MoviePass parent buys classic cinema listings service Moviefone in a move to boost subscriptions
Hello, Mr. Moviefone, and welcome to MoviePass.
MoviePass’ parent company has bought film listings provider Moviefone, in a move meant to accelerate the growth of the popular yet controversial cinema subscription service, the companies said Thursday. Helios bought the 29-year-old Moviefone from Oath Inc., a unit of Verizon Communications.
The mostly stock deal is the first acquisition by MoviePass’ owner, New York-based data firm Helios & Matheson, to bolster the fast-growing service that has been billed as the Netflix of movie theaters. MoviePass lets users of its red debit card see one regularly priced movie a day for $9.95 a month.
Helios & Matheson paid about $8.6 million for Moviefone, including $1 million in cash, according to a regulatory filing. Verizon also received warrants to buy Helios stock at a fixed price of $5.50 a share. Assuming the stock trades higher than that, the deal could be worth up to $23 million.
Helios shares fell 10 cents, or 3%, to $2.88 on Thursday.
MoviePass hopes Moviefone, best known for the booming voice that greeted users of its defunct call-in service, will serve as a way to draw new subscribers and make money from advertising online. Moviefone, once lampooned on “Seinfeld,” now operates a website with showtime information and film trailers.
“We see there’s a lot of room for growth,” said Ted Farnsworth, chairman and chief executive of Helios, in an interview. “We think it’s going to be great from a strategic standpoint.”
The prospect of ultra-cheap movies has attracted 2 million subscribers to MoviePass so far. Helios & Matheson expects to pass 5 million subscribers by the end of this year, and Farnsworth forecasts MoviePass to become profitable by the end of 2018.
MoviePass has drawn sharp criticism from major cinema chain AMC Theatres, which said that its low subscription cost would undercut ticket prices and devalue moviegoing. However, some theaters have shown an interest in working with the service. Last month, MoviePass made a deal with Mark Cuban’s Landmark Theatres to let subscribers reserve seats online.
Oath, which formed under Verizon last year to encompass the mobile phone giant’s digital assets including AOL and Yahoo, will continue to sell ads for Moviefone and will have a small stake in Helios, Farnsworth said. Moviefone was founded in 1989 and acquired by AOL in 1999 for $388 million in stock.
UPDATES:
4:00 p.m.: This article has been updated with the closing share price for Helios & Matheson.
This article was originally published at 11:50 a.m.
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