Kartoon Studios (NYSE American:TOON) today
provided a business update for the second quarter of 2023.
Andy Heyward, Chairman & CEO of Kartoon Studios, stated,
“While revenues grew for the 6-months ended June 30, 2023, sales
for the three-month period were effected by an industry-wide
slowdown of program orders by broadcasters and streaming networks,
impacting our Mainframe Studios subsidiary. This slowdown was
largely due to the anticipation of and the actual Writers Guild of
America (WGA) and Screen Actors Guild (SAG) strikes in Hollywood,
compounded by the streaming services retooling their models. This
strike-driven ‘reset,’ resulted in reduced spending across the
entire entertainment industry with new content orders coming to a
near halt. Although the strike is ongoing, neither
Kartoon Studios nor its subsidiaries are signatories of WGA or SAG.
As a result, orders have begun to pick back up, and we have a
number of significant series expected to greenlight imminently,
from Mainframe’s diverse base of customers, including Mattel,
Disney, Netflix, Hulu, Spin Master, and others. We expect this
positive trend to continue and believe the revenue decline we
experienced has been timing related. We anticipate the forthcoming
orders will positively impact revenue in future quarters, allowing
the Company to resume its steady and continuing growth
trajectory. Animation is a timeless and reliable performer
that is a staple for broadcasters and streamers alike. Our
subsidiary, Mainframe Studios, has built a well-earned reputation
as one of the premier suppliers to Netflix, Disney+, YouTube, Hulu,
Mattel, Spin Master, and others, which we are very confident will
continue, as they deliver reliable and top-performing brands,
including Barbie, Coco Melon, and the upcoming Unicorn Academy,
among others.”
“In the meantime, our wholly owned distribution platform,
Kartoon Channel!, is performing extremely well by
all metrics, having recorded 82% year-over-year improvement in the
1st half of 2023, as we have seen steady increases in both
subscribers and minutes watched, with noteworthy ‘stickiness’ to
the growing brands of Stan Lee’s Superhero Kindergarten, Rainbow
Rangers, and the recently launched Shaq’s Garage. Kartoon Channel!
viewer rankings continue to outperform all of its major competitors
in the Apple app store, with 4.9 out of 5 stars, besting Disney+,
Netflix Kids, YouTube, and others, as the brand takes root and
grows. As a result, Kartoon Studios is now less dependent on
third-party networks for distributing our content. It is also
important to note that while many of our competitors have been
chasing subscribers over profits, in contrast, we have taken a more
measured approach and our growing streaming business is very near
profitability, as we build out what we are confident will become an
extraordinarily valuable and lasting global asset.”
The Company is highly encouraged by a number of growing projects
underway at Kartoon Studios, including the highly successful recent
launch of Shaq’s Garage, starring Shaquille O’Neal and Rob “Gronk”
Gronkowski. The Company expects to announce a broader distribution
agreement in the near future, following its successful premiere on
Pluto TV, which exceeded expectations. Shaq’s Garage is now
available to Kartoon Channel! audiences across all major platforms,
including Amazon Prime Video, Roku and The Roku Channel, Apple,
Google, Android, Amazon Fire, LG, Samsung, Kartoonchannel.com, and
more. Kartoon Channel! also continues to enter new international
markets, with an established presence in Europe, Latin America, and
Asia. Most recently, the Company announced its expansion into
Malaysia through a partnership with Astro Ceria (Astro Ch 611),
Malaysia’s #1 homegrown kid’s channel.”
The Company commenced the launch of a series of very significant
initiatives as the controlling partner of “Stan Lee Universe, LLC,”
through which it manages the rights of the Stan Lee brand. Towards
this end, the Company recently announced plans for the launch of
STAN LEE COMICS, a line of digital and print comic
books based on never-before-released stories and characters created
by Stan Lee, through a partnership with LEGIBLE INC. (CSE: READ)
(OTCQB: LEBGF) (FSE: D0T) .
The Company also achieved a total and near-instantaneous
sell-through of over 8,000 Stan Lee digital
collectibles through its partnership with digital
leader, VeVe, on July 18. Additionally, the Company
announced the release of the Stan Lee documentary
on Disney+, on the heels of a critically
acclaimed premiere at The Tribeca
Festival. “These recent initiatives are simply
the start to what we believe will be a major and highly successful
campaign to leverage and monetize the Stan Lee brand, including new
content to be announced that will continue to honor the legacy of
one of the most creative forces of our generation,” continued Mr.
Heyward.
“Lastly, we are advancing a number of exciting initiatives
within Frederator Networks, including our recent partnership with
BuzzFeed’s Animation Lab to develop a premium content series for
digital hit Chikn Nuggit based on the original shorts
created by Kyra Kupetsky, which has amassed over 1 billion views to
date on social platforms. We are also launching limited-edition
branded products for our critically acclaimed, hit original Netflix
series, Bee and PuppyCat, through Hot Topic, Crowdmade, Youtooz and
Toynk.”
Mr. Heyward concluded, “Although the markets remain challenging,
we are highly encouraged by the outlook for the business and
anticipate improved revenue in the second half of this year, as
content orders across the Mainframe production business resume. At
the same time, the Company remains laser-focused on managing
expenses. We expect that our recent initiatives to streamline the
organization will be more fully realized in the second half of the
year, as we move toward profitability.” Expense reductions include
personnel costs, production spend, lease, and vendor expenses
The Company reported revenue of $11.0 million and $25.2 million,
for the three and six months ended June 30, 2023, compared to $22.1
million and $23.6 million for the same periods last year. As of
June 30, 2023, Kartoon Studios had current assets of $91.6 million,
working capital of $14.4 million, and total stockholders’ equity of
$87.5 million.
Complete details of the Company’s financial results for the
second quarter ended June 30, 2023, are available in the Company’s
Form 10-Q, has been filed with the Securities & Exchange
Commission and is available on the Company’s website.
About Kartoon Channel!Available everywhere and
anywhere kids are today, Kartoon Studios’ Kartoon Channel! is a
family entertainment destination that delivers 1000s of episodes of
carefully curated and safe family-friendly content. The channel
features original content, including Stan Lee’s Superhero
Kindergarten, starring Arnold Schwarzenegger, Rainbow Rangers, and
Shaq’s Garage, starring Shaquille O’Neal and Rob “Gronk”
Gronkowski.. Kartoon Channel! also delivers animated classics for
little kids, such as Peppa Pig Shorts, Super Simple Songs,
Melodee’s, Finny the Shark, Strawberry Shortcake, as well as
content for bigger kids, like Angry Birds and Yu-Gi-Oh! Kartoon
Channel! also offers STEM-based content through its Kartoon
Classroom, including Baby Genius and more, as well as a Spanish
language service on the platform, KC En Espanol..
Kartoon Channel! is available across multiple platforms,
including iOS, Android Mobile, Web, Amazon Prime Video, Apple TV,
Amazon Fire, Roku and The Roku Channel, Pluto TV, Comcast, Cox,
Dish, Sling TV, Android TV, Tubi, Xumo, Samsung and LG Smart
TVs.
Internationally, Kartoon Channel! is currently available in key
territories around the world, including Africa and Sub-Sahara
Africa (StarTimes), Australia and New Zealand (Samsung TV Plus),
Germany (Waipu), Philippines (Tapp Digital) and Maldives
(Dhiraagu). Kartoon Channel! Branded blocks are also currently
available daily in 69 countries across the Middle East, Africa,
Latin America, and Europe.
About Kartoon Studios Kartoon Studios (NYSE
AMERICAN: TOON) is a global end-to-end creator, producer,
distributor, marketer, and licensor of entertainment brands. The
Company’s IP portfolio includes original animated content,
including the Stan Lee brand, Stan Lee’s Superhero
Kindergarten, starring Arnold Schwarzenegger, on Kartoon
Channel!; Shaq’s Garage, starring Shaquille O’Neal, on Kartoon
Channel!; Rainbow Rangers on Kartoon Channel! and
Netflix; the Netflix Original, Llama Llama, starring Jennifer
Garner, and more.
In 2022, Kartoon Studios acquired Canada’s WOW! Unlimited Media
and made a strategic investment becoming the largest shareholder in
Germany’s Your Family Entertainment AG (FRA:RTV), one of Europe’s
leading distributors and broadcasters of high-quality programs for
children and families.
Toon Media Group, the company’s wholly-owned digital
distribution network, consists of Kartoon Channel!, Kartoon
Channel! Worldwide, Frederator Network, and Ameba. Kartoon Channel!
is a globally distributed entertainment platform with full
penetration of the U.S. television market and international
expansion underway with launches in key markets around the world,
including Germany, Malaysia, India, Africa and Sub-Sahara Africa,
Australia, New Zealand, Philippines and Maldives. Kartoon Channel!
and Ameba are available across multiple platforms,
including iOS, Android Mobile, Web, Amazon Prime Video,
Apple TV, Amazon Fire, Roku, Pluto TV, Comcast, Cox, Dish,
Sling TV, Android TV, Tubi, Xumo,
Samsung and LG Smart TVs. Frederator Network owns
and operates the largest global animation network on YouTube, with
channels featuring over 2000 exclusive creators and influencers,
garnering billions of views annually.
For additional information, please
visit www.kartoonstudios.com
Forward Looking Statements: Certain statements
in this press release constitute "forward-looking statements"
within the meaning of the federal securities laws. Words such as
"may," "might," "will," "should," "believe," "expect,"
"anticipate," "estimate," "continue," "predict," "forecast,"
"project," "plan," "intend" or similar expressions, or statements
regarding intent, belief, or current expectations, are
forward-looking statements. While the Company believes these
forward-looking statements are reasonable, undue reliance should
not be placed on any such forward-looking statements, which are
based on information available to us on the date of this release.
These forward looking statements are based upon current estimates
and assumptions and are subject to various risks and uncertainties,
including without limitation, our ability to generate revenue or
achieve profitability; our ability to obtain additional financing
on acceptable terms, if at all; the potential issuance of a
significant number of shares, which will dilute our equity holders;
fluctuations in the results of our operations from period to
period; general economic and financial conditions; our ability to
anticipate changes in popular culture, media and movies, fashion
and technology; competitive pressure from other distributors of
content and within the retail market; our reliance on and
relationships with third-party production and animation studios;
our ability to market and advertise our products; our reliance on
third-parties to promote our products; our ability to keep pace
with technological advances; our ability to protect our
intellectual property and those other risk factors set forth in the
“Risk Factors” section of the Company’s most recent Annual Report
on Form 10-K and in the Company's subsequent filings with the
Securities and Exchange Commission (the "SEC"). Thus, actual
results could be materially different. The Company expressly
disclaims any obligation to update or alter statements whether as a
result of new information, future events or otherwise, except as
required by law.
MEDIA CONTACT
:pr@gnusbrands.com
INVESTOR RELATIONS CONTACT
:
ir@gnusbrands.com
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