Saturday, August 19, 2006

Audio Book Publishers Report: MediaBay, Audible

MediaBay reported their financial results this week. MediaBay has over 75,000 hours of audio content distributed through our consumer brands,, AudioBookClub, Radio Spirits and Radio Classics. Content is distributed on the internet via digital download subscription services, websites, mail order, retailers, and even via a cell phone (ring tones) offering. (What is that? Just a few words per ring? TO BE!, TO BE!). MediaBay are also MSN Music’s exclusive provider of spoken word products for downloading via the Web, and have a growing list of digital distribution partners that include Real Networks, Loudeye, and XM and Sirius Satellite Radio. MediaBay has been in business for 12 years.

MediaBay has had some reported financial difficulties recently and unfortunately, their financial results are not great for the first half 2006. Net sales were $2.6 million for the six months ended June 30, 2006, down from $5.6 million for the six months ended June 30, 2005. The company made a strategic decision to migrate thier business model to one based on digital distribution through partnerships with MSN, Yahoo, AOL, etc. so their content is available via these music services. As a result revenue comparisons year on year are misleading. Net loss applicable to common stockholders for the six months ended June 30, 2006 was $15.7 million, or $1.49 per diluted common share, compared to a net loss of $22.2 million, or $4.36 per diluted common share for the six months ended June 30, 2005. With allowence for extraordinary items their net income was virtually the same as last year which will not be enough to raise their market cap. This is important because it is currently at $3mm and NASDAQ issued them a warning in June that they needed to raise their value to over $5mm. The press release doesn't mention this or what their plans are and they have until September 25th to comply. The company retained a Banker in February for the generic 'review of strategic options'. Since the press release on the results was sparse I am thinking something is brewing.

Some of MediaBay's digital content partners include BBC, Blackstone, CBS Radio, Harper Collins, Hay House, Oasis, Penguin Audio, Random House, Simon & Schuster, Sound Room, and Zondervan.

Audible Inc. reported their six month numbers in late July which were better with revenues for the six months up over $10mm versus the same period last year. Net income however was significantly lower than the same period last year due to higher royalty payments. Audible has benefited significantly from its relationship with Apple and the IPOD. It should be interesting to see if there is any negative impact to the Audible business model if the new IPOD is equiped with with an e-book reader as most people expect. Audible may be a legitimate channel for Apple to work with in suppling them with ebook content from publishers. Apple wouldn't have to deal with the toublesome publishers directly. Audible's stock price is slightly higher than their 12mth low but half their 12 mth high. Other stats are in the press release.

Here is a little more on Audio books from a prior post.

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