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August 28, 2006

Is Hollywood Media Restructuring?

posted by MR WAVETHEORY at 8/28/2006 06:55:00 PM
Hollywood Media (HOLL), owner of Hollywood.com, Broadway.com, and Theatre.com, has sold its Baseline Studio Systems business. to NY Times for $35 million. It looks like the company may finally be restructuring so that it can focus on its entertainment properties.
Hollywood Media has been short on cash. Revenues have been growing at 30%+ but the company has not been profitable on a net income basis. It's been losing a million or two every quarter. Thus, the stock has traded at roughly 1x sales. Pretty awful for an internet stock!

Will Hollywood Media stock rise? That's a good question. I applaud management for selling the non core business to focus on entertainment content and ticketing. It'll be interesting to see what management has in store for that $35 million of cold hard cash that's now sitting in the bank. Staci confirms this view and also says that it means the NY Times will be an authoritative destination for entertainment using the data.

Did Hollywood Media get a good deal for Baseline?
Apparently so. According to Dealscape, the Times paid close to 6x sales for the property. "The new purchase offers access to more than 1.5 million records of information on the entertainment industry. The Times says that it expects Santa Monica, Calif.-based Baseline to generate about $6 million in revenue in 2006." Adotas thinks Baseline will fit well with About.com.

Is traffic growing at Hollywood Media's web properties? It looks like the answer is no. From the chart below, you can see that the traffic has been flat. What is growing seems to be monetization. It's nearly impossible to do a movie launch without a web campaign, and you can just imagine the importance of being on Hollywood.com.

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