Chicken Soup for the Soul Entertainment, Inc.
Q1 2018 Earnings Call Transcript

Published: 14 May 2018

[Operator:]

Good day, ladies and gentlemen and welcome to the Chicken Soup For The Soul Entertainment First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I'd now like to introduce your host for today's conference James Carbonara of Hayden IR. Sir, you may begin.

[James Carbonara:]

Thank you and welcome. With me on the call today is William J. Rouhana, Chairman and Chief Executive Officer and Scott Seaton, Vice Chairman. Following this discussion, there will be a moderated Q&A session open to participants on the call. We appreciate having the opportunity to provide an update on the business operations and review the first quarter financial results. During this call, management will make forward-looking statements. These statements are based on the current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary text regarding forward looking statements contained in the earnings release issued today, which also applies to the content of this call. I would now like to turn the call over to William Rouhana, Chairman and CEO. Bill, please go ahead.

[William Rouhana:]

Okay. Thanks, James. Good afternoon everyone and thank you for joining us today. As those you were seeing the results can see we're off to a solid start in 2018. Our results are in line with our guidance and we're making good progress towards increasing our online network revenue and viewers growing our pipeline of new releases for 2018 and Screen Media and securing our TV production commitments for the year. All of this reinforces our confidence in achieving our goals and targets for 2018. At a very high level, we delivered total revenue of $6 million for the first quarter towards the high-end of our guidance which was $5.5 million to $6.2 million. And the result of solid performance in each of our three revenue categories on line networks, traditional distribution and the production television series. Adjusted EBITDA of $1.7 million was also in line with our guidance for the quarter. So we got to reach of our three business areas. The first are video on demand business which we call online networks in our statement of operations and for this call, I will refer to these as VOD. This is a comparatively comprised of six advertising supported networks A Plus, Popcornflix Popcornflix kids, Popcornflix comedy, Espanyol Flix and Fried Pix [ph]. Since our last call, we've taken a look at these networks and have decided that four of them A Plus, , Espanyol Flix Flex, Popcornflix kids and Popcornflix comedy will eventually live under the Chicken Soup for the Soul label. Fried packs were remain under our Screen Media label since the content in the fry picks category does not fall within the lifestyle categories we plan to cover. The main Popcornflix network will continue as it is for the time being. Overtime we expect to add a new subscription version for each of these networks and to gradually add more VOD networks covering lifestyle areas such as food, family, kids, relationships, travel and others will do this through organic growth and through acquisition. We've made significant progress towards expanding our presence in VOD and Popcornflix revenue increased 31% from Q1, 2017 to Q1, 2018 had requests increased 9% year-over-year. Popcornflix is delivered on many devices and platforms and on both YouTube and the Web, it has grown even more significantly than our other platforms. In the first quarter of 2018, we had 132,691 new subscribers on our YouTube channel compared to 50,000 subscribers added in the first quarter of last year. When we acquired Screen Media in November, Popcornflix on the web had 397,000 users per month with about 3.8 million pages. As of April, we had 829,000 users with 7.7 million pages users are up over 100% on the web. One of the fundamental objectives of our strategy is to continue to grow our VOD networks to create a network of networks while building out a library of content. Plus in addition to Popcornflix we are in the process of categorizing our existing library of films and TV series to roll out new networks branded under Chicken Soup For The Soul will also be adding the original TV series produced by Chicken Soup For The Soul which we call Chicken Soup For The Soul originals to Popcornflix, we expect that roll out to commence in the second half of the year. There's no doubt that video streaming and online on demand viewing is continuing to disrupt and be a key driver of growth in the entertainment business. We're in an enviable position with a large and growing and highly desirable demographic of viewers and extensive production and distribution assets and capabilities. We're using these resources to accelerate the transformation of our business and to create a highly desirable network of networks and to the Chicken Soup For The Soul brand. We're actively monitoring evaluating a pipeline of acquisition opportunities for being selective in our consideration when we have flexibility given our strong balance sheet and scalable platform. In 2018 and 2019, we expect continued growth with or without acquisitions and our current outlook is based on this assumption. Now let's talk about TV and Film distribution our second revenue category. We licensed TV series and movies worldwide across all media including theatrical, home video, pay per view free cable and pay television VOD and new digital media platforms. As you recall, we are in the copyright for hold long term distribution rights to approximately 1200 television series and films in our library in this part of our company. The most important predictor of results in this part of our business is our pipeline of acquired content. Our existing library generates approximately 50% of our revenue in this area and the balance of revenue generally comes from newly acquired content. Not surprisingly when we took over Screen Media we found there was work to be done in filling the 2018 pipeline. We successfully acquired enough content to fill the pipeline through the end of the first quarter of 2019. Revenue increased over 50% from the first quarter of 2017 to the first quarter of 2018 in this area and adjusted EBITDA increased over 65%. With one of the largest independently on libraries of film entertainment in the world and license agreements across all forms of media our distribution capabilities enable to direct distribution of our in-house produce television series those Chicken Soup For The Soul originals I mentioned. This eliminates third party distribution fees which can be as much as 30% of revenue and thereby enhances the profitability of our productions. Now let's turned into in the TV series in short form video production. This is been the bread and butter of our business for our first three years. It has and continues to generate significant revenue adjusted EBITDA as well as library rights for our business as we hope. We've had great success obtaining sponsors and obtain sponsor coverage for four series in 2017, Chicken Soup For The Soul in heroes that was season three being that vacation rental potential and the new Americans. Our strategy of only producing series after we have obtained commitments for more than the production costs is clearly worked. We have produced 111 half hours of television series using this method. As previously noted, these series are now distributed via Screen Media which saves up a 30% of distribution fees that would have been paid to others. These series have hired on eight major networks CBS, The CW, Discovery Life, Discovery Family, TLC, FYI, ANA and now Netflix. This year we expect to obtain sponsors for sixty half-hour equivalents of episodes for new and renewed TV series. We used to call at six series but since some series will come with more than ten half-hour episodes we now talk about this as sixty half-hour equivalents. We are aggressively selling our existing inventory and are in active discussions for the production in new episodes. Putting us on an accelerated pace towards achieving our full-year targets. As you may recall each year we start over from zero to identify sponsors and shook your funding to produce content for the upcoming seasons. This portion of our business has been the primary driver behind our company historically being a fourth quarter company. However, thus far in 2018, we have $2 million of revenue from the production of season three for the Chicken Soup For The Soul, Hidden Heroes, which is currently airing on the CW network and from season one of Vacation Rental Potential, which premiered at the end of 2017 on the A&E Network. In addition, Being Dad was picked up by Netflix and generated additional revenue in the quarter, by the way the Netflix deal was done by Screen Media, saving us the 30% distribution fee we would have paid another distributor. We're doing well on TV series commitments, we've secured 10 to 16 new half-hour episodes with HomeAway commitment to a second season of Vacation Rental Potential the series premiered on any on December 9, 2017 became the most watched show in the network's home category. The timing of this position enables us to begin production months earlier than last year and recognize the revenue and EBITDA from our TV series production business over the course of the third and fourth quarters of 2018 instead of just the fourth quarter as we did in 2017. The ten episodes to be Vacation Rental Potential to be produced for this next season give us the first of the 60 half-hours of TV series episodes we expect to create for 2017, 2018. We have a clear view of the additional 50 episodes including more than four series for which we are in discussions with 13 new and existing sponsors. One interesting fact is that three of the four series in these events discussions have more than one sponsor. In the past, the series only had one sponsor when we've launched them that will clearly change. As a result, this revenue category continues to be de-risks, we started early beginning in April versus August of last year. We're building inventory and monetizing our 111 half-hours to our distribution capabilities and the number of sponsors who are interested in our TV shows is increasing. With that, I will turn the call over to Scott Seaton for a more detailed review of the financials.

[Scott Seaton:]

Great, thanks, Bill. Total revenue for the first quarter of 2018 was $6 million in line with our guidance and four times the $1.4 million in the first quarter of last year. The increase was primarily driven by the acquisition of Screen Media and the increase in TV production related revenue. On a pro forma basis for Screen Media, the first quarter 2018 revenue for the combined results of Chicken Soup For The Soul Entertainment and Screen Media increased from $3.9 million to $6.0 million that we reported up 54% for the quarter. Even on a pro forma basis there was meaningful year-over-year growth. So breaking this down by our three revenue categories, first online networks which are our A plus and VOD networks, revenue was $662,000 in the first quarter of 2018 compared to $86,000 in the year ago quarter. Please note that an additional approximately $300,000 in revenue now appears in the television and film distribution category because going forward we have decided to limit the online networks category strictly to own and operated networks. Our second category of revenue television and film distribution includes our traditional global licensing of TV series and movies across all media platforms generated $3.2 million for the first quarter of 2018 versus zero in the prior year before we acquired Screen Media. And our third category television is short form video production includes revenue associated with our Chicken Soup For The Soul original TV series generated $2.1 million in the first quarter of 2018 compared to $1.3 million in the year ago quarter. Overtime, we continue to expect our online networks revenue to become the primary driver of our business. Gross profit for the first quarter of 2018 was $2.6 million or 43% of revenue compared to $943,000 or 67% of revenue in the first quarter 2017. The change in a percentage of gross profit results from $1.45 million of non-cash amortization of film library in our traditional distribution business which is quite required by GAAP to be included in the cost of goods sold. Without this non-cash charge, the gross profit would have been $4.1 million or 67% of total revenue which margin is consistent with last year. Operating loss for the first quarter of 2018 was $160,000 compared to an operating profit of $541,000 in the first quarter of 2017. This decrease was a result of the same $1.45 million non-cash amortization of the film library in the cost of revenue. Absent this non-cash charge, operating income would have been $1.3 million as described above. The net loss for the first quarter of 2018 was $562,000 compared to a net loss of $134,000 for the first quarter of 2017, two primary drivers of this change or $45,000 at onetime acquisition related costs and $336,000 provision for income taxes, the vast majority of which are deferred. Adjusted EBITDA for the first quarter of 2018 was $1.7 million compared to $693,000 for the comparable period of 2017. So turning to the balance sheet, we have cash and cash equivalents of $1.8 million of March 31, 2018 compared to $2.2 million as of December 31. A total debt was $1.7 million of $200,000 from $1.5 million at December 31, 2017. I would also note that our accounts receivable are now $8.4 million, a good future source of cash. More importantly, the largest receivable was only 36% of total receivables versus 58% last year and our largest customer accounted for 19% of revenue in the first quarter of 2018 versus 75% in 2017. Both evidence the growing diversification of our business and a larger number of customers. At the time of the fourth quarter earnings conference call, we were in discussions with a lender for $7.5 million of financing. Since that time, we have closed on a Patriot bank financing which consists of a five year $5 million term loan and a three year $2.5 million revolving credit facility that can be used for working capital and general corporate purposes including acquisitions. Approximately $1.7 million of the proceeds were used to repay our previous credit line which was replaced by this new credit facility. Late in the first quarter, our board approved a $5 million share repurchase program, authorizing the repurchase of our common shares in the open market or privately negotiated transaction at management's discretion. Subsequent to the end of the quarter and up through yesterday we have repurchased 36,561 shares at a total cost of $268,647 with an average cost of $7.35 per share. This was funded with cash on hand and the shares are being held in treasury stock. We decided to withdraw from the market for a time when material agreements were side that had not yet been publicly announced. After several weeks, we returned to the market and a continuing to buy. For 2018, we are reiterating our full-year outlook of $36 million in total revenue and $18 million in adjusted EBITDA. As we noted on our previous call, we expect our second quarter results to be down sequentially from the first quarter as it is traditionally our weakest quarter. There will be no productions delivered until Q3 and there is some seasonality in Screen Media's traditional distribution business. More importantly we encourage investors to not to emphasize quarter-to-quarter fluctuations as the current composition of our business is not to do so to linear growth but over the longer term we believe will deliver strong growth increase profitability and achieve a significant shift in the composition of our revenue and earning sources. Bill, back to you.

[William Rouhana:]

Thank you, Scott. As a result of our online networks growing 31% filling our distribution pipeline through Q1 of 2019, de-risking our production business and the strong operating performance through the first part of 2018, were increasingly confident in our ability to achieve our full-year 2018 targets. We already have $2 million in revenue for TV series production we've signed HomeAway for ten half-hours and are in serious discussions with 13 sponsors for additional 50 half-hours across four series. We are also selling our existing immaterial of 111 half-hours to further de-risks the TV production business. All-in-all, we feel like we're in a good place. As our industry continues to change and evolve, we expect there will be additional opportunities to further build the company more quickly through acquisitions. We're constantly looking at potential acquisitions in three categories, content libraries, digital publishers and standalone VOD networks. Acquisitions in these areas help us reduce our costs in marketing and content and give us a competitive advantage in building our VOD business. This concludes our prepared remarks. So I'd like to operator I'd now like to open the call for questions.

[Operator:]

Yes, sir. [Operator Instructions] Our first question is from Daniel Kurnos with The Benchmark Company. Your line is now open.

[Daniel Kurnos:]

Great. Thanks. Good evening. This may come as a surprise Bill but solid quarter so actually not a ton of questions for me here. Pretty well outlined strategy and execution just at this point just kind of taking the boxes on this one you gave the color around the line of sight into the four incremental series I don't know if you can talk any more about timing, just on that or you since you gave sort of the sponsor of color just kind of your thoughts on sort of the environment for picking up sponsors and how on a go-forward basis sort of this process and even starting early sort of gives you confidence in the long term trajectory of that aspect even if it's not really the focal point but sort of a nice backstop in the current in your current business plan?

[William Rouhana:]

Okay. First of all as I stand the, I guess, the best way I could give you a sense of how we're feeling about things or two I would say two anecdotal comments. My first one would be that for the first time in the history of our company although not that long history. We actually have one series where there are two sets of sponsors try both try to be in the show and kind of competing for it. So that's an unusual place to be and that very nice place to be. The second thing is that this morning we started working on 2019. So when I can assure you, we wouldn't be working on 2019 almost we had an extremely high degree of confidence that that we're looking good for 2018. And it really makes sense for us to be starting now for next year so that we really hold this entire process forward and start even to get out across the entire year next year. So those are the two that's kind of two anecdotal ways for you to understand our state of mind, now in terms of timing we are really close on a number of these things but they take some time to get done paperwork and the like and they're always longer than I think they're going to be. But by the next time, we are reporting we should certainly have a complete and clear view of the contracted revenue that will be in place for two 2018 and we should be able to give you a report on that, that is very reassuring and complete.

[Daniel Kurnos:]

Very helpful. And then let me ask you kind of a high level hypothetical question here. There's clearly some flywheel effect between the content that someone else is basically paying you to produce and your ability to translate that in terms of Chicken Soup For The Soul originals and or utilize that programming. Have you considered at all reducing profitability to drive incremental shows and just sort of to develop sort of almost free content to use in the in the OTT network or is it more just about maintain integrity of the business model for the time being maximize that of the cash flow and reinvest that into ancillary more other ways to go after the OTT opportunity?

[William Rouhana:]

We actually had asked me this question last quarter, I don't know if you remember, I read the transcript this morning and so that similar question from you last time. We're going to stick with our program of being always being careful about the way we commit money never taking risk in this category and fundamentally stay focused on content that works for our brand and with our brand. I think the one place that things might change overtime and this would be quite a while I think is at some point we will be able to predict with some clarity that we will get all our money back from using the content on our OTT and subscription networks and when that happens then things will be a little bit will change slightly. Is that help answer your question or would you like to drill in further.

[Daniel Kurnos:]

No, that is a good answer and so that's good helpful clarity on sort of your view of where you said now and where you might go. So let's just change shift gears here a little bit to the OTT side of equation. Can you just talked about how you balance further OTT network adoptions sort of using your live monetizing your library on existing OTT networks versus kind of your stated goal of eventually implementing your own paywalls I don't know if paywalls at 2018 event or not it may depend on content. But once you proliferate content it's sometimes hard to put the genie back in the bottle just love to hear your thoughts on kind of balancing the two since there's probably a pretty big opportunity for you to utilize some existing distribution channels to monetize to further monetize your content.

[William Rouhana:]

And I think this is definitely a why not both situation Dan. These are not mutually exclusive thoughts, I don't think we've been successfully monetizing the content for a while and then putting it and looking at it and dividing it up into kick into categories that we could use to create the critical mass for new OTT networks seems to work, consumers seem to accept that idea I think that's how it Popcornflix ended up with the five different channels that it has today. And as we're looking at the library of stuff that we have we're seeing ways to introduce new channels that will have some meaningful critical mass and I think it will we should expect to be able to start doing that in the second half of this year. All of that is going to be enhanced as we buy other libraries which we will monetize through our traditional distribution business as well as segment and divide it used to add to the critical mass of even more networks. As you know when we do that we are doing something that others have a hard time doing where lowering our content costs to create the new networks and giving ourselves a competitive advantage and in fact that a lot of ways because we can monetize libraries quickly through Screen Media's traditional distribution capability, we're going to own that content essentially for free. And that is one of the two very meaningful and I think sustainable competitive advantages we will have as a result of the way we're organized with TV production traditional distribution and online VOD networks. The second part of your question in terms of the timing of paywall I mean I want to get to that as soon as we can we're pushing pretty hard on that. I think we'll get to that this year without it without a doubt. How far into the year will get before that happens I'm not sure but we're working hard on that and we think it's an important part of our business. A little bit of that depends on some acquisition opportunities that exist. And that are under at least under thought and I want to say they're underway because they're not quite but we're looking at them carefully. And some of them bring with them a faster way to go into that space and to actually have some critical mass in that space others do not. So the timing is a little bit affected by that but generally I think this year as well.

[Daniel Kurnos:]

Great. And then just last one for me, just on your use of cash with the bank loan gives you a nice low cost specially for your size line of credit, I am assuming that general working capital needs for production expenses this sort of going to be a primary draw of that and that you will leave it under on. Is that kind of the right way outside of that is that kind of the right way, to think about it and then sort of fund everything else with cash from operations a less sort of maybe a bigger acquisition comes onto your play?

[William Rouhana:]

Yeah. So that's a great way to think about it. We'll we think about it that way sometimes and sometimes we think about it as a source of acquisition capital. But I do think that the most important thing for you to know is to the extent that we decided, we wanted more capital it would definitely not be in a way that was using our stock at these prices. I mean there's a lot of different ways to obtain capital as you know that do not cause you to current debt or for to dilute your shares. So we have access to capital in a variety of different ways and we will if we can if we want to make a big acquisition or if we see the number of acquisitions that are coming increasing significantly then we'll probably go in that road. The line of credit itself is more than enough for what we need for our current operations given the fact as Scott pointed out we have a nice receivable balance which is group which is actually coming down as we collect the cash which is what's good one and positive cash flow essentially. And as we sign these new contracts with sponsors there that just increases the cash flow as they pass over time and we always have a profit built into that so a lot of that goes to the bottom line.

[Daniel Kurnos:]

All right, well. Thanks for all the color Bill, good job and good luck.

[William Rouhana:]

Thanks, Dan.

[Operator:]

Thank you. Our next question comes from Lisa Thompson with Zacks Investment Research. Your line is now open.

[Lisa Thompson:]

Hi, guys.

[William Rouhana:]

Hi, Lisa.

[Lisa Thompson:]

So got talk about on the OTT business since that seems to be what your future's going to be you've obviously grow with a lot and last time you talked about it, you were talking about things like getting the ad dollar prices up, then higher initial force to sell direct in I was just wondering what you done and how have you gotten so many more users, both on the Web and YouTube?

[William Rouhana:]

Yeah. Okay. Those are great questions. We have actually seen CPMs continue to rise, our ECPMs I guess is what you call in this space, the amount that advertisers pay us. And that is good. At the addition of analytics to the various platforms will help us drive those prices even higher and we're in the process of doing that as we speak. Our salesforce exists and is turning its attention a little bit to the sale of OTT ads because its primary attention has been focused on getting those series commitments in place for this year and will be and once we turn to next year they'll be more of a focus also on the OTT stuff. But see our net users I really I called out the Web growth we said because I found it sort of amazing. We did a new app on the Web for Popcornflix, I guess just around the time that we bought the company it was being done. And it was real it was put up and it ever since that time the growth has been very continuous like about 200,000 or so users a month. I don't know if it'll continue. Of course that's really, really good for us because in that in that part of our business we don't share our ad revenue with anybody the way we do with YouTube and the way we do with ROKU and the other platforms that we're on. So that caught my attention when I started seeing that growth but I don't really know why have you dive after we've been trying to figure it out, it may be as simple as that new, the new app just working well and delivering a quality of service that makes the user experience much better and that's the best we've come up with so far, doesn't seem like magic, it seems like blocking and tackling as far as I can tell and that's just good news. As far as YouTube goes yeah that's it, really amazing growth in that space as well and that's continuing, we're seeing lots of subscriber growth there, we have one of the most robust film oriented YouTube subscriber base channels it's a great spot for us. And we when we look at acquiring content this is an interesting thing. That channels an important factor in our analysis of how quickly we're going to get back to revenue, get back the investment in the new content because that seems to be a very consistent place that we generate a fair amount of cash. And as you know our theory is get these libraries, monetize them as quickly as we can on the platforms and retain them to build out our own team to this is so overtime. So all of those things that you mentioned are really key drivers of that business and are going well.

[Lisa Thompson:]

So but have you done anything in the early like marketing program up there or advertising?

[William Rouhana:]

Yeah, we did. We did we've done some marketing on ROKU that also have we done of course we've done a lot of stuff but putting introducing that including introducing the salesforce and having them begin to sell. That they really hasn't begun in earnest it should be getting earnest soon, it's we've done some marketing that's helped that but I don't think that's really what's been driving these results as much as the new apps coming out coming onboard the user experience being improved. And so I think we have more opportunity to grow CPM further through analytics and then through the salesforce. So I really expect those numbers to continue to rise over the course of the rest of the year as users rise as well. So I think two ways that area will grow.

[Lisa Thompson:]

So do you expect that is to just grow sequentially, linearly each quarter and so you have any seasonality or anything worth that goes on there?

[William Rouhana:]

A little seasonality in Q2 but a little bit in Q3 summertime people watch less stuff, their credit size.

[Lisa Thompson:]

Right.

[William Rouhana:]

But I think it will grow sequentially each quarter for the next for a while that's the one part of our business that I think is probably sequentially is a sequentially growing business, so one of the reasons I like it once we introduce subscribers I think that will enhance that growth subscriptions that will enhance that growth as well. So yes, so that's the part that I do think will you'll see sequential growth.

[Lisa Thompson:]

Oh just one to cover you said that you can add the Chicken Soup content to Popcornflix in the second half of the year. Is that mean everything that you produced beginning years and all that stuff?

[William Rouhana:]

A lot of it, if we don't add something it will be because somebody else paid us enough money for it to cause us not to do it. And I don't mean to be vague but there a few library related conversations with other vendors which would be worth deferring a little while putting it on Popcorn so.

[Lisa Thompson:]

[Indiscernible] just like give it to Netflix for six months and won't take it away and put it back on news? Is that work?

[William Rouhana:]

Work out.

[Lisa Thompson:]

Okay.

[William Rouhana:]

That's exactly right. Yeah, they pay enough, of course we'll do that.

[Lisa Thompson:]

Right. Do you have good feel for if you put something on there, how much it will generate for you internally or is that you just don't know, could it to know?

[William Rouhana:]

Yeah, I think it's too new to know for sure, overtime we're going to definitely be able to see through - just through measurement of exactly how many or current how many as reserve we'll be able to understand exactly what we get when we put something on there but until we have a little more experience with that we're really not going to know. So we're going to have to be careful and we won't do anything that isn't really thought through in that space.

[Lisa Thompson:]

Okay. And then back to production. So since you said that the case in renewal starting role you would book some in Q3, I'm assuming at the other shows well you won't be booking anything until Q4, right or no?

[William Rouhana:]

I think there's a good chance that at least one more show is advanced and not so that we will do some in Q3 as well, and there's possibly two more. But between the two quarters we'll get it all done so.

[Lisa Thompson:]

Got it.

[William Rouhana:]

Yeah it's a little faster than even I expected but still there's work to be done. So I can't totally projected perfectly yet.

[Lisa Thompson:]

And can you give us hints on what they're going to be, what topics or anything, nothing?

[William Rouhana:]

I can't, yes, sorry. I just not, is good - if it's amazing I don't know if you all heard that you probably noticed we said Netflix today right on the call and this is the first time...

[Lisa Thompson:]

Great.

[William Rouhana:]

Wherever you going to use that name. So we've been dying to announce for like two and a half weeks that Being Dad was picked up by Netflix. But Netflix perhaps is press releases about shows they acquired. So we've known but now you know. We're allowed to tell you but we were allowed to put out a press release tell you so it's just that a lot of this stuff as we're going through it know we're dealing with people who have very, a big view of their out importance and they're quite often right about it. And so we're going to defer to them and make sure we do business more than anything before we do anything else. And that Netflix that is a good example of that. We're very excited about the fact that here we are of another network adding validating what we're doing picking up our show it's Fitch [ph] show and it's a pretty high quality data work that's a very important one everybody's excited about it, and there we are we now have one of our Chicken Soup For The Soul originals going out over Netflix so obviously we'll view that.

[Lisa Thompson:]

How the Netflix failed to the give you some clear view of percentage of user, how is our work?

[William Rouhana:]

I give you they pay you a flat face, there's nobody got nobody I know of gets a percentage of Netflix money. All of you could negotiate that for us we'd appreciate it.

[Lisa Thompson:]

I don't know how these things work. So it just pages make up some number and you just go yeah that's well no go away if anything. Is there any [indiscernible].

[William Rouhana:]

If it is negotiation then I have to thank the guys at Screen Media, who actually dis-hated that conversation got it done went through the range average that it takes to actually negotiate these deals which are they take a considerable amount of time and effort they did an awesome job for us and it's just another great example of how we've got more power and the ability to get more things done with as a result of the combination with Screen Media and their capabilities.

[Lisa Thompson:]

And how do you put the rest on that sort of things is like all at once, you take new step?

[William Rouhana:]

Yeah, that kids booked as its deliverable and in this particular case of that show is completed, it was its delivered now so books now.

[Lisa Thompson:]

Okay. So when you build them in the new pay you right away they'll pay you when they're done with it.

[William Rouhana:]

They pay you over, they pay you out of that they pay everything on a payment plan it's like [indiscernible].

[Lisa Thompson:]

All right. And said you book it when you get the check?

[William Rouhana:]

No, we book when we get the contractual amendment when they have what they're obligated to pay us and we deliver.

[Lisa Thompson:]

Okay, alright. Okay, well, I think that's all the questions I have. Yeah.

[William Rouhana:]

Thank you.

[Lisa Thompson:]

Alright dear, thanks.

[William Rouhana:]

Will move on.

[Operator:]

[Operator Instructions] Our next question comes from Evan Greenberg with Legend Capital. Your line is now open. If your line is on mute, please un-mute your line. Evan Greenberg, your line is now open.

[Evan Greenberg:]

Well, Bill. How are you?

[William Rouhana:]

Hi Evan, how are you doing?

[Evan Greenberg:]

Hey, one of the little clarification on the social media OTT and that's an all new revenue channel it sums up about was up a 4% and 2%, 3% and 2% so. I wanted to get an idea that channels profitable now and did that integrate into the acquisition of - the Screen Media [ph] acquisition was just into helped the OTT it all?

[William Rouhana:]

Yes, it's profitable. And it was a key part of what we were looking to get what we got at the Screen Media company it was what as you may recall one of the strategic reasons to do the Screen Media acquisition in addition to the competency and capability of traditional distribution so yes, profitable and it created beautifully.

[Evan Greenberg:]

Okay. And do you feel that that's going to be able to be something that will be continued and are there different sponsors for those channels then there were then there are for the traditional business in Popcornflix?

[William Rouhana:]

Yeah. It's a different kind of purchase so it of a wider group of potential advertisers who are used to buy regular way types of perishables that run on the Popcornflix channels so that is a bigger group. Sponsors who are interested in and aggressively working towards integrating their content which is the kind of sponsor that we have for a TV series, that's a more limited number. But I think over time that number's clearly going to grow because this is a trend that's accelerating as it gets harder and harder for people to find good places to get to their customers and the news and to spend advertising dollars. What we so it is it is a bigger group for sure who'll who do the normal way advertising on Popcorn.

[Evan Greenberg:]

Okay. Thanks a lot.

[William Rouhana:]

You're welcome. Thanks, Evan.

[Operator:]

Thank you. Our next question comes from Steve Shniper with Stonebridge Investment [ph]. Your line is now open.

[Unidentified Analyst:]

Hey, Bill. How are you doing?

[William Rouhana:]

Hi, Steve.

[Unidentified Analyst:]

Couple of questions, you having any progress on broadening out the analyst coverage on stocks?

[William Rouhana:]

It's hard to tell Steve, based on the list of people on the call I would say we got a short.

[Unidentified Analyst:]

Okay. On the last call you had made a comment that you were interested in buying some stock personally in the coming days obviously that can be subject to blackout period since the company was able to buy back stock I guess some of those blackout periods were lifted did something change and your commitment?

[William Rouhana:]

No. I'm still interested in doing it. I will say that as we go through this there's lots of rules and regulations. One of which was that I had information that other people didn't have that the company did through part of this period. We have a blackout exactly this in the company are not allowed to buy after the end of a quarter before the announcement of the quarterly results. So after today, since the first quarter results will be out, sometime next week I should be in a position to buy unless there's with serial information that I'm aware. In order to be careful though, I have to figure out how to buy when the company is not because I'm not allowed to buy ahead of the company. I have to defer that opportunity to the company. We've been trying Steve just so you know for the last few days to buy our allotment there's a limit that we're that the company is allowed to buy each day based on the last four weeks average trading volume. And we've been trying to buy our limit and we haven't been able to do it for the last few days. Even though we've got in and tried to follow the rules, we're not allowed to set new prices we're not allowed to trade in the first half hour in the last half hour and there's a number of rules. So in order for me to buy, we're going to have to succeed in buying the full company allotment first in a day and then I would be able to buy a lot as it's not the last half hour of the day. So I'm going to try but first the company has to has to get its allotment for the site it's not trading because otherwise I'm taking advantage of a company opportunity. As you can tell, I've been learning a lot about this space because I've spent a lot of time with our buyers trying to make sure I don't exactly what I'm allowed to do.

[Unidentified Analyst:]

Have the lawyer given you any thoughts on both the company and yourself when let's say in a week or so I mean you're not in a blackout period of putting in simultaneous 10-b 5 plans that would you share by X shares, X percent goes Bill, X percent goes in the company, nobody taking advantage of anyone you're on the same playing field?

[William Rouhana:]

Yeah I think we want to keep the discussion on the part of the company as to when we can buy.

[Unidentified Analyst:]

Okay.

[William Rouhana:]

And since we've trying to do that, it created that it creates the complexity I just described to you. I do intend to and hope to be able to buy so far I have missed some of the opportunity but certainly not a meaningful portion of it.

[Unidentified Analyst:]

Okay. I'll keep an eye open. I appreciate it.

[William Rouhana:]

You're welcome.

[Operator:]

Thank you. Our last question comes from Michael Martino with Four Points Capital. Your line is now open.

[Michael Martino:]

Hey, guys. How are you?

[William Rouhana:]

Hi, Mike. How are you?

[Michael Martino:]

Not too bad and nice job my I came in a little bit late to the call so my questions were answered on last two people so. Just want to say Hello, great job, keep going and I'm looking forward to see what happens over the next few weeks, months and years?

[William Rouhana:]

Thank you, Mike. We appreciate your support.

[Michael Martino:]

All right, guys. Best of luck, see you.

[William Rouhana:]

Thanks, Mike.

[Michael Martino:]

Thanks, all. Take care, bye.

[William Rouhana:]

Bye. All right. Thank you.

[Operator:]

We have no further -

[William Rouhana:]

Go ahead, operator, sorry.

[Operator:]

We have no further questions at this time. I'd now like to turn the call back over to Bill Rouhana for further remarks.

[William Rouhana:]

Well, all I would say now is thank you all for your support and we're looking forward to updating you periodically on how things are going and talk to you all soon. Thanks very much for joining us today.

[Operator:]

Ladies and gentlemen, thank you for participating in the today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.