Poor Sales, Dwindling Inventories Put Hurt on Image in Q3

The net loss widened for Image Entertainment Inc. in the third quarter as sales continued to drop for DVDs and Blu-ray discs. Digital distribution was the one bright spot for the Chatsworth-based home entertainment programming producer and distributor that faced financial difficulties the past year and escaped possible bankruptcy after new ownership stepped in. For the quarter ending Dec. 31, the company reported a net loss of $2.1 million, or $0.09 per diluted share, on revenues of $25.1 million. For the same period a year ago Image had a net loss of $304,000, or $0.01 per diluted share, on revenues of $39.2 million. A weak new release schedule, retailers cutting back on inventory and concerns about Image’s financial position contributed to a drop in revenues, particularly in DVDs and Blu-ray discs. Digital distribution, however, showed positive growth for the third quarter with revenues of $1.3 million, an increase of 34.3 percent over the same period a year ago. In January, affiliates of private equity firm JH Partners became took over a majority ownership in Image that led to a change in the executive team. Shares purchased by the affiliates allowed Image to pay off lingering debt. “Now that the transaction with JH Partners has closed, we are working to increase content acquisition activity and streamline processes that will help us in our goal to return to profitability,” said John Avagliano, Chief Operating Officer and Chief Financial Officer. Mark R. Madler