Robert “Bob” Johnson made Black Entertainment Television a name brand in African-American households with shows such as “Bobby Jones Gospel” and “Video Soul.”
Now the black-media entrepreneur has a broader goal: becoming a major player in the new world of online content distribution. And one of his major vehicles for getting there? Struggling Image Entertainment Inc.
Johnson announced plans last week to acquire the Chatsworth independent distributor as a first step toward acquiring a vast reserve of content to license to online streaming services, which American viewers are finally taking to in big numbers.
“An explosion of distribution outlets will become available,” Johnson said in an interview with the Business Journal. “Digital will become faster, more flexible and mobile. Those things have to be fed by content.”
In 2010, Johnson formed RLJ Acquisition Inc. and last year raised $144 million in an initial public offering with the intent to buy one or more entertainment businesses. The Bethesda, Md., firm is a special purpose acquisition company, in essence a corporate shell that raises investor funds to acquire companies.
The proceeds of last year’s stock sale will go toward not only the acquisition of Image, but Silver Spring, Md., home entertainment distributor Acorn Media Group, which was also announced last week. Both need to be approved by RLJ investors later this quarter.
Acorn and Image will operate jointly under the name RLJ Entertainment Inc., and the company is expected to trade on the Nasdaq. Image Chief Executive Ted Green is staying on to run the combined companies, from Chatsworth and suburban Washington, D.C.
Holders of Image common stock will receive 2.1 million shares of RLJ Entertainment common stock. Image preferred stockholders will receive $22.6 million in cash and notes. In all, Image’s current investors will own about 11 percent of the combined company, which doesn’t have a market valuation yet.
Image’s business has long been buying rights from independent movie producers, contracting for the production of discs, and marketing and wholesaling those discs to brick-and-mortar and online retailers.
The company owns exclusive rights to 3,700 DVD titles, including the Criterion Collection, which includes classics such as “Godzilla” and “Wizard of Oz.” Newer titles are acquired from film festivals and markets, and the company is known for its genre-specific collections, such as horror and African-American titles.
Acorn’s niche, meanwhile, is acquiring home entertainment rights to British TV and movies, such as comedy series “Doc Martin.” The company was also more highly valued than Image, with Acorn shareholders receiving $105 million, 1 million shares of common stock of RLJ Entertainment and warrants to purchase another 1 million shares of stock.
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