Exhibit 99.1
HOLLYWOOD MEDIA CORP.
HOLLYWOOD MEDIA ANNOUNCES EXCHANGE AGREEMENT
(Boca Raton, FL - August 28, 2002) - Hollywood Media Corp. (Nasdaq: HOLL)
announced today that it is exchanging approximately $49.0 million in non-cash
advertising that it has available for use over the next four years for Viacom's
transfer to Hollywood Media of its entire equity interest in Hollywood Media
plus Viacom's payment of $2.0 million in cash to Hollywood Media. Viacom
currently holds 8,614,687 shares of Hollywood Media common stock, plus warrants
to purchase an additional 262,973 shares of common stock, which together
represent approximately 30.8% of Hollywood Media's shares outstanding. Hollywood
Media will retain $5.0 million in non-cash advertising and promotion across CBS
properties for use through calendar year 2003.
As a result of the exchange, Hollywood Media's shares outstanding will decrease
to approximately 20.4 million shares from approximately 29.0 million shares,
significantly increasing the remaining shareholders' percentage interest in
Hollywood Media. Importantly, this transaction is expected to accelerate the
company's timetable for profitability due to the elimination of approximately
$17.0 million in annual amortization expense. Today's transaction does not
affect either Hollywood Media's or Viacom's relationship with MovieTickets.com,
of which both companies are shareholders.
Mitchell Rubenstein, CEO of Hollywood Media, commented, "This transaction
benefits Hollywood Media in that it greatly accelerates our expected timetable
for profitability, with positive GAAP earnings now expected to be reached during
2003. It also reduces our shares outstanding by approximately 30%, which
significantly increases our remaining shareholders' percentage interest in
Hollywood Media. As we have evolved into a diversified media company with
established brand names and an increasing number of business customers, our
overall need for a high level of consumer advertising has diminished
substantially. Consequently, CBS' advertising platform, which in the early
stages of our development was quite beneficial, is no longer a strategic asset
for us. We are retaining $5 million in non-cash advertising, which we believe
should be more than ample to promote our consumer properties through calendar
year 2003. Given the evolution of our business, we believe the benefits of this
transaction to our shareholders far outweigh the present value of the non-cash
advertising that was available to us over the next four years."
Attached are unaudited pro forma financial statements as of and for the quarter
ended June 30, 2002 assuming that the exchange between Hollywood Media and
Viacom had occurred on January 1, 2002.
Continued . . .
HOLLYWOOD MEDIA ANNOUNCES EXCHANGE AGREEMENT
Page 2
ABOUT HOLLYWOOD MEDIA
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Hollywood Media Corp. is a leading provider of news, information and ticketing
covering the entertainment and media industries. On the strength of its history
in developing comprehensive entertainment industry databases, as well as its
unique content, the Company has launched a network of commercial and consumer
businesses. The Company's commercial units include CinemaSource, EventSource,
AdSource, Baseline/FilmTracker, and Theatre Direct International. These services
supply thousands of media outlets with specific information on entertainment
events such as movies, live theater and concerts. The Company's ticketing units
sell live theater tickets to shows in New York and London to consumers through
its Broadway.com and 1-800-Broadway units, and to businesses through Theatre
Direct International. The Company also owns Hollywood.com and a minority
interest in MovieTickets.com. In addition, the Company also owns and operates
two recently launched digital cable television networks, Totally Broadway TV and
Totally Hollywood TV. The Company's shares are traded on the Nasdaq Stock Market
under the symbol HOLL.
The matters discussed herein that are forward-looking statements are based on
current management expectations that involve risks and uncertainties that may
result in such expectations not being realized. Potential risks and
uncertainties include, but are not limited to, the risks described in Hollywood
Media Corp.'s filings with the Securities and Exchange Commission.
CONTACT
For Hollywood Media:
John Buckley/Kim Holt
Brainerd Communicators, Inc.
212-986-6667
buckley@braincomm.com
Holt@braincomm.com
HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Pro forma *
June 30,
2002
---------------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,163,451
Receivables, net 1,616,324
Inventories, net 6,643,550
Prepaid expenses 1,448,495
Other receivables 656,770
Other current assets 184,993
Deferred advertising - CBS 950,119
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Total current assets 16,663,702
PROPERTY AND EQUIPMENT, net 4,470,986
INVESTMENTS IN AND ADVANCES TO EQUITY METHOD INVESTEES 938,685
NONCURRENT DEFERRED ADVERTISING - CBS -
IDENTIFIABLE INTANGIBLE ASSETS, net 3,077,405
GOODWILL, net 40,775,736
OTHER ASSETS 1,263,303
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TOTAL ASSETS $ 67,189,817
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,885,309
Accrued expenses and other 2,491,591
Notes payable 250,000
Loan from shareholder/officer -
Accrued exit and retail closure costs 130,257
Deferred revenue 8,313,481
Current portion of capital lease obligations 414,180
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Total current liabilities 13,484,818
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CAPITAL LEASE OBLIGATIONS, less current portion 292,899
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DEFERRED REVENUE 604,433
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MINORITY INTEREST 28,278
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OTHER DEFERRED LIABILITY 3,145,211
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CONVERTIBLE DEBENTURES, NET 2,900,691
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 539,127 shares authorized; none outstanding -
Common stock, $.01 par value, 100,000,000 shares authorized;
19,970,364 and 27,971,409 shares issued and outstanding at June 30,2002
and December 31, 2001, respectively 199,704
Deferred compensation (1,034,074)
Additional paid-in capital 276,624,062
Accumulated deficit (229,056,205)
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Total shareholders' equity 46,733,487
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 67,189,817
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* Pro forma. Assumes the Viacom Exchange Transaction occurred on January 1,
2002.
The pro forma above takes into account the one-time non-cash accounting charge
resulting from the Viacom Exchange Transaction.
HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30,
------------------------------------------------
2002 2002
---------------------- -----------------------
Pro forma* Actual
NET REVENUES $ 16,522,685 $ 16,522,685
COST OF REVENUES 11,468,041 11,468,041
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Gross margin 5,054,644 5,054,644
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OPERATING EXPENSES:
General and administrative 1,245,679 1,245,679
Selling and marketing 861,779 861,779
Salaries and benefits 3,489,967 3,489,967
Amortization of CBS advertising ** 238,125 5,025,145
Depreciation and amortization 942,681 942,681
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Total operating expenses 6,778,231 11,565,251
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Operating loss (1,723,587) (6,510,607)
EQUITY IN EARNINGS - INVESTMENTS 14,575 14,575
OTHER:
Interest expense (237,705) (237,705)
Interest income 7,209 7,209
Other, net (18,446) (18,446)
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Loss before minority interest (1,957,954) (6,744,974)
MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (189,411) (189,411)
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Net loss $ (2,147,365) $ (6,934,385)
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Basic and diluted loss per common share $ (0.11) $ (0.25)
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Weighted average common and common equivalent
shares outstanding - basic and diluted 19,662,197 28,276,884
====================== =======================
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* Pro forma. Assumes the Viacom Exchange Transaction occurred on January 1,
2002.
** The pro forma above assumes a straight line amortization of $1.27 million
over a period of 16 months. The $1.27 million reflects the approximate book
value of the $5 million in advertising retained in the Viacom Exchange
Transaction.