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Hollywood Media Corporation (OTCPK:HOLL)

Q4 2005 Earnings Conference Call

March 16th 2006, 4:30 PM.

Executives:

Matthew Hayden, Hayden Communications - IR

James Moakley, Hollywood Media Corp. - Assistant General Counsel

Mitchell Rubenstein, Chairman, Chief Executive Officer

Laurie Silvers, Hollywood Media Corp. - Vice Chairman, President and Secretary.

Analysts:

Murray Arenson, Ferris Baker Watts

Parham Ghorban, Roth Capital Partners

Jeff Shelton, Natexis Bleichroeder

Nelson Obus, Wynnefield Capital

Andrew Mize, Cossara

Spencer Waxman, Shannon River Partners

TRANSCRIPT SPONSOR
Hollywood.com logo

Operator

Good afternoon, ladies and gentlemen. My name is Jeannie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Hollywood Media Corp. Fourth-Quarter and Year-End 2005 Earnings Conference Call.

Operator Instructions

Thank you. It is now with great pleasure to turn the floor over to your host, Mr. Matt Hayden of Hayden Communications. Sir, you may begin your conference.

Matthew Hayden, Hayden Communications – IR

Thank you. And welcome everyone to today's conference call to discuss Hollywood Media's 2005 fourth-quarter and full-year financial results. Today's press release announcing these results is available on the Investor Relations section of Hollywood Media's website at Hollywood.com. On the call today is Mitch Rubenstein, Chairman and CEO of Hollywood Media Corp., as well as Laurie Silvers, President of Hollywood Media. At the conclusion of the call, there will be a question-and-answer period open to those participants.

At this time, I would like to turn the call over to James Moakley, Assistant General Counsel of Hollywood Media, to read the cautionary statements about forward-looking information. Brian -- oh, I'm sorry, James?

James Moakley, Hollywood Media Corp. - Assistant General Counsel

Good afternoon. This presentation may contain in addition to historical information forward-looking statements within the meaning of Federal Securities laws regarding Hollywood Media Corp. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that may cause actual outcomes to differ materially from expectations reflected in forward-looking statements. Potential risks and uncertainties include the Company's ability to manage its growth and integrate new businesses; the Company's ability to develop and maintain strategic relationships; the Company's ability to compete with other media, data and Internet companies; technology risks and risks of doing business over the Internet; the Company's ability to maintain and obtain sufficient capital; and its ability to realize anticipated revenues and cost efficiencies as well as government regulations, volatility of the Company's stock price, and other risks described in Hollywood Media's filings with the SEC, including its Form 10-K report for 2004 as amended.

The Form 10-K includes a discussion of risk factors and can be accessed through the Investor Relations section of the Hollywood.com website or from the SEC's EDGAR database at SEC.gov. Because forward-looking statements are subject to such risks, we caution you not to place undue reliance on any forward-looking statements. Forward-looking statements made during this presentation speak only as of the date of this presentation. All written or oral forward-looking statements by Hollywood Media or made on its behalf are qualified by these cautionary statements.

I’ll turn the call back over to Mitchell Rubenstein.

TRANSCRIPT SPONSOR

Hollywood.com logo

Hollywood Media Corp. (Nasdaq: HOLL) is a leading provider of news, information and ticketing covering the entertainment and media industries.

Our websites include:

(1) Hollywood.com, one of the leading movie-related sites on the Internet, featuring over one million pages of in-depth movie information, including photos and reviews, showtime listings, entertainment news, and an extensive multimedia library.

(2) Broadway.com, which offers the most comprehensive online coverage of live theater in the world, featuring online theater ticketing for shows in New York and London's West End.

(3) MovieTickets.com, one of the leading destinations for the purchase of movie tickets through the Internet. Hollywood Media currently owns 26.4% of the equity of MovieTickets.com, Inc.

Read more about these, our interactive cable channel and our B2B businesses, and view our press releases and SEC filings.

To sponsor a Seeking Alpha transcript click here.

Mitchell Rubenstein, Chairman, Chief Executive Officer

Thank you, James. The fourth quarter of 2005 was a strong finish for what turned out to be another record year for Hollywood Media. We grew revenue by 20.3% for the quarter, while net loss decreased 63.7%. And for the year, revenue increased 31%, while net loss decreased 23.2%.

Regarding our divisional results, we continue to grow our ticketing revenue, which was up 32.2% for the year. Our data business revenue was up 32.9% for the year and Internet ad sales were up 60.3% for the year with 133% growth Internet ad sales for the fourth quarter of 2005 as compared to fourth quarter 2004. Please note that the Broadway ticketing results included adjustments to decrease revenue and to decrease cost of ticketing by approximately $5.7 million for the first three quarters of 2005 due primarily to the correction of an error in the method previously used to report hotel package sales. These adjustments did not impact the amount of loss previously reported for the 2005 periods. In other words, our revenue for the year was reduced by $5.7 million and our cost of revenues was likewise reduced by the same amount, resulting in no net effect on the bottom line.

For the full-year 2005, SG&A expenses were up 6.3% versus 2004. However, SG&A expenses for fourth quarter 2005 decreased 18.9% to $3.4 million compared to $4.2 million for the fourth quarter of 2004 as cost efficiency initiatives helped to control expenses, particularly related to reduced audit fees and Sarbanes-Oxley compliance costs. The continued revenue growth coupled with reductions in certain expenses has enabled us to make further strides toward profitability as we narrowed our net loss considerably.

We made an important acquisition in the fourth quarter by acquiring a company based in the UK called CinemasOnline, which is another platform for growth of our Internet sales and other divisions in the UK and the continent. CinemasOnline's current business includes maintaining websites for movie theater chains and live theater venues in return for retaining the right to sell advertising on these websites. In December 2005, we launched our Theatre.com website for London West End theater based on our Broadway.com model and turned on ticketing on the site in March. We believe Theatre.com represents a compelling opportunity for the Company in 2006 and beyond, as we are able to leverage our existing ticketing infrastructure. Laurie will go into some details on preliminary results shortly.

As I mentioned, we saw a significant revenue increase in our Internet ad sales division, following the launch of our redesigned website in October of 2005. Fourth-quarter 2005 Internet ad revenues increased 133% over the fourth quarter of 2004, and we had a 105% revenue increase on a sequential basis over the third quarter of 2005.

Now, let me provide some specifics for our fourth quarter 2005 results. Net revenues for the three-months ended December 31, 2005 increased 20.3% to $28.5 million compared to $23.7 million for the same period of '04, while total operating expenses increased 7.8% to $29.6 million from $27.5 million for the same period in the prior year. As I mentioned, the Company's SG&A expenses decreased -- that was decreased by 18.9% in fourth quarter to $3.4 million. While SG&A increased sequentially by 27.9% from the third quarter of 2005, and is still a significant improvement compared to the 42.8% sequential increase from the third to fourth quarters of 2004. The sequential increase is related to normal audit and Sarbanes-Oxley consulting fees that occur in the fourth quarter.

The Company reported second consecutive quarter of positive cash flow from operations. The net loss for the fourth quarter of 2005 was $1.4 million or $0.04 per fully diluted share compared with a net loss of $3.9 million or $0.13 per fully diluted share for the fourth quarter of the prior year. This was a 63.7% narrowing of our net loss compared to the fourth quarter of 2004 and a 44% improvement sequentially over our net loss for the third quarter of 2005, which was $2.5 million or $0.08 per fully diluted share.

The fourth quarter loss included the following expenses: depreciation and amortization of approximately $0.5 million, net interest of approximately $400,000, non-cash compensation of approximately $200,000 and approximately $100,000 related to Hollywood.com Television.

Now, I will discuss the financial results in our primary business segments. During the fourth quarter of 2005, our Broadway ticketing business delivered a 17.4% revenue increase to $23.6 million compared to $20.1 million for the fourth quarter of 2004. Deferred revenue relating to Broadway ticketing, a leading indicator of future Broadway ticketing revenues, was $16.5 million as of December 31, 2005 compared to $10.8 million on December 31, 2004, an increase to 53.5%. Our fourth quarter 2005 gross margin in the Broadway ticketing division was 15.2% as compared to 13.2% for fourth quarter 2004.

The data business segment contributed revenue of $2.7 million for fourth quarter '05, up 17.1% compared to the $2.3 million in the corresponding period of the prior year with gross margins of 73.9% in the fourth quarter 2005 as compared to 67.8% for fourth quarter 2004. The increase in data business revenue from fiscal '04 to fiscal 2005 was attributable primarily to the July 2004 acquisition of StudioSystems and increases in revenues from our source and baseline businesses due to internal growth achieved by adding new customers as well as the licensing of additional data to existing customers. For example, one of our portal customers who was already a CinemaSource customer began licensing our event data listings, thereby increasing revenue per customer. Our data business has relatively low incremental fixed costs and high margins. We expect to see further increases in revenues and bottom line for our data business in 2006.

Our Internet ad sales division had $1.8 million in sales during fourth quarter 2005, a 133% increase from $768,000 in fourth quarter of 2004. For the month of January 2006, comScore Media Metrix reported that Hollywood.com had 11.1 million global unique users.

For Hollywood.com TV, we booked advertising revenues during the fourth quarter of 2005. This is a milestone for us and even though revenues were minimal, we expect our ad revenue to ramp in 2006, with additional expected upside thereafter. Overall, we made solid progress as evidenced by these improvements and expect to yield further benefits in both 2006 and 2007. Our goal remains to reach profitability for Hollywood Media, and we believe we are on track to achieve that goal if these positive trends continue as we anticipate.

Now, for a full summary of full-year '05 results. For the year, net revenues increased 31% to $95.6 million compared to $73 million for '04; the net loss for 2005 decreased by 23.2% to $8.9 million as compared to the net loss of $11.6 million in '04. Total operating expenses for '05 increased 26% compared to '04. The net loss for the year was $0.28 per fully diluted share based on 31.5 million weighted average shares outstanding, achieving a 32.1% improvement over the 2004 net loss of $0.42 per fully diluted share based on 27.8 million weighted average shares.

We are pleased with our revenue increase and the decline in net loss in '05, and we're continuing with further implementation of our efficiency initiatives, including additional offshore outsourcing. Our 2005 results showed progress toward achieving profitability. The revenue trends across our three largest business segments were very positive in 2005, and we are poised for what we expect to be a record year in 2006.

Turning to the balance sheet, Hollywood Media completed the quarter with $7.1 million in cash and cash equivalents compared to cash and cash equivalents of $6.3 million as of December 31, 2004.

I’ll now turn the call over to Laurie Silvers, the President of Hollywood Media, who will discuss some of our many operational developments. Laurie?

Laurie Silvers, Hollywood Media Corp. - Vice Chairman, President and Secretary

Thank you. As Mitchell mentioned, we successfully launched our Theatre.com website in December 2005, entering the market for live theater in London's West End. And in March 2006, we launched the ticket sales function on Theatre.com. We were able to create and launch Theatre.com at a relatively low cost because we are utilizing our existing Broadway.com operational infrastructure as well as our already owned URLs for this rollout, including both the UK and American spellings of Theatre.com and Theaters.com.

Many of you may be unfamiliar with the size of the opportunity in London's West End ticketing. According to The Wall Street Journal, more people attended theater in London's West End in 2005 than on Broadway in New York City; although, the total revenue is less in London than in New York. London Theater drew its highest ticket revenue on record last year with $655 million in box office.

I would like to share with you some very preliminary results of the ticketing on Theatre.com. From last Friday night to Tuesday night, we began Theatre.com's first pay-per-click advertising on one search engine in the U.K. And in those four days, Theatre.com received orders for 76,000 pounds or approximately $132,000 of product, comprised of 66,000 pounds of West End tickets and the remainder hotel packages. We spent only 4,125 pounds for the pay-per-click. We of course are not forecasting sales based on such early preliminary data. However, we are pleased with the initial nice metrics, including the mix of tickets and hotels closely resembled our Broadway.com model.

As Mitchell mentioned, our advertising revenue and traffic on Hollywood.com showed strong growth since the redesign in October 2005. Recent advertisers on Hollywood.com have included Diet Coke, Winterfresh, and Paramount Pictures. In January 2006, we further supplemented Hollywood.com with our newly acquired fan sites. These popular fan site portals are being integrated into Hollywood.com to enhance the user experience and grow Hollywood.com's community and traffic. These fan sites are overseen by over 200 Webmaster fans at no cost to us for the Webmasters. The new Hollywood.com website offers users a variety of new functions and improvements, including exclusive audio podcasts and user blogging; intelligent search; deeper database information and expanded editorial content, news, and features on movies, TV shows, and celebrities. We are adding new functionality weekly, tapping into our India-based team.

Turning to MovieTickets.com, in which we own a 26.2% interest – equity interest, MovieTickets.com now has agreements to handle online movie ticketing on an exclusive basis for over 70 exhibitors, up from approximately 30 at the end of 2004. And, there is an exciting new development. MovieTickets.com has announced that it has been selected by Yahoo! Movies as its exclusive online movie ticketing service. This is notable as Yahoo! was previously an affiliate of MovieTickets.com, had changed to Fandango two years ago, but has now switched back to MovieTickets.com on an exclusive basis. Users searching for movies and showtimes at Yahoo! Movies can purchase movie tickets via a co-branded Yahoo! MovieTickets.com area for theaters affiliated with the MovieTickets.com service. MovieTickets.com's partners include theater chains with some of the highest revenue producing locations in the nation, consistently representing over 50% of the top 50 and over 50% of the top 100 grossing theaters in North America on any given weekend. In addition to Yahoo!, MovieTickets.com serves as the exclusive online movie ticketing service for approximately 100 other Websites, including MSN, AOL Moviefone and The New York Times website.

To update you on Hollywood.com TV, the free VOD industry while still in its infancy is experiencing strong growth in subscribers as the cable companies rollout VOD. Hollywood.com TV is now accessible by more than 15 million cable TV subscribers, up from approximately 8 million subscribers at the beginning of 2005. We estimate that Hollywood.com TV was available to approximately 70% of all US free VOD-capable cable subscribers at the end of 2005. Our goal for 2006 is to top 20 million subscribers.

Thank you for your time. At this point, Mitchell and I will be happy to answer any of your questions.

Mitchell Rubenstein, Chairman, Chief Executive Officer

Jeanie, questions?

Question-and-Answer Session

Operator

Operator Instructions Your first question is coming from Murray Arenson from Ferris Baker Watts. Please go ahead.

Q - Murray Arenson

Thanks, Hi Mitch and Laurie.

A - Laurie Silvers

Hi.

A - Mitchell Rubenstein

Hi Murray, how are you?

Q - Murray Arenson

Great thanks. Couple of questions for you. One is, EBITDA for the quarter if I did my math right, it looked like it was just a little bit negative, which was a little bit below expectations. I just wondered if you can speak to whether that's correct and where the difference was?

A - Mitchell Rubenstein

Yes, that's correct. We were shy by approximately $500,000. If you exclude those other items that I mentioned, it was very close to -- if you use adjusted EBITDA, subtracting out non-cash compensation and the other items that I briefly mentioned, you are close to zero. We had some costs that we had not budgeted fully for training expenses related to the installation of Great Plains, the new accounting software, and that was in large part the difference.

Q - Murray Arenson

On the revised accounting on the Broadway ticketing side, can you tell us what -- I'm just trying to kind of do apples-by-apples. Do you know what that Broadway ticketing number would have been for the fourth quarter under the old accounting system? Do you know what I mean?

A - Mitchell Rubenstein

For all of 2004, it was approximately $3 million. I don't have the breakdown by quarters, but you could, just extrapolate based on the overall revenue in the quarters.

Q - Murray Arenson

Right, I'm sorry. I was speaking to -- you talked about how you had to reduce the -- for the first nine months, you had to reduce the revenues and the expenses associated…?

A - Mitchell Rubenstein

Oh okay, how much it was in the fourth quarter?

Q - Murray Arenson

Yes.

A - Mitchell Rubenstein

Yes, sorry, don't have that statistic handy.

Q - Murray Arenson

Okay. On the data side of the business, you talked about exiting the year doing a $5 million annualized EBITDA run rate. Did that happen? Are you close to that? Are you comfortable with where you are at?

A - Mitchell Rubenstein

Yes, we have annualized data, EBITDA of $5 million or more.

Q - Murray Arenson

Right and let me ask one more, which is, I'm just trying to get my arms as well as I can around the London opportunity look into the year. I know you only kind of pointed to one weekend's worth of data here. But can you give us some sort of sense of your expectations and what you would view as a success and what you view as kind of a shortfall of what you think this can add to your business?

A - Mitchell Rubenstein

Sure. Well, as Laurie mentioned, preliminarily just we’ve won the UK-based search engine so we already been using U.S. search engines, we had very strong, very preliminary results. So, you know, we are now going to start layering in additional search engines and things, and we think the opportunity is very large because the competition is so much less than in the U.S. I mean it’s a $650 million market. So, I think there's a lot of upside potential there. We're very enthusiastic about it. I encourage you to go on to Theatre.com website, and I think you'll find it pretty much the same if not even better than Broadway.com in terms of its presentation.

Q - Murray Arenson

I'm assuming you are expecting it will take a while to make the same sort of imprint in that market as you've already made in the Broadway market. So, I'm just trying to get a sense if the London business is roughly two-thirds of the Broadway business, how--?

A - Mitchell Rubenstein

Right, The Wall Street Journal reported that New York is a bit higher -- 25, 30% higher in terms of overall revenue than London. But because we have less competition in London, we maybe able to achieve market share similar to we have in New York obviously over some period of time. So, we spent a lot of time working on the site, launching it, relationships with the theaters there. There's approximately 53 important theaters in London. So, it's more actual theaters in London than New York. And there's some great shows playing there right now -- Mary Poppins from Disney, Guys and Dolls, Billy Elliot The Musical, which shows they are all going to be transferring over to Broadway. So, actually the editorial we do now in London, we can then leverage back into Broadway. So, we did see a lot of upside, and our investment was relatively modest since we already had the theater URLs spelt both with "theaters" as well as "theatres". And that brand, that Theatre.com brand against the editorial that's on Theatre.com packaged in with the great ticketing. And with that, with limited competition that creates and affects the business.

Q - Murray Arenson

But do you view that period in which you'd kind of build up to a similar market share as what roughly a 2 to 3-year period? Or how are you thinking about that?

A - Mitchell Rubenstein

It's really too early to say. It could take that long; or it could happen a lot quicker.

Q - Murray Arenson

Okay, that also my last question. Thank you.

A - Mitchell Rubenstein

Okay, thank you. One more thing to add on your hotel question in the fourth quarter. We booked about $0.5 million in revenue for hotels in Q4 '05 and that was all profit since we're just booking the net.

Q - Murray Arenson

Right, okay, thanks.

Operator

Thank you. Your next question is coming from Mr. Richard Ingrassia with Roth Capital Partners. Please go ahead.

Q - Parham Ghorban

Hi guys, it's actually Parham for Rich. I thought we could kind of revisit the Theatre.com opportunity. You mentioned that you are marketing right now on one search engine internationally. I was wondering what that search engine was. And then, which search engines you plan on marketing in the US-based engines. And just in general, what are the other plans for building I guess buzz and traffic for the site?

A - Mitchell Rubenstein

Okay. Good question. I'd rather not mention the name of the search engine for competitive reasons, but it's one of the major UK search engines. So, it's only available with a UK URL; you know, the dot co dot uk at the end not dot com. So, most Americans are not using that particular search engine. So we wanted to start off -- in order to analyze the effectiveness, we want to start-off in the market itself with search. Look at the ROI and so on, which was very good, and we are expanding that now or in the near future to include additional UK search engines as well as US ones. And we generally use the major ones and look at -- we do it on a test basis initially like the 4-day test that we did. And then, we build a campaign around that once we know the ROI works as we do. And we are not even in the tourist season yet; that won't happen till the summer. So, all indications are full steam ahead. We have plans to do some newspaper advertising, spent a 150, $200,000 building our brand, doing that, we pulled that and are doing some limited -- or will be doing some limited outdoor in the market. And radio is a little too expensive and not much ROI. Radio in the UK is extremely costly: radio advertising. So our focus really is online and search, and we found that it does perform for us.

Q - Parham Ghorban

Okay, and then, if I look at the traffic numbers at this point I mean obviously it's early, but it looks pretty modest and obviously, you're going to build that up throughout the year and through '07. When you looked at the opportunity initially and kind of when you are looking at it going forward, how do the costs look in terms of building the site out and building out the brand relative to what you thought going into it I guess?

A - Mitchell Rubenstein

Well, we have reasonable expectations on the revenue side because we didn't plan on spending a lot of money marketing the site. So we are going to have a little more infrastructure once we load in all the different search engines if the results from the other search engines mirror somewhat proportionately what we're seeing here. So -- but we're only going to do it based on the return on investment and analyze that – that its profitable and not spend more money than we're taking in.

Q - Parham Ghorban

Okay. Thank you.

A - Mitchell Rubenstein

Thank you.

Operator

Okay. Your next question is coming from Mr. Jeff Shelton with Natexis Bleichroeder. Please go ahead.

Q - Jeffrey Shelton

Thanks, a couple of questions. First question, can you comment on the unaudited nature of the financials in your release?

A - Mitchell Rubenstein

We're just finishing up our audit now. We don't expect any changes in the numbers that we release today.

Q - Jeffrey Shelton

But you will be filing the K tonight, or you are going to ask for an extension?

A - Mitchell Rubenstein

We're going to take a short extension that's allowed under the SEC rules.

Q - Jeffrey Shelton

Okay. And secondly, could you be a little bit more specific about what happened with the Broadway ticketing revenue line item in the past three quarters? My understanding was you had been booking hotel packages net. So curious as how that affected both line items?

A - Mitchell Rubenstein

Right, it was a clerical error combined with not being caught by our information systems. And what happened was it got booked as gross. And then, there was the subtraction of cost of goods sold to get to the net amount, and it should've been booked strictly as net. So, we adjusted that in the current quarter and booked $500,000 of hotel revenue, which was in effect pure profit in Q4 '05. So, that change had no effect on the bottom line.

Q - Jeffrey Shelton

This being the end of the year, you usually divulge results for the MovieTickets.com for the full year. Are you willing to give some numbers today?

A - Mitchell Rubenstein

I don't have those in front of me. There is a separate firm that does the MovieTickets.com audit. So I'm not prepared to give those today.

Q - Jeffrey Shelton

Right and last question, are you willing to come out at this time and give some specific numbers for what you're looking for revenue EPS, either for full year or for the first quarter?

A - Mitchell Rubenstein

We're not prepared to give that type of guidance, other than to say we believe we are on track as we mentioned that our goal is to get to GAAP profitability as soon as possible.

Q - Jeffrey Shelton

Okay. Thank you.

A - Mitchell Rubenstein

Thank you.

Operator

Thank you. Your next question is coming from Mr. Nelson Obus with Wynnefield Capital. Please go ahead.

Q - Nelson Obus

Hi there, hey, what was EBITDA for the year?

A - Mitchell Rubenstein

Nelson, I don't have that in front of me. And then, we would have to post that reconciliation simultaneously with any response under the SEC rules.

Q - Nelson Obus

I think -- I would just say this -- for your credibility, I think you need to put the EBITDA numbers in there by division, so we can see the 5 million that you allegedly earned -- I'm sure you did in data. But I mean, the granularity is simply not there and it undermines the Company's credibility. So this is a year-end call. When you put your K out or whatever, I think you have got to put it there because it's very hard for me to -- it's just very hard for me to true up. I assume your EBITDA positive in Broadway is 5 million in data, I just can't true it up. So I hope you'll take this into consideration and go ahead and give us some granularity in regard to EBITDA.

A - Mitchell Rubenstein

Right. Nelson, you mentioned that before and I did -- we did consider it, an historical EBITDA presentation. And based on the multiplicity of divisions and various interpretive issues, we just decided not to include it at this time. But we will certainly consider including it in the future because it does look good. But the division (multiple speakers) -- we do disclose the operating numbers by division in our 10-K, including the operating income from each division.

Q - Nelson Obus

Well, EBITDA is really what we need. And I'm not trying to be confrontational. But, if you have so many divisions that you can't put down an EBITDA for each division, you ought to think of selling a few of them to create a more straightforward company that the shareholders can understand. I'm sorry to -- I hope you understand I'm trying to be constructive. But I simply can't accept your answer. I mean any board that in this day and age is trying to provide some clarity to shareholders would I think go the extra step. And maybe you've got to bring somebody in there to go through the numbers and separate them and make the judgments. But it's just very difficult to see exactly what's going on there.

A - Mitchell Rubenstein

Right, well look, it's -- EBITDA is a good metric as I had and as I said, we will definitely consider it.

Q - Nelson Obus

Take another shot, okay?

A - Mitchell Rubenstein

Okay, thank you for the suggestion.

Q - Nelson Obus

Okay.

Operator

Operator Instructions. Thank you. Your next question is coming from Mr. Murray Arenson, Ferris Baker Watts. Please go ahead.

Q - Murray Arenson

Thanks. Just a couple follow-ups. One on the advertising side, you talked about being involved in some larger buys kind of opening you up to a whole new tier of potential advertisers. Are you seeing that? Can you characterize that?

A - Mitchell Rubenstein

Yeah, I mean Laurie mentioned just briefly three of the advertisers, which included Diet Coke, which sponsored our whole Oscar section of Hollywood.com recently. So, we are definitely stepping it up. If you look at comScore Media Metrix numbers, as reported for the month of January 2006 globally, which is the most recent report, Hollywood Media was number three after INDB and Yahoo! Movies and ahead of Moviefone and MSN Movies in terms of aggregate traffic if you also add in MovieTickets.com with over 20 million unique users just in January. So, that's attractive to advertisers. And of that 20 million plus, 11.1 million unique users were on Hollywood.com alone.

Q - Murray Arenson

The Hollywood.com -- Hollywood.com TV, can you give us some sort of sense of how you expect that to grow when the revenues might get to the point where they are significant enough that you might either break them out or share them with us?

A - Mitchell Rubenstein

We hope they get more significant during the year. Nielsen begins rating the free video-on-demand space as they reported in Q2 of this year, and we expect advertisers will then be able to allocate more of their ad budgets to free VOD services. In addition, Comcast has mentioned that they are shortly launching localized ad serving of VOD, which is geared to the free VOD platform, which will allow cable operators to begin selling ads in their local markets for free video-on-demand which means in the local markets -- like markets like New York and Philadelphia are big markets. So, the combination of Nielsen and the local ad serving technology that’s occurred should create a lot of advertiser interest in wanting to buy the national spots that cable networks like Hollywood.com TV have.

Q - Murray Arenson

And lastly, just to clarify what you did say as far as guidance goes, were you pointing towards full-year profitability or were you pointing towards sustainable profitability at some point during the year?

A - Mitchell Rubenstein

Well, what our goal is is to get GAAP profitable as quickly as possible. We think that's really the key metric as opposed to EBITDA. Although, I also understand the importance of EBITDA as well, but I'm not guiding to GAAP profitability within any particular time period.

Q - Murray Arenson

Gotcha. Okay. Alright, thank you.

Operator

Your next question is coming from Andrew Mize (phonetic) of Cossara (phonetic), please go ahead.

Q - Andrew Mize

Thank you. If you in the Q4, if you had reported the revenue the way you had reported for the first 9 months, what would the Broadway ticketing revenue have been? I know it was 500,000 profitability. But I'm wondering on the gross up just for comparability looking at a model here, what would it have been had you reported it in the same manner you had the previous three quarters?

A - Mitchell Rubenstein

Right, well generally, what I can -- I can't give you that number unfortunately; I'm not permitted to. But what I can say is that we had hotels revenues in Q4 of approximately $500,000. And so that was all commissions. And our commissions are approximately 30% of what the revenue is –

Q - Andrew Mize

Okay.

A - Mitchell Rubenstein

Or what the hotel room gross in that would've been.

Q - Andrew Mize

Okay. Thank you.

A - Mitchell Rubenstein

Thank you.

Operator

Thank you. Your next question is coming from Mr. Spencer Waxman, Shannon River Partners. Please go ahead.

Q - Spencer Waxman

Hi, a couple of questions. Since we're so far along into this quarter, can you tell us, Mitch, do you expect to just on a cash basis be cash flow positive?

A - Mitchell Rubenstein

You know, we just -- you know we finished closing the books at the end of the year and just completing the audit. And we're just not comfortable talking about the first quarter, which isn't done yet, especially with so many initiatives like Theatre.com and so on in process at the moment.

Q - Spencer Waxman

Right. What's the scope of the investment or the expense run rate, how do you look at it, of the initiatives in the U.K.?

A - Mitchell Rubenstein

Under 100,000 a month.

Q - Spencer Waxman

Okay.

A - Mitchell Rubenstein

Significantly under that at the moment.

Q - Spencer Waxman

Okay, and could you -- I mean a few quarters ago, you spoke -- I think it was coming into '05 and one of the goals in '05 was to explore strategic initiatives and whether that was around MovieTickets.com or deciding if there were units to be sold or what have you. Could you just give us an update on what the thinking is into you have all these businesses or in terms of priorities and strategy of the different businesses? Are you considering selling any -- or what the goals are for MovieTickets.com? Just a general update on your strategy along those lines.

A - Mitchell Rubenstein

Well, we're certainly opportunistic. There was an article in The New York Times earlier this week on the front page of the business section at least in the edition that I had talking about primarily Internet companies. And we were included in the list as potential acquisition targets. So, we read that article, and we obviously -- it's something that's – it's on our minds when you see transactions like the recent iVillage sale to NBC Universal. When you see other transactions like that in earlier periods and when you look at some of the metrics that we are now delivering on a business segment by business segment basis, stripping out the public company expenses and so on. So it's clearly on our minds. And it's clearly something that we would be full hardy not to consider and to take into account in our thinking.

Q - Spencer Waxman

Okay. Thanks.

A - Mitchell Rubenstein

Thank you.

Operator

Thank you. There appear to be no further questions, and now I would like to turn the floor back over to Mr. Mitch Rubenstein for his closing remarks. Please go ahead.

Mitchell Rubenstein, Chairman, Chief Executive Officer

Okay. I'd like to thank everyone for attending and just to kind of sum up, I believe that we are creating assets with significant value and we're seeing the fruits of that labor starting to appear. So, thank you and look forward to updating you on the next quarterly conference call.

Operator

Thank you. This does conclude today's Hollywood Media Corp. conference call. You may now disconnect your lines at this time and have a wonderful evening.

TRANSCRIPT SPONSOR

Hollywood.com logo

Hollywood Media Corp. (Nasdaq: HOLL) is a leading provider of news, information and ticketing covering the entertainment and media industries.

Our websites include:

(1) Hollywood.com, one of the leading movie-related sites on the Internet, featuring over one million pages of in-depth movie information, including photos and reviews, showtime listings, entertainment news, and an extensive multimedia library.

(2) Broadway.com, which offers the most comprehensive online coverage of live theater in the world, featuring online theater ticketing for shows in New York and London's West End.

(3) MovieTickets.com, one of the leading destinations for the purchase of movie tickets through the Internet. Hollywood Media currently owns 26.4% of the equity of MovieTickets.com, Inc.

Read more about these, our interactive cable channel and our B2B businesses, and view our press releases and SEC filings.

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Source: Hollywood Media Corporation Q4 2005 Earnings Conference Call Transcript (HOLL)
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