New Frontier Media, a Boulder distributor of electronic adult entertainment, said Tuesday it agreed to purchase Santa Monica, Calif.-based MRG Entertainment for a total of $20 million in cash and stock.
The deal is expected to close by the end of the week. MRG produces adult content for premium pay-TV channels such as Showtime and Cinemax.
Under terms of the deal, New Frontier Media will pay $15 million in cash and $5 million in stock for the privately held company.
“It really broadens our scope in the field of erotic and mainstream entertainment,” said New Frontier Media president Ken Boenish. “To date, New Frontier Media is not a maker of content of any kind.”
New Frontier Media distributes pay-per-view and video-on- demand adult content under the brand “Ten,” short for The Erotic Network. The company’s networks reach more than 90 million cable- and satellite-TV subscribers in the U.S.
New Frontier Media also reported fourth-quarter net income of $2.8 million, or 12 cents a share, compared with $2.9 million, or 13 cents a share, for the comparable quarter in 2004. Revenue for the quarter was down 4 percent at $11.5 million, compared with $12 million for the same quarter a year ago.
Playboy Enterprises Inc.’s entry into the video-on-demand marketplace dampened New Frontier’s revenue, Boenish said.
“We were early into the VOD market,” he said. “And Playboy, being our largest competitor, was a bit late, but it impacted revenue when it came in.”
Staff writer Kimberly S. Johnson can be reached at 303-820-1088 or kjohnson@denverpost.com.
