Cinedigm Stock Forecast - Financhill

Cinedigm Stock Forecast

Cinedigm Stock Forecast: Cinedigm [CIDM] has been in the news. The company has been going through a lot of changes and winning headlines in the process.

On June 8, 2020, Cinedigm issued a press release announcing the launch of a new network called CONtv Anime. The new offering will be available across the company’s 120-million device footprint, including Smart TV brands.

In addition, Cinedigm announced that it would rebrand its ad-supported Viewster offering and bring it into the CONtv fold. This move adds 175 million devices to Cinedigm’s potential footprint, making for a total of 295 million devices around the world.

So, what is Cinedigm? What does the company do? And, why should you care?

Cinedigm Is A Content Distributor (With Scale)

Cinedigm was founded in 2000. It distributes video content, specifically movies and television.

The company also works with digital cinema assets for movie screens and other channels like digital channels and physical content. This includes more 32,000 titles (around 7,000 feature films and over 1,600 TV show seasons).

Some of Cinedigm’s popular brands include Crown Media, Konami, NBA, NHL, and Wildbrain. The company boasts a broad reach as well – approximately 93% of connected devices in the world have the ability to stream Cinedigm content.

Its distribution partners include Netflix, Hulu, Sling, Apple TV, Netflix, HBO, Starz, Showtime, Amazon, XBOX 360, and Twitch.

Cinedigm also works in independent films and releases 8-12 new titles per year. It counts seven documentaries that were nominated for Academy Awards and six animated films that were nominated for awards as well as many festival award winners. Some titles include “A Brave Heart, “Loving Vincent,” and “The Invisible War.”

Is Cinedigm Stock A Buy?

One of the things that make Cinedigm unique is that it has strong vertical integration.

To begin with, the company is strong in content creation. Amongst independent studios, Cinedigm has the most market share at just over 20% of the industry. HBO is close behind at 18%, followed by STX Entertainment and RLJ Entertainment with just over 12% each.

Cinedigm has the ability to distribute the content it creates through several network channels. In addition to the CONtv Anime mentioned above, the company also owns CONtv, Docurama, the Dove Channel, Bambu, Comedy Dynamics, The Bob Ross Channel, Hallypop, Combat Go, and others. Cinedigm also licenses content and boasts an extensive library of content rights which it uses to bolster its video platform offerings.

This combination isn’t so surprising. Many video streaming companies have turned to creating their own content to bolster the content it licenses, but Cinedigm goes above and beyond.

The company created its own technology platform – called Matchpoint – that allows content providers to offer streaming services.

With this service, the company facilitates app development and platform distribution while offering insights and analytics on users.

Furthermore, the company has a strong management team, experience navigating distribution, the technical expertise to run its platforms, and a strong advertising acumen.

Risks of Investing in Cinedigm

Cinedigm is facing some risks. For one, the company has a ton of debt. Some of this is because Cinedigm is using strategic acquisitions to fuel its growth.

Buying companies requires capital and it takes time to amortize those costs. In addition, Cinedigm is expanding its offerings through efforts like CONtv Anime.

There are costs involved there too. Taking on debt is not necessarily a bad thing. That’s how many companies grow, especially with regard to technology or licensing rights.

Buying a company that has want you want instead of building the technology you want from scratch or negotiating content rights is often easier and faster.

The risk comes in when the company tries to pay for it all. In the case of Cinedigm, it will need to generate enough income from its expansion efforts to cover its debt repayment schedule.

Furthermore, Cinedigm takes on risk from its expansion efforts. From its new technology to recent acquisitions, the company will need to incorporate those aspects into its existing business model in a way that introduces synergies or at least limits inefficiencies.

It also needs to be able to maintain its existing content licenses and manage its growth, while understanding that carrying so much debt will limit its access to additional financing at favorable terms should it be needed.

Will Cinedigm Competitors Beat It?

Competition is fierce for Cinedigm, but not prohibitive. The company’s competitors include Sony Digital Cinema, Christie Digital, GDC, and Digital Cinema Implementation Partners (DCIP), which is a joint venture between AMC Entertainment, Cinemark, and Regal Entertainment.

These rival companies are formidable, but not impossible. Cinedigm’s Services segment is strong.

The major studios in Hollywood have agreements with five entities for cinema deployment and Cinedigm is on the list.

Plus, the company has an interesting strategy for managing the competition. Cinedigm goes small. It partners with local entities and develops studio relationships with local markets.

This allows the company to tap into their local expertise and even leverage some of their relationships. It is one of the ways the company differentiates itself.

That said, Cinedigm does expect the competitive landscape to change. The field of content creation and distribution is vulnerable to changes in end viewer preferences as well as technology advancements.

If Cinedigm misses the mark, another competitor with state-of-the-art tech, content that people want, or an eye towards developing a new type of content could steal away enough market share to make it problematic.

Plus, many of Cinedigm’s competitors have been around longer, have more resources, and can price their offerings more aggressively.

Cinedigm Stock Forecast: The Bottom Line

Overall, there are several reasons to be encouraged about Cinedigm’s future.

The vertical integration allows the company to offering a wide variety of services which translates into multiple revenue streams.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.