Moviefone Won’t Help MoviePass

By Douglas A. McIntyre Updated Jan 12, 1:43AM EST · Published Apr 6, 6:25AM EDT

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Moviefone Won’t Help MoviePass — © Thinkstock

MoviePass majority owner Helios and Matheson Analytics Inc. (NASDAQ: HMNY) bought old-time movie website Moviefone. The company’s stock promptly sold off. Investors understand that the ownership of a service Helios and Matheson Analytics paid almost nothing for will not help its subscription business model.

Moviefone was owned by Oath, the web portal company that operates AOL and Yahoo. Moviefone is one of the oldest properties on the web, founded in 1989 before broadband service was introduced to the public. It has an extremely modest 6 million unique monthly visitors, hardly enough to increase the MoviePass subscription count by much.

Helios and Matheson Analytics shares fell over 3% on the day of the announcement to $2.88, just above its 52-week low of $2.20, and well down from its 52-week high of $38.86. The company’s market cap is only $124 million.

The price paid for Moviefone was only $1 million in cash, and:

… 2,550,154 shares of common stock of HMNY (the “Closing Shares”), and the issuance of warrants (the “Closing Warrants”) to purchase 2,550,154 shares of common stock of HMNY at an exercise price of $5.50 per share …

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So, the exercise price is about double the current value of the stock.

Whether or not MoviePass owns Moviefone, the service had to drop its subscription price to $6.95 from $9.95. Why would the service drop the price unless it had trouble adding new members? Logically, there is no other reason.

Commenting on the deal, Ted Farnsworth, Helios and Matheson Analytics board chair and chief executive, said:

HMNY’s vision is to have MoviePass support the entire movie theater industry ecosystem– from distribution to exhibition and now, content. Above all, we believe the Moviefone acquisition will serve as another valuable source of revenue for HMNY and MoviePass.

Based on the low price of the transaction, Moviefone was bringing Oath little money. That makes it hard to believe the service “will serve as another valuable source of revenue for HMNY and MoviePass.”

MoviePass continues to grasp at straws as it works feverishly to find a successful model.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.