Helios and Matheson Analytics Inc. (HMNY), parent company of MoviePass, has announced plans to spin off the struggling subscription service into its own company.
“Since we acquired control of MoviePass in December 2017, HMNY largely has become synonymous with MoviePass in the public’s eye, leading us to believe that our shareholders and the market perception of HMNY might benefit from separating our movie-related assets from the rest of our company,” said HMNY Chairman and Chief Executive Officer in a statement.
In order to achieve the separation, HMNY is looking to create MoviePass Entertainment Holdings as a discrete, publicly traded company that would be made up of shares from the MoviePass subscription service, MoviePass Films (the company’s production arm), MoviePass Ventures (set up to co-acquire and distribute completed films), and Moviefone, which MoviePass acquired from Verizon back in April.
“We believe this new vertically integrated entertainment ecosystem, if achieved, would provide a sharper market focus, and that the combination of these four business lines under the MoviePass Entertainment umbrella would produce substantial synergies that we believe will generate value for our shareholders, subscribers, and business partners,” continued Farnsworth.
Whether HMNY’s bid to spin off their MoviePass holdings will succeed depends on Delaware law, as the move is subject to approval from state regulators. The company’s financial troubles are well-documented; MoviePass temporarily shut down back in July after running out of money, and in August their quarterly earnings report revealed a Q2 operating loss of $126.6 million. That same month, they announced that they would limit both new and existing users to just three movies a month.
HMNY is currently in hot water with New York’s attorney general’s office, which is currently investigating the company for fraud after they allegedly misled investors.
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