After announcing an alliance with digital-platform-focused film distributor New Video at the Sundance Film Festival in January, digital cinema exhibition company Cinedigm (s CIDM) said Thursday that it has purchased the New York-based company for a price that could total as much as $20 million based on performance considerations.
“We were looking at acquiring them all along,” conceded Cinedigm chairman and CEO Chris McGurk. The previous agreement, which had the two companies jointly releasing about a dozen independent films a year, “gave us oppoturnty to date before marriage,” he said.
Combining the two companies creates a one-stop digital distribution shop for makers and sellers of independent films and other video content, combining New Video’s extensive reach across all segments of the VOD marketplace with Cinedigm’s strong presence in digital cinema.
The combination forms a kind of “digital mini-major” studio, as McGurk put it.
Under the direction of former Overture and Anchor Bay executive McGurk, Cinedigm has quickly streamlined itself into a leading distributor of alternative digital content for movie theaters, programming everything from the FIFA World Cup to the BCS Championship game to Phish concerts in 3D digital cinema to theater locations across North America.
New Video Group, meanwhile, has enjoyed a ground-floor position in the online distribution of independent film and older TV shows, partnering with Apple’s iTunes as far back as 2006. With more than 4,000 movie titles and 6,000 TV episodes in its library — most of it fully licensed — New Video distributes about 12 percent of the video content available on iTunes.
The two companies had already partnered to acquire three indie films: Sundance titles The Invisible War, Citadel, as well as the just-announced Gabrielle Union/John Slattery drama In Our Nature. Going forward, McGurk says the company wants to release at least two movies a month into Cinedigm’s combined theatrical and home entertainment digital pipelines. Also being considered is a movie-streaming service, although details for which haven’t yet been thought through.
Under the agreement, Cinedigm will pay $10 million in cash and $4 million in stock to acquire New Video. Another $6 million could be paid out over the next three years if Cinedigm Entertainment Group meets certain unspecified financial goals.
New Video principals Susan Margolin and Steve Savage will remain in positions of management control over the VOD/home entertainment side of the company, with Los Angeles-based Cinedigm moving personnel from a satellite office in New Jersey into New Video’s New York City office.
With the deal announced late Thursday, Cinedigm shares rose nearly 6 percent during Friday Nasdaq trading.