko wrote.

Universal Music UK will add 130 websites to the backlog of 500 websites that ROO Group already plans to make live in the next 1-2 years. These websites emerged from deals announced earlier this year with News Corp, Trinity Mirror, VNU, and mtvU, among others. ROO Group currently has 400 operational websites. Fetyko says once the backlog is rolled out, ROO Group’s  distribution network could more than double.