Potential at Seven Arts as Distribution Changes - Analyst Blog
9:03a ET November 2, 2011 (Zacks.com) Potential at Seven Arts as Distribution Changes
Ken Nagy, CFA
Seven Arts Entertainment Inc. (SAPX) is an independent motion picture production and distribution company which develops, finances, produces and licenses theatrical motion pictures, with budgets generally ranging from $2 million to $15 million, for exhibition in domestic (United States and Canada) and foreign theatrical markets. Seven Arts strategy is to build their film library up from 33 titles today, to 50 to 75 titles over the next 5 years. While earnings will be up and down and generally difficult to predict the firm should be valued on the monetization of its film library. As distribution changes at a swift pace firms that can continue to monetize creatively will benefit.
The Company has seven motion pictures (Catwalk, The Winter Queen, Mortal Armor: The Legend of Galahad, Romeo Spy, Voodoo Museum, The White Lily and Neuromancer) in development that are expected to be released within the next two to three years. In addition to the domestic titles, Seven Arts also released Knife Edge (October 2009) as a United Kingdom DVD premiere and Night of the Demons (September 2010) in the United Kingdom theatrically.
The number of films produced is shrinking and major studious have cut back on distributing smaller budget pictures and have focused on large budget pictures and franchises. Seizing on the opportunity of fewer films produced, Neuromancer could provide significant revenues beyond what is typical of Seven Arts films.
Effective monetization of the film library is critical as technology changes. Seven Arts must continue to find new ways to monetize these assets in order to grow the library with new films.
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