With its stock price below $1 per share, Cinedigm set a stock buyback and plans to rebrand the company to emphasize its streaming assets.
In a letter to shareholders, Cinedigm CEO Chris McGurk said the company plans to repurchase up to 10 million shares of its stock.
“Why are we doing this?“ McGurk said. “Our balance sheet is very strong, with essentially no debt, and our recent upside performance has increased our cash on hand even further from the end of last quarter. This gives us complete confidence that we can execute this significant stock-repurchase program without hampering planned operating expenditures, such as key content acquisitions.”
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On top of that, McGurk said, the company believes the stock is undervalued, making it a good investment. “We are effectively putting our money where our mouth is,” he said.
“I personally own more than 2 million shares of Cinedigm stock, so I understand the frustration that all our shareholders are feeling now, particularly given our strong operational and financial performance,” McGurk said. “With this repurchase program, we are choosing to signal that we fully agree with the analysts who study and follow Cinedigm, and who have targeted our stock price at $2.25-$5 per share.”
Cinedigm has repositioned itself from a digital cinema technology company to a streaming company. McGurk said the company is on a “similar revenue and audience track” to where Pluto TV was when it was acquired by Paramount Global and Tubi was when it was acquired by Fox.
He also compared the company’s Matchpoint streaming platform to BAMTech, the Major League Baseball Advanced Media-developed streaming platform purchased by Disney. (Disney bought the last 15% of BAMTech last year for $900 million.)
“As Cinedigm has completed its transformation to a streaming content and technology business this fiscal year, I'm excited to announce we will be rebranding the company to reflect this momentous turning point for the company,“ he said. ”This branding will accentuate our position and narrative for today and the future.”
Cinedigm stock was heading down in early trading Thursday. After the letter came out, shares were up 5% in the afternoon. ■
