Cineverse Corp (CNVS) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Cinedigm Digital Cinema Corp. second-quarter fiscal 2014 earnings conference call. At this time, all participants are in a listen-only mode. Later we will have a question-and-answer session and instructions will follow at that time. (Operator Instructions).

I would now like to turn the conference over to your host for today, Ms. Jill Calcaterra, Chief Marketing Officer. You may begin.

Good afternoon and thank you for joining today's conference call. Participating in today's call are Cinedigm's Chairman and Chief Executive Officer, Chris McGurk, and Chief Operating Officer and CFO, Adam Mizel.

Before I hand the call over to management, please note that on this call certain information presented contains forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions. Potential risks and uncertainties that could cause the Company's business and financial results to differ materially from these forward-looking statements are described in the Company's periodic reports filed with the SEC from time to time.

All of the information discussed on this call is as of today, November 13, 2013 and Cinedigm does not intend and undertakes no duty to update future events or circumstances. In addition, certain of the financial information presented in this call represents non-GAAP financial measures.

And now I would like to turn the call over to Chris McGurk. Chris?

Thanks, Jill, and thanks to everyone for joining us on today's call. Since we just had an investor call less than a month ago, our comments today will be brief. I will begin with an update on our very recent acquisition of Gaiam, Inc.'s Entertainment Unit, referred to as GVE, including progress on our integration efforts. After that, Adam will review our financial results and guidance for the second half of the fiscal year. Then we will answer any questions you might have.

So let's get started. Cinedigm took a giant leap forward when we announced subsequent to quarter end our acquisition of GVE, which closed on October 21. This accretive, game-changing acquisition immediately provides Cinedigm with a vast array of premium branded content and increased leverage and scale across the entire entertainment value chain. This transaction significantly strengthens our position at the forefront of the digital revolution, creating tremendous upside value opportunities for our shareholders.

The acquisition of GVE is expected to add annually approximately $49 million of GAAP revenues and $15 million in EBITDA as well as increase our annual sales managed at retail to over $320 million, making us a powerhouse with every platform, retailer, and supplier in the independent content distribution business.

Additionally, the combined entity has a market position as the second largest distributor of non-theatrical DVDs and Blu-ray discs in the US, larger than five of the major studios; and even stronger leadership position as the largest digital aggregator and distributor of independent content in the world, managing far more digital transaction volume across all digital platforms and formats than any other studio; exclusive multiyear relationships with a wide range of brand-name content suppliers including the WWE, National Geographic, the NFL, Discovery Networks, Scholastic, and the Jim Henson Company; a library of over 32,000 films and TV episodes; direct relationships with almost all physical and digital retailers, including Walmart, Target, iTunes, Netflix, and Amazon; a huge volume of business intelligence derived from all of these direct relationships and enormous number of transactions that provides yet another strong competitive advantage.

Finally, the combined entity has strong, experienced management, significantly bolstered with the addition of the GVE team.

In addition to these strategic advantages, this transaction provides Cinedigm with the scale, cash flow, and flexible debt structure and revolver necessary to support our current growth plans without further equity capital raises. We've spent the last few weeks integrating GVE into the Cinedigm fold and we have already made significant progress. We are pleased to report that we have already achieved almost 95% of the roughly $3.4 million to $3.8 million in synergies we anticipated and we expect to create even more cost-saving opportunities as we combine all elements of our organizations.

Given the rapid progress we've made on cost savings and synergies, our focus now will also turn to growth in revenues. Our customers and suppliers have been universally enthusiastic about this acquisition and we expect to quickly tap new and/or enhanced revenue streams through both existing content supplier relationships as well as new opportunities with additional brands and other film, TV, and digital content suppliers. The broad strength of our distribution machine across all platforms combined with our strong track record in maximizing the value of independent content in both physical and digital channels as well as the breath of all of our direct retail relationships makes us one of the strongest distribution choices ever offered to independent content suppliers. We plan to immediately leverage that compelling business proposition to rapidly build our sales base.

We are also laser focused on our digital network business, which we launched with Docurama a few months ago on YouTube, Samsung, Roku, Xbox, and other platforms. GVE's strong brands and content relationships immediately strengthened our assets in this area and should allow us to quickly build out additional networks based on premium branded content targeted at easy to reach narrowcast audiences.

The Chernin Group's recent investment of nearly $100 million for 60% of the digital anime channel Crunchyroll again emphasizes the upside potential of this business, which we at Cinedigm are uniquely well-positioned to develop due to the enormous depth of our library, our digital assets and track record, and our narrowcast marketing expertise.

In summary, the GVE acquisition was truly transformative for Cinedigm on every level and we expect to begin to reap the financial rewards of this transaction beginning with our third- and fourth-quarter results and continuing into fiscal 2015 and beyond.

Before I turn things over to Adam I would also like to mention that we are very pleased with the reception to Short Term 12, our award-winning drama that was released into theaters in late August. Approaching $1 million at the box office, the film is the best-reviewed movie of the year and being mentioned as a year-end awards contender. We expect it to perform strongly in the ancillary markets as well beginning in our fiscal fourth quarter.

With that, Adam will now review our financials.

Thank you, Chris. Consolidated revenues including deployment in the second quarter were $20.4 million, a 10% decrease from the prior year period. Deployment revenues declined by $700,000 in the quarter due to a reduction in releases by studios in the current fiscal quarter as compared to the prior year fiscal quarter and longer hold periods of several blockbusters limiting screen space to accommodate the numerous other wide studio releases.

Second-quarter non-deployment revenues excluding were $7.8 million, a decrease of $1.6 million from the year-ago period. The decrease is primarily due to one, the expected reduction in service revenues as the termination of the North American deployment program resulted in no activation fee revenue recognized during the quarter as compared to $1.4 million of activation fees in the prior year quarter.

Two, lower results in software license fees reflecting the successful in-process business model shift to a software as a service revenue model. And three, timing delays of digital license fee recognition and physical goods shipments into the second half of the fiscal year.

Revenue variance from our preannouncement occurred because we were unable to recognize digital license fees related to a specific content supplier who had not completely cleared to the rights to certain titles before we were able to sell those titles for distribution. Had that revenue been recognized, we would have improved upon our preannouncement EBITDA guidance range. So consistent with our preannouncement three weeks ago, consolidated adjusted EBITDA in the second quarter was $10.6 million, a decrease of $3.5 million versus the prior year quarter. Also in line with our preannouncement, adjusted EBITDA from non-deployment businesses was a loss of $1.3 million during the quarter, declining from $1.2 million from the year-ago period.

These declines were predominantly due to one, the previously discussed $700,000 reduction in DPF revenues, which all dropped to the bottom line. $2.9 million of upfront theatrical releasing, marketing, and acquisition costs recognized in the quarter, our J-curve costs, as well as the additional theatrical releasing SG&A expenses supporting those releases.

Three, the previously disclosed timing delays in several digital licensing transactions to later this fiscal year as well as the delay in a major DVD shipment into early October from late September at the request of the retailer. And four, the continued timing delays to later this fiscal year in our software unit installations in revenue recognition from several existing international exhibitors and domestic movie studio customers.

Additionally our nonrecourse debt balance at September 30 has reduced by approximately $20 million since the beginning of the fiscal year and as we stated previously, we expect that balance to continue to rapidly decline going forward.

Looking ahead with GVE integrated, Cinedigm is expected to produce strong financial results right out of the box, with total second half consolidated revenues including deployments and services of $84 million to $86 million and EBITDA of $41 million to $42 million. Non-deployment revenues are expected to be $59 million to $61 million with EBITDA of $17 million to $18 million.

Second half guidance for entertainment division is expected to be $52 million to $54 million of revenues with $12.5 million to $13.5 million of EBITDA for the full six months. Please note that due to the timing of the closing of GVE acquisition, our consolidated results for the remainder of fiscal 2014 will not include the first three weeks of GVE's October 2013 operations.

Without a good read of the monthly timing of revenues at this juncture, I should point out that we do not yet know the expected modest impact this will have on total second-half revenues and EBITDA. Of course we will provide that information on our next earnings call.

In summary, given the results of the first few weeks of the combined new Cinedigm Entertainment Group, we are confident about our prospects in part because our larger scale should help reduce the timing and earnings volatility that often impacted our past reporting.

I will now turn the call back to Chris for closing comments.

Thanks, Adam. Our efforts over the last 2.5 years to transform Cinedigm including selling two non-core divisions, acquiring new video, completely refinancing our balance sheet, and the very recent GVE acquisition have put us in a very strong position to take full advantage of the digital entertainment revolution. Together with our digital cinema business, which continues to generate strong recurring revenues, Cinedigm now has a great array of premium branded content and broader scale and increased leverage across the entire entertainment value chain.

We thank you for your time and attention today and look forward to sharing our continuing progress with you on next quarter's call.

With that, we are now happy to answer any questions you might have.

(Operator Instructions). Eric Wold, B. Riley.

Thank you, good afternoon. A few questions. I guess first of all, one, obviously looking at the second-quarter results, a lot of small things out of your control that impacted the quarter from DVD shipment moving from one month to the next, digital rights out of your control. Talk about with the level of guidance you gave for the back half of the year post GVE, what is your comfort in the visibility in giving guidance going forward now that you have GVE rolled in the mix versus where you were previous to that? How is that changing?

As we talked about on the call a few weeks ago and as I mentioned today, I think with the scale that we now have, we have more visibility and more predictability, and there still will be lots of examples like what we referred to today and on the phone. The difference is that a business that's approaching $90 million of revenues in our content business, there are probably some more things that go the other direction to offset them and/or with a bigger library and more business, as management we have the ability to influence -- try to offset things that go one direction inappropriately with something that we can move up to go in the right direction to try to offset those.

We didn't really have that capability as a much smaller company so we feel more comfortable in our ability to both project and to meet those guidance projections.

Okay, then on the Indie film side, I guess one, I know it might still be early but any sense of the level of kind of upfront J-curve costs we could see a range -- you could see in the current quarter versus the $2.9 million that we saw in this last quarter. And I guess post GVE, any expectations about the emphasis placed on Indie films going forward versus libraries of content like that you got a GVE. Should we still expect something around 20 to 25 new films per year or could that emphasis drop a little bit?

Two things, I think in this quarter we have a couple of releases set. At the end of the month we are releasing a very interesting documentary about the music culture that surrounds the Mexican drug cartels called Narco Cultura. Then in December we are releasing a movie called Penguin King, The Adventure of the Penguin King, which is voiced by Tim Allen. So we have two releases, neither of them as large as Short Term 12 or Afternoon Delight or some of our other summer releases, so those J-curve costs will be a lot lower this quarter. I don't know exactly what they will be, but they will be a lot lower. That's first. To your second question, Eric --.

I will answer that. I think we are going to continue to release independent films as in the past and again, we are going to follow our very flexible releasing strategy where none of the movies are ever in wide release. We either go in a limited traditional theatrical release like we did with Short Term 12 or we will go day and date VOD like we did with the Journey documentary or we will go premium VOD like we did with the Julianne Moore movie, The English Teacher. We are going to continue that.

Will we do 20 to 25 films next year? Volume isn't our goal here. Our goal is to be in the theatrical releasing business in a smart way in a very risk advantaged way and provide a steady flow of content into the ancillary market so it really ups our game when selling our catalog to a Netflix or to an Amazon or to a Walmart.

So I think you'll probably see the number of releases as we focus on the integration of Gaiam and really building that business and building our networks maybe steady-state out in the midteens or so. We're not necessarily targeting to get to 20 or 25 releases going forward.

Okay, then final question. Adam, I know it's not going to hit or impact the EBITDA guidance you gave for the back half of the year, but post -- with the GVE consolidation, any consolidation charges, restructuring charges, below the line impacts from that that hits in this quarter or is that kind of all in the past?

Yes, there will be two sources of significant accounting charges in the quarter that we are in currently. Number one is we will need to expense a lot of the transaction fees and expenses for acquiring Gaiam. We only amortized debt issuance fees and stock issuance fees on the balance sheet, so there will be several -- a couple few million dollars of transaction costs that are expensed as we talked about when we closed the deal. There are about $5 million and change of expenses. So half of that gets expensed and half of that hits the balance sheet and is amortized.

We will also have a restructuring and transition charge related to severance, related to systems, related to lots of things, all of which were part of our budget for the transaction and as we are going through that now, we are going to kind of see where we expect to be, I believe, and that's also going to be a couple few million dollars of charges between all the stuff that you have to deal with between severance and writing off different pieces of assets and all kinds of stuff like that.

So that will all happen, again all factored into our analysis, factored into our loan structure and our cash flows. And as Chris said, we are ahead of where we expected to be on realizing synergies, so we feel pretty good about what we are doing. But yes, that will all happen in Q3.

Perfect. Thank you, guys.

Andrew D'Silva, Merriman Capital.

Thanks for taking my call. I've just got a couple of quick questions. First off, you mentioned you missed a timing of a contract in the last quarter. Can we expect that to come into Q3? And then what will be the topline impact of that as well?

It will either -- I would expect in either Q3 or Q4. I think one of the questions is what are the optional rights clearances? That will impact timing and magnitude and I can't get into individual things like that. But it's the nature of sometimes the beast, but we will definitely recognize that revenue before the fiscal year is out.

All right, and then as far as GVE goes, I know you guys are saying things were running smoothly. You were happy with integration. Have you guys seen any synergies arise with your existing content being able to be distributed due to some of the big-box retail channels and then vice versa with their content being placed in some of your online networks?

First of all, it's only been three weeks since we closed on the transaction, so there's only so much that can happen, number one. Number two would be I think all of -- each of us we're doing a pretty good job of -- we are doing a very good job of getting our content to the right places and one of the powers of the partnership we created with Universal last summer with Cinedigm is it dramatically increased our access to and the volume of product that we were shipping and selling through the big-box retailers. So there isn't a lot of change there.

I think over the next three to six months, Chris, Bill Sondheim, and I are going to be going to talk to all of our customers personally and directly about the ways we can find revenue enhancements and synergies. We've had conversations with almost everybody on the phone and a couple people we are meeting with as we speak.

As well as targeting new customers that exist out there. We think the power of our business proposition is extremely compelling not just against the other independents but up against the other major studios at this point so we are very hopeful that we are going to reel in a lot of new business in the next few months.

Yes, although a lot of that doesn't really kick in until January -- those conversations won't really kick into high gear until next year because it is the holidays and if you are a retailer, you don't want to talk about anything other than maximizing and dealing with your Christmas sales. If you are a content owner, you are not going to distract from thinking about new forms of distribution and new distribution partners while you are working hard to make sure you have a good holiday.

So we are laying the foundation but I think a big focus in the first half of calendar 2014 is the revenue synergies if it's likely -- because a big focus in the last couple months of this year are getting the integration, getting the expenses done right, getting the people under one culture and so that's how we sort of staged it out.

Good. Okay, that makes sense and then kind of back tracking to your legacy business, you mentioned you are releasing two films this quarter theatrically. Is your fourth quarter, your March quarter expected to be kind of the biggest quarter as far as releases go since you are not really directly competing with a lot of the major studio releases?

Certainly you are right. We target our releasing away from November, December, and Memorial Day through July other than maybe a counterprogramming indeed but more of it certainly. And I think we have four releases in the fiscal fourth quarter. A couple of them are sort of service deals where we are not actually doing any P&A, which is actually nice. Those generally are quick profit contributors and a couple of them are traditional where we are acquiring and releasing movies so we have four at the moment but I could see a couple more potentially happening between January and March. But there's also just a limit on our own capacity so four, five, six a quarter is about the most we could ever do and do a good job on.

That makes sense. The major studios only release about 20 some of the year anyway, so you get maybe (multiple speakers)

Only one of them does. That's Warner Bros. The rest of them are in the 10 to 15, so yes, but they are doing much different things.

There are 3000 screen releases and if we get up to 200 screens, that's wide for us.

Absolutely and then I guess just kind of shifting gears a little bit, your software business, you are transitioning the SaaS model. Is there any way we can think about modeling that out going forward? And then as far as the reoccurring revenue streams, before you were kind of looking at 20% of the total initial cost backlog. How can we model that going forward now that it has transferred into a SaaS business model?

I think we will be able to give you a lot more color and clarity on that over the next several months because I think there are a lot of -- there's about 15 exhibitors who are in pilots and reviewing contracts to go live on the enterprise Web product either software as a service, there's a couple big studios doing the same thing and looking at launching in the early calendar 2014, early to mid their next version of the distributor product on the SaaS version.

So as that happens, we will be able to make that more clear to you, but effectively generally speaking when we price these things we are looking to have three-year revenues that are similar to a license and maintenance model and then the assumption is they keep going beyond three years. So that's kind of how we and many others in the software industry think about SaaS business.

Good. And then how is the international opportunity with the software business as well? Is that still there. I mean are you guys still pursuing that in Australia and South America and whatnot?

Yes, all of that on both the servicing and software side are going on. Our installations in Australia and New Zealand are almost done. We probably have another 100 to 200 to go and we are in a couple of deep conversations with exhibitor and partners in both Latin and South America and parts of Europe and Asia that we hope to add to that pipeline in the months ahead.

Perfect. All right, guys. That's all I had. Thanks a lot.

Kris Tuttle, Soundview Technology.

Thanks very much. Thanks, guys, for taking my call. Chris, I guess this question is a little bit for you. The last year or so it's been pretty intense specifically this is a big transaction. I know there's still a lot of work to do in the next couple months. But as you start thinking about kind of calendar 2014, my question is really what are your kind of calendar priorities as you think about next year with this acquisition behind you? You talked a little bit about this already in terms of visiting the customers and all that, and that makes sense, but strategically what's sort of your top priority kind of in putting your calendar together for next year and the things that you want to accomplish?

I think I touched on this a little, Kris, in my comments. It's really -- we have transformed Cinedigm now and we have basically turned the Company into this powerhouse independent distributor. The next 12 months is really demonstrating that to the marketplace at every level and on every aspect of what we do. From our theatrical distribution business to our traditional physical business, to our digital business and launching new networks, it really sort of prove the concept over the next 12 months.

In a lot of ways we always like to use Lions Gate as a parallel. I think I said that on the last couple of calls. But further, a real transforming event from them wasn't when they ultimately did The Hunger Games and bought Summit. It was back in the mid 2000s when they acquired Artisan and became the 800 pound gorilla among independents in physical distribution. And that is -- we like to compare our acquisition of Gaiam to that. We think with that acquisition, that's our Artisan. We're now the biggest independent content distributor out there with reach everywhere in the business with a phenomenal number of digital transactions and huge non-theatrical video volume.

We've now got to take that position and we've got to demonstrate it and leverage it in the marketplace and grow our business over the next 12 months. Obviously we have got to focus right now on completing the Gaiam integration and making sure that that is done as efficiently and properly as possible. And our experience over the last three weeks has been very positive in that regard, as Adam mentioned. But again, my priority is sort of delivering on the promise of this combination and really growing every aspect of the business and we are very confident with the management team we now have in place that we can do that.

Yes. All right, thanks, Chris.

(Operator Instructions) [Ron Chezz], private investor.

Good afternoon. There is -- if you would address please -- there is the reality and perception that the physical business is in a state of decline. Here you're going much more heavily into the physical business as you expand the digital capability. So do you want to address what you think the strategic posture is with regard to the physical business and the degree to which it is either in decline or not?

Sure, a couple things. First of all as we talked a few weeks ago, it is -- the physical business is still a $14 billion to $15 billion a year revenue business and to be a powerhouse distributor digitally, you also have to be one physically and vice versa because your customers are looking for a partner who can service them effectively across all of the channels. That's why they are outsourcing to the distributor.

And by combining our businesses, we are now the largest physical and the largest digital distributor independently in the space. That's number one.

Number two, the digital business absolutely over the last two years has been declining 6% overall a year. I note that last year in 2012, both Cinedigm and Gaiam grew their physical businesses. Cinedigm by 55% and Gaiam by almost 10%, reflecting what I think are the trends that we deal with, which are different than the headlines. As I like to remind people step back for a second.

Most of the people who are on this call live in a city on the coast. Most of the people on this call in addition to their big flatscreen TV have put in their routers and wiring in their home so they can have Wi-Fi. Most of them have an Apple box or a Roku box or an Xbox, whatever they are using as a player to access over the top channels and most of the people on this phone will spend a couple hundred dollars a month on a cable bill including wireless -- or Internet access at a high speed.

Most people in the United States of America can't afford to do that. Most people in the United States of America go buy DVDs and rent DVDs because what I just described is a couple thousand dollar upfront investment and a couple hundred dollar a month ongoing investment. So we all have to take a step back and remember that the market is different than the people that we are, because it's absolutely true. I don't do anything with a DVD. My family lives on our Apple TV with Netflix and iTunes and everything else, but we are a huge minority.

So that's one of the reasons we at Cinedigm and at Gaiam too have been growing their business because if you look at the kinds of products that we are acquiring and distributing, it fits that market. If you are acquiring a WWE Summer Slam DVD, after you've seen that either on TV or not, you are not going to iTunes to do that. You're going to Walmart. Walmart is increasing the size of their floorplan dedicated to DVDs right now because as the DVD vendors have exited, they are getting more and more business and they are selling more. The same at Target, the same at Best Buy.

So that physical business has a lot of legs and that's why we've been growing it overall. Absolutely if you compare the number of DVDs at Disney, where they sold of Iron Man 1 versus Iron Man 3, you see a big decline. They are selling many more electronic sales and digital rentals and all that happens. So it's a different business and it's a business that has a lot more legs than I think the headline people address.

Also in that space, we are seeing Gaiam in the last 12 months added four new customers, whether it's E.W. Scripps or Discovery, different pieces of Discovery and so as if we have added lots and lots of new customers because that business consolidates and when you are at the scale we are at with the lowest costs, the highest quality distribution meaning you can get shelf space and marketing support, which drives sales and revenue, you acquire the rights to more and more business because there aren't many who can do that.

So we look at the physical business and we see both of those elements contributing to our growth, both the type of content, the fact that more of it is bought than people realize, the ability to add customers and we have the largest digital business and we manage that transition.

So when we at all of that up, that's part of what we see as some of the accretion and revenue synergies we haven't factored into our analysis in buying Gaiam and putting together in one company. It's why we are excited about the prospects over the next 12 months to grow the business.

So this should be different to your point than the headline numbers and there is the prospect that by virtue of your position you will be able actually to grow that business.

Correct.

Would you speculate as to or too early to speculate on goals with regard to expansion of that business, some percentage increase?

Again it's early on one level in that we haven't gone out and driven hard on the new sales front but we expect to be able to produce double-digit growth across our home entertainment distribution business over the next 12 to 24 months and we will give guidance as we get closer to the -- as we do our budgets and we get through the sales process of a lot of customers and new customers but we feel pretty good about what our opportunity is and that is part of what we based our acquisition on.

I gather that that has not been factored into the second half guidance that you just gave.

Our second half guidance does not include new sales and new customers because they would have really no impact. At this point if we were to sign up a new piece of business tomorrow, it would be almost impossible to put any of that business whether in physical or digital form into the marketplace before the end of the fiscal year. The lead times are too long. So business that we are pitching and working on now is really driven for our next fiscal year and so that is how we look at that question.

Back to partly the physical business, so if we don't live on the coast and we are in the Midwest, we are just -- you are stuck with us as DVD customers, right?

Ron, I'm pretty sure you are a digital customer.

I'm just kidding.

If you want to buy DVDs, we won't complain.

We will buy DVDs, okay? You talked about achieving 90%, 95% of the synergy goals now. Do you have some expectation guidance idea about what more you might be able to achieve?

We certainly think there's an opportunity to exceed our targets in synergies. And we know there's more to come. I think first of all, we have a set of integrations that are going on within the Company at the unit level and then there's all kinds of things that we expect to be able to achieve to probably exceed what our initial targets were. And then over the next six months to nine months, we've got to look at how we reengineer all pieces of the business. We have the opportunity to consolidate some of our back-end physical good distribution vendors, so we think there's more opportunity.

As I said, we closed three weeks ago. We are pretty happy with where we are but that just means we get to raise the bar.

And in the network capability besides Docudrama, Docurama, you are working on other opportunities there?

Yes, we have one or two opportunities that we hope to be announcing in the few months ahead and then we have had some interesting conversations with some of our new customers through the GVE acquisition about digital channels and we have a pretty robust pipeline of opportunities and we are going to scale up the rollout of those over the next six to 12 months as we've been talking about.

One more question. You addressed or as you talk about synergies, what management did you inherit, senior management did you inherit at Gaiam?

I think as we mentioned on the last call, we felt that the management at Gaiam was a really great asset and we are very pleased that first and foremost, we inherited Bill Sondheim, who was the President of Gaiam Entertainment, who I have known for 15 years and who actually worked for me when I was at Universal and he was running PolyGram Home Entertainment, which we acquired. So we knew Bill was the guy and he's now the President of our entire entertainment group and he brought some extremely strong senior executives with him.

We have a new head of marketing that worked at Gaiam who we think is a real powerhouse executive, a head of sales, and several others who came with him that Bill did a great job of attracting and retaining there at Gaiam and now have moved into even bigger positions in the joint company.

So I think there are probably all told at least six or seven really key, strong executives at the level below Bill that came with him and we feel great about the quality of our organization. We have a powerhouse distribution company and we think we have a powerhouse executive team now.

I wish you good luck.

Thank you. I show no further questions at this time and would like to turn the conference back to management for closing remarks.

This is Chris. I would just like to quickly thank you all for your support, your interest in the Company, and we are really looking forward to reporting our results on our next call with you that will include the impact of GVE.

One thing just so people are aware, we will be presenting on December 3 at the LV Micro conference here in LA. If anyone is going to be there, I look forward to seeing you in person as well.

Great. Thank you all and we will talk to you again soon.

Thanks.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect at this time.