M+E Connections

FilmOn parent FOTV Media Networks plans to grow organically and through acquisitions, the streaming video company disclosed in its initial public offering filing (IPO) with the SEC on July 5. It’s looking to buy and operate companies that “could augment or complement our current offerings through the addition of content licensing and pay-per-view arrangements, content distribution agreements, platform white label service arrangements and production services,” the company said.

But the company said it has “no commitments or agreements with respect to any such acquisitions, and there can be no assurance that we will complete any acquisitions in the future.”

The company’s “core strategy” is to grow its ad-based, subscription and transactional VOD business domestically and internationally by “expanding our unique and exclusive video content library, broadening our subscriber and user bases, increasing streaming advertising revenue opportunities, enhancing our user interface and extending our direct-to-consumer streaming service continually to the most advanced internet-connected devices,” it said in the filing.

In addition to FilmOn, the company also owns over-the-top services CinemaNow, Hologram and OVGuide. All of its OTT platforms are available through internet-connected devices that include computers, Android and iOS smartphones and tablets, and set-top boxes. FilmOnTV programming also reaches satellite TV audiences via the Dish Network in the U.S., Sky in the U.K. and Freesat throughout Europe.

The company monetizes its platform via ads, premium subscriptions, transactional VOD, and other video and audio offerings including pay-per-view events and licensing of its digital media, it said.

The company also disclosed that its FilmOn app has been preloaded as the default OTT app on more than 19 million PCs and tablets manufactured by Lenovo, according to Lenovo data.

FOTV was started by media entrepreneur Alki David in 2007 and launched its initial streaming video site in the U.K. in 2009, following that with a site in the U.S. in 2010. The company’s headquarters are in Beverly Hills, Calif. and London.

The company already has “the capacity to deliver over 2.5 billion pre-roll and mid-roll video ads and display banners per month to our existing global audience of more than 75 million monthly unique visitors,” about 50% of whom are located in the U.S., it said in the filing. Citing the analysis of third-party measurement tools, including Google’s Interactive Media Ads server technology, it monetizes about 10% of its ad capacity and has “the potential to significantly increase our advertising revenue by expanding our internal advertising and sponsorship teams to deliver more advertisements to our growing global audience,” it said.

The company is looking to raise as much as $34.5 million with the IPO, including 3.75 million shares of common stock and another 562,500 shares of common stock as an option to the IPO’s underwriters, all at $8 a share. The company’s stock would trade on the Nasdaq Capital Market under the ticker symbol “FOTV.”
FOTV plans to use net proceeds from the IPO to “further expand our content offerings to become one of the major OTT platforms in the world,” it said.

But there are a few areas of concern for potential investors. The company’s revenue dipped to $13.1 million in the fiscal year ended Dec. 31 from $13.5 million the prior year, while its loss widened to $8.7 million from $5.3 million, it disclosed in the filing. Other risk factors that it cited included the fact that its independent registered public accounting firm expressed “substantial doubt” about its ability to continue as a going concern.