Fifteen years after beloved PBS painter Bob Ross — famous for painting those “happy little trees” — passed away, investors may have him to thank for a wonderful profit-making opportunity. Cinedigm (NASDAQ:CIDM) is in the spotlight today as CIDM stock is popping in part because of Ross’s influence.
Los Angeles-based Cinedigm is an independent entertainment studio that does film, television and digital production. It’s also known for its over-the-top (OTT) channels, which refers to streaming media channels that circumvent cable television providers and networks.
It’s in the OTT arena that Cinedigm is making its mark right now, and that’s where Bob Ross comes in.
Those Happy Little Trees
At the beginning of June, CIDM stock was stumbling at less than $1 per share and in danger of being delisted from the Nasdaq Composite. It was a hard fall for a company that saw its stock over $100 per share in 2005 and 2006. But as the entertainment industry evolved, Cinedigm was left behind.
A June 3 announcement marked the beginning of a resurgence. Cinedigm announced a partnership with Bob Ross Inc to launch an OTT channel that features the long-running PBS series The Joy of Painting.
The channel is on Samsung devices and then expanded to Roku (NASDAQ:ROKU) and is being launched on video-on-demand platforms around the world.
Ross’s show began airing in 1983 on public television stations and he was known for painting relaxing settings and his soothing, calm voice. He used a wet-on-wet painting technique so viewers didn’t have to wait for layers to dry. That allowed his work to develop in real time, as Ross narrated by describing his “happy little trees” and clouds.
Even after his death, Ross remains extremely popular, with more than 5.5 million followers on social media and 5.6 million unique views on Twitch. More than 2.5 million people watched an hour-long YouTube special about Ross.
What It Means for CIDM Stock
One channel, even one as popular as Bob Ross, can’t save a company. But it’s a start — and Cinedigm is moving quickly to expand its customer base.
An announcement that Cinedigm reached an agreement with Vewd, the world’s largest smart TV solutions provider, to offer Cinedigm’s streaming channels on Vewd devices pushed CIDM stock to a 52-week high.
The deal makes the company’s channels available on an installed based of 300 million smart TVs and connected devices manufactured by Sony (NYSE:SNE), Samsung, Skyworth, Hisense, Philips and TiVo (NASDAQ:TIVO).
Vewd will also put Cinedigm’s channels, which include the Bob Ross Channel, Docurama, Dove Channel and Comedy Dynamics, on more than 40 million new devices that are shipped annually.
Cinedigm President Erick Opeka talked up the new deal: “With global ad-supported OTT revenues surging to $53 billion globally over the next five years, our focus is on rapidly expanding our distribution footprint to maximize growth … Vewd helps us dramatically expand the viewer base for our rapidly growing portfolio of OTT networks, which we expect to double over the next 18 months.”
This week, Cinedigm announced another new channel, MyTime Movie Network, which it says will offer curated content that caters to women. The channel will include comedies, musicals, dramas and a projected library of 50 original movies.
Another partnership with SPI International has Cinedigm creating two new channels — FashionBox HD for fashion-related content, and Gametoon, which is for esports tournaments and gaming-related content.
The growth of OTT channels is a great opportunity for Cinedigm investors and they are absolutely essential if the company is to achieve its growth potential. In its most recent earnings report, Cinedigm noted that OTT/streaming revenues were up 95% on a year-over-year basis.
For the quarter, the company earned $11.5 million in revenues, resulting in a net loss of $2.3 million. However, that was a 33% improvement on a year-over-year basis, and the company says it managed to reduce its debt by $12.5 million.
The company also noted a $68 million investment in Starrise Media Holdings, a Chinese entertainment company that trades in Hong Kong. Cinedigm purchased 162 million shares of the company and plans to close on the remainder of its investment, which includes 29% of Starrise’s outstanding shares.
Cinedigm hopes the investment will allow it to become the first studio integrated in the U.S. and China markets, allowing it to continue its OTT streaming efforts.
The Bottom Line for CIDM Stock
Investing in Cinedigm is a bet that streaming video and the cord-cutting phenomenon will continue, and that the company can find niche audiences with its specialty OTT offerings to bring in enough advertisers to turn a profit.
When that happens, investors will be seeing a happy little profit.
CIDM stock has a “B” rating my Portfolio Grader right now, where it’s listed as a buy.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.