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Chicken Soup for the Soul Entertainment (CSSE) Buys Screen Media At A Bargain

11/07/2017
By Lisa Thompson

NASDAQ:CSSE

Today CSSE (NASDAQ:CSSE) announced its acquisition of Screen Media, a NYC based company comprised of a film and TV content library, a content distributor, and a streaming platform. This gem was a distressed purchase for $5 million consisting of $4.9 million cash and 35,000 shares of the Company’s Class A common stock and Class Z warrants of the Company exercisable into 50,000 shares of the Company’s Class A common stock at $12 per share. Screen Media is expected to book $12 million in revenue and $5 million in EBITDA in calendar year 2017. It should add about $2.6 million to CSSE’s Q4 2017 revenues. 

Ten million of the $12 million in revenues comes from distribution of content. Separate from content that it has rights to stream on its streaming service, Popcornflix, Screen Media owns a content library of more than 1,200 television series and feature films. It was one of the largest, independently owned libraries of filmed entertainment in the world. Screen Media generates revenues by distributing its content, as well as content from third parties, across all media: including theatrical, home video, pay-per-view, free cable and paid television, video-on-demand and other video platforms. 

About $2 million of its revenue comes from advertising on the company’s Popcornflix streaming channels. Popcornflix is one of the largest advertiser-supported direct-to-consumer online video services and can also accessed through devices such as Roku. According to its web site it has “full-length movies that will make you laugh, make you cry, scare the heck out of you, or inspire you to hug the person you love. We have compelling documentaries, foreign films, unique original web series, and a place that showcases the brightest film makers of tomorrow.” It has five digital streaming channels, is available in 56 countries, and has rights to over 3,000 films and approximately 60 television series. The company is excited about acquiring a fully functional streaming platform to which it can add its Chicken Soup content and already has critical mass and an audience of 15 million active users. 


Through the acquisition of Screen Media, CSSE can leverage its content. It can add its content to the Popcornflix channels that offer free content supported by ads, and may add a premium paid for service without ads in the future. CSSE believes that using its direct sales force and A+, it can increase the CPMs of Popcornflix. As a result Screen Media should be able to generate over $12 million in revenues next year even with out subscriber growth. CSSE has a strong balance sheet with approximately $5 million in cash even after paying for Screen Media, and no debt. Due to the acquisition of Screen Media, we are raising 2018 revenues to $36 million but leaving all other estimates the same until the company releases the financials on Screen Media. While this acquisition certainly is additive to 2018, it makes us much more certain of the company hitting our 2018 estimates. Our valuation estimate for year end 2018 remains at $282 million or $23.00 per share. 

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