Kew Media revenues hit $39.8M in Q1

CEO Steven Silver said the company is still assessing opportunities for acquisitions in both the production and talent spaces.

Kew Media has reported revenues of $39.8 million in Q1 of 2018, with $24.1 million of that coming from production and $15.7 million from distribution.

For the quarter, Kew posted $2.5 million in adjusted EBITDA, while gross profits were $12.8 million, with $6.1 million of that coming from production and $6.7 million from distribution. Kew said it expects adjusted EBITDA to be higher in the second half of the year as production activity (and the revenues derived from it) increases in the summer months. The results were in line with management’s expectations, the company stated.

Kew has continued to acquire in recent months, most recently agreeing to buy Australian non-scripted indie Essential Quail Media Group (EQ Media) for an initial purchase of $31.9 million (AUD$32.8 million). The transaction is expected to close in July and is still subject to closing conditions.

Pending the approval of the EQ Media acquisition, Kew will have 14 separate business under its corporate umbrella. Among those are the Canadian prodcos  Bristow Global Media,  Our House Media, Architect Films, Frantic Films, Media Headquarters Film and TV  that were purchased in March 2017, in addition to London- and L.A.-based company Content Media Corporation (which has since been rebranded to Kew Distribution). The company later added U.K.-based TCB Media Rights and Toronto-based scripted prodco Sienna Films, and tapped Carrie Stein as its EVP, global scripted series.

“From a standing start, we have built a cohesive and increasingly integrated operation that we expect to grow in 2018, while continuing to pursue further accretive and strategically important corporate acquisitions,” said CEO Steven Silver in a statement. Once the EQ Media transaction closes, Kew said it will have $20 million in loan availability and additional cash resources for working capital and other corporate purposes. Following completion of the deal it also expects to have between $60 million and $65 million of net debt.

The company now has a library of around 11,000 hours of content, compared to roughly 6,000 hours a year ago.

During an investor call, Silver said the company’s strategy to vertically integrate production and distribution to increase speed and efficiency to market is working, pointing to three examples: Global Media’s Haunted Hospitals, Frantic Films’ In Plain Sight and Media Headquarters The Brigade. “These shows were greenlit and are going into production only because of the combination of production and distribution living together under one roof,” said Silver.

Chairman Peter Sussman also reiterated Kew’s intention to get into the talent-management space as a third pillar to complement its production and distribution businesses. However, he said the company is still in the process of assessing opportunities in that field. “There are not many talent management companies, so it’s a smaller pool that we fish in. I would describe it as more a medium-term strategy, but it’s a priority. We think it could be significantly accretive to what we’re doing,” he said.

Silver added that there will come a time when Kew needs to slow down on the acquisition front, but it hasn’t come yet. “We don’t think this is the moment to pause. It’s likely there will be a moment, but we think it’s important to really keep going. There are strategic opportunities in front of us and we’ve made no secret of the fact we’re still on the acquisition trail. Right now, that hasn’t changed,” he said.

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