Helios And Matheson Rises After Announcing MovieFone Acquisition

Shares of Helios and Matheson Analytics (HMNY) are rising after the company announced the acquisition of MovieFone from Verizon’s (VZ) Oath in order to build out its movie theater subscription service MoviePass.

MOVIEFONE TAKEOVER: On Thursday, Helios and Matheson and majority-owned subsidiary MoviePass announced that the company has acquired Moviefone, an entertainment service owned by Verizon’s Oath, which provides over six million monthly unique visitors access to movie listings and information across the entertainment ecosystem. The deal is the second acquisition in the consumer entertainment industry by Helios and Matheson, which is looking to build out its content marketing strategy and advertising revenue platform for MoviePass. Oath, the umbrella company for Verizon divisions like AOL and Yahoo and is headed by former AOL CEO Tim Armstrong, will continue to sell Moviefone’s digital ad inventory and has taken an ownership stake in MoviePass through equity in Helios and Matheson. The purchase price for the transaction includes $1M in cash, the issuance of 2,550,154 shares of common Helios and Matheson stock and the issuance of warrants to purchase 2,550,154 shares of common stock at an exercise price of $5.50 per share.

EXECUTIVE COMMENTARY: “This natural alignment between MoviePass and Moviefone will help us grow our subscriber base significantly and expand our marketing and advertising platform for our studio and brand partners,” MoviePass CEO Mitch Lowe said. “Moviefone has been a go-to resource for entertainment enthusiasts for years, and we’re excited to bolster its presence and bring this iconic platform into the entertainment ecosystem of the future.”

WHAT’S NOTABLE: In March, Helios and Matheson announced a plan to spin off wholly-owned subsidiary Zone Technologies in order to create two public companies that will focus on their own operational plans. Following the spin-off, Helios and Matheson said it expects Zone to become an independent publicly traded company with a listing on Nasdaq. Upon completion of the transaction, Helios and Matheson said it plans to continue focusing on MoviePass operations and expects the management team to remain in place. Meanwhile, Zone plans to focus on its RedZone Map product, as well as growth and acquisitions and both companies expect to retain New York City headquarters. Additionally in March, MoviePass, which surpassed two million subscribers in February, recently announced that for a limited time it would offer its annual subscription to new subscribers for $6.95 per month. The service, which was introduced at $15 per month last year and lowered to $9.95 per month in August, gives subscribers the ability to attend up to one new movie per day and works at over 91% of theaters in America.