Genius loss widens after weak TWC slate
By Susanne Ault -- Video Business, 5/12/2008
MAY 12 | Genius Products LLC reported widening losses in its first-quarter 2008 earnings, as the company was dragged down by a weak DVD slate from The Weinstein Company.
For the three months ended March 31, Genius posted a net loss of $15.4 million. That compares to $2.4 million in red ink the company incurred during the comparable frame in 2007.
Revenue rose 18% to 98.2 million.
In a conference call with analysts on Monday, Genius management expressed confidence the company can improve operations. Genius hopes to cut expenses through recent headcount reductions, plus grow revenue through its expansion into videogame publishing and distribution. Additionally, the theatrical slate for TWC should strengthen by late summer, according to Genius, which distributes TWC titles.
As reported earlier, Genius reduced its workforce by about 15% in recent weeks. That will shave $4.4 million in annualized operating expenses, said the company.
Also, Genius is working to reduce its DVD output, to similarly become a more efficient firm. In recent months, it has been steering away from non-branded budget product and focusing its energy on its known distributed labels, including TWC, World Wrestling Entertainment and Sesame Workshop.
“We are encouraged by our solid first-quarter revenue, considering the limited theatrical slate and soft market conditions,” said Trevor Drinkwater, president and CEO for Genius Products Inc., which has a stake in Genius LLC with its majority owner, TWC. “We also began implementing steps to reduce our operating expenses during the latter part of the first quarter, which will better align the cost structure of the company with our streamlined business model.”
In March, Genius said it would launch a videogame business, starting with the third-quarter release of Linerider. During its first-quarter earnings call, Genius management also said it would work to release an interactive product based on the popular Halo franchise near that time as well.
Modest performing theatrical Genius DVDs in the quarter included TWC’s The Mist. However, Genius is looking ahead to bolstered DVD returns from such upcoming TWC theatricals as Crossing Over with Harrison Ford and Kevin Smith-directed Zack and Miri Make a Porno.
Further unspecified titles also should be released soon on Blu-ray Disc, according to Genius. Previously, TWC was streeting its titles exclusively on HD DVD.
Genius is already handling Blu-ray product from its other distributed labels, including Tartan Video and WWE.
Due to its rapidly changing infrastructure, Genius declined to provide any guidance for the remainder of the year.
“TWC’s significant ramp-up starting in August through the end of the calendar year should result in a solid fourth quarter and first quarter of 2009,” said Matthew Smith, Genius Products LLC president. “As a direct result of the shift in schedule combined with our aggressive reorganization, we have decided to withdraw previously announced annual guidance and will provide updated financial guidance when second-quarter results are announced.”
