Stock Wars: Cinedigm Vs. Curiosity Stream

Benzinga’s weekly Stock Wars matches up two leaders in a major industry sector, with the goal of determining which company is the better investment.

This week, the duel is between two entertainment industry companies: Cinedigm Corp CIDM and Curiosity Stream Inc. CURI.

The Case For Cinedigm: This Los Angeles-headquartered company was launched in 2000 as Access IT Digital Media Inc. with a focus on helping theaters transition to digital projection.

The company went public in 2003 and took the Cinedigm name in 2013 as it expanded into distribution and streaming.

Over the years the company expanded through a series of initiatives including the launch of the Docurama documentary channel, the faith-based Dove Channel, the Chinese-focused Baidu channel and the Bob Ross Channel with its “Joy of Painting” programming. The company also acquired The Film Detective in 2020, which gave it access to classic and under-the-radar works from Hollywood’s golden era that it presents via streaming and sales through DVD and Blu-ray retail channels.

The company’s most notable endeavors during 2021 included the acquisition of the independent film subscription streaming service Fandor, the partnership with filmmaker Robert Rodriguez on the relaunch of El Rey Network as a streaming service, the horror-focused acquisitions of the ScreamBox streaming service and the Bloody Disgusting entertainment news and reviews site, and a debut in the non-fungible token (NFT) market under the Fandor Selects banner.

A not-so-notable happening this year occurred on July 20 when Cinedigm received a notice from Nasdaq indicating that it was no longer in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Rule”) due to the failure to timely file its annual report on Form 10-K for the fiscal year that ended March 31. The company received a follow-up notice on Aug. 27 announcing it regained compliance.

In its most recent earnings report, the full-year, first-quarter data published on Sept. 9, Cinedigm reported revenues of $15 million, up from the $6 million reported one year earlier. The company generated a net income of $5 million, or 3 cents per share versus a net loss of $19.9 million, or -21 cents per share in the prior year’s full-year, first-quarter.

Cinedigm also reported paying down all of its corporate debt after the quarter concluded. Erick Opeka, president and chief strategy officer, pointed to a 181% year-over-year growth in streaming revenues coupled with new channels, including an upcoming Elvis Presley Channel formed in collaboration with Elvis Presley Enterprises and Authentic Brands Group. 

“Despite this quarter being a traditionally slow period for streaming, Cinedigm bucked that trend by delivering the highest streaming minutes on record, record revenue growth, and continued strong subscription results,” Opeka said. “With the addition of new channels, content, and distribution partners, we expect this trend to continue over the next two quarters of the fiscal year, which are the seasonally strongest periods of business.”

Cinedigm opened for trading on Wednesday at $2.58, which is slightly under its 52-week high of $2.81 and far from its 52-week low of 45 cents.

Related Link: The complete Stock Wars series

The Case For Curiosity Stream: This Silver Spring, Maryland-based company was launched in 2015 by John S. Hendricks, founder of Discovery Communcations Inc.’s DISCA Discovery Channel.

The company is focused on the presentation of original documentaries and series, most notably “Stephen Hawking's Favorite Places” and “David Attenborough's Light On Earth.” It also licenses content from international broadcasters including the BBC and Japan’s NHK.

Among its new offerings for 2021 are the series “Rescued Chimpanzees of the Congo with Jane Goodall,” the biomimicry-focused “Evolve” and “Doug to the Rescue,” featuring aerial cinematographer and drone pilot Doug Thron.

Curiosity Stream also released its first feature-length film production, the documentary “Heval” about British-born actor Michael Enright, who gave up his Hollywood career to volunteer for the fight against ISIS in Syria.

Off the screen, this year found the company acquiring One Day University, an adult education program offering lectures from college and university professors, and making an investment in Nebula, the world’s largest creator-owned streaming and technology platform.

In its most recent earnings report, the second-quarter data published on Aug. 10, the company reported revenue of $15.3 million, up from $12 million one year ago. But, it also reported a net loss of $8.3 million and basic earnings per share of -16 cents, compared to a net loss of $4.3 million and a -66 cents basic earnings per share in the previous year.

President and CEO Clint Stinchcomb chose to ignore the quarterly net loss in his earnings statement, focusing instead on how the company “grew direct subscribers 56% year-over-year while retaining a higher percentage of users who signed up in second quarter 2020 than any other streaming service.” He also highlighted a new partnership with Spiegel TV that he predicted would extend the company’s brand through German-speaking Europe.

Curiosity Stream opened for trading on Wednesday at $10.64, closer to its 52-week low of $7.44 than to its 52-week high of $24.

The Verdict: While neither company will be mistaken for Netflix Inc NFLX or Walt Disney Co DIS in terms of revenue and market dominance, both have successfully plumbed niche markets with the constantly expanding streaming service.

The companies also have a strange yin-yang balance with Curiosity Stream limiting itself to non-fiction programming while Cinedigm’s diversity of programming tries to fill every imaginable audience nook — really, the Bob Ross Channel? One thing they have in common is anemic stock performance — both of their shares should be trading a lot higher.

In judging the two companies, Cinedigm appears to be the more ambitious and has a stronger foundation for growth in a sector that is certain to see increased consolidation as the competition for content and audiences grows. Cinedigm’s acquisition of Bloody Disgusting is a shrewd maneuver to expand its media focus in the horror realm, which arguably has the strongest cult audience, while its movement into NFTs shows a willingness to embrace new revenue streams.

It is not difficult to imagine the WallStreetBets crowd latching on to this company.

In this Stock Wars duel, we tip our hat to Curiosity Stream for the quality of its programming and its dedication to the documentary genre, but we believe Cinedigm is the stronger stock pick.

Photo: Jane Russell in "The Outlaw" (1943), a title available from Cinedigm's label The Film Detective.