Roadshow Films has entrenched its position as Australia’s leading theatrical distributor as its market share in the year to June 30 hit 28.4%, up 2.9% on the prior year.

Despite that Village Roadshow’s film distribution unit’s pre-tax earnings fell by nearly 10% to $41.7 million on revenues of $345.2 million.

VRL attributed that result to underperforming film and TV content, particularly Transcendence, on which it incurred a $2 million write-off on the minimum guarantee.

“Distribution was a disappointment, missing our EBITDA forecast by 4%,” Ord Minnett analyst Nick McGarrigle said in a briefing note to clients today.

“We expect distribution results to continue trending down slowly over time, but note that digital opportunities provide some upside risk to that assumption.”

Roadshow’s top titles for the year included The Hunger Games: Catching Fire, The Wolf of Wall Street, The LEGO Movie, The Hobbit: The Desolation of Smaug, American Hustle and Gravity.

Roadshow Entertainment continued as the No. 1 independent retail distributor of DVDs in Australia with a market share of 14.5%. Sales of TV DVDs were driven by library titles and content from output deals with the BBC, ABC, ITV and Shine.

The market for physical retail sales remains healthy with estimated annual revenues of $1 billion, while the digital market grew by 22% at retail and 25% at the trade level, mostly from the film rental business. Roadshow has a 16% share of the digital film market.

The company predicts fiscal 2015 will be “the year” of subscription VoD with the anticipated launch of several services including Netflix in Oz/NZ.

Roadshow said it’s well placed to capitalise on this emerging market, holding non-exclusive SVoD rights in three of its four TV output deals.

The distributor renewed its output deals with the Nine Network and New Zealand’s Sky for four years and its output arrangement with Lionsgate for three years.

The Australia cinema exhibition division's pre-tax earnings were $57.1 million, up from $53.7 million, despite a marginal decrease in ticket sales to 24.8 million.

"We remain positive on cinema into FY15 and FY16 given the strong release schedule, but our forecasts may be under some downside risk given the final margin experience of FY14," McGarrigle said.


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