OCH Q2 revenue down by 12 percent

Temecula :Outdoor Channel Holdings, Inc. (Nasdaq: OUTD) has reported its financial results for the three months ended June 30, 2010.

Total revenues amounted to $16.8 million for the 2010 second quarter, a decrease of 12% compared with $19.2 million in the corresponding period a year ago. For the first six months of 2010, total revenues were $34.7 million, a decrease of 4% compared with $36.2 million in the corresponding period a year ago.

Advertising revenue for the 2010 second quarter increased 2% percent to $7.3 million from $7.1 million in the prior-year period on higher short-form and online advertising revenues, net of lower time-buy revenues. Subscriber fees totaled $4.5 million for the second quarter of 2010, a 16% decrease compared to subscriber fees of $5.3 million in the prior-year period due to changes in our reserves for potential most-favored nations (“MFN”) liabilities with our distributors, and production services revenue totaled $5.1 million during the 2010 second quarter, a decrease of 25% compared to $6.8 million in the prior-year period due primarily to the continued reorganization of our Production Services business unit and resulting reduced low-margin and non-renewed projects.

“Our second quarter results reflect the ongoing advertising market recovery as we once again experienced growth in our short-form and online advertising sales,” said Roger Werner, President & Chief Executive Officer. “We continue to offer unique opportunities to our advertising partners and have further strengthened our multi-platform category leadership position. While our reported subscriber revenue was adversely impacted because of changes in our reserves for potential MFN liabilities, we made strategic progress through a packaging upgrade in Houston and the further roll-out of our high-definition offering and we anticipate further gains in the subscribers in the back half of this year. Also, as announced in June, we implemented further measures aimed at improving the profitability of our Production Services business. Looking ahead, we are focused on executing our growth strategy and capitalizing on our many strengths as we enter our seasonally stronger half of the year.”

Costs of services for the 2010 second quarter were $8.0 million, a 21% decrease compared to $10.1 million for the corresponding prior year period, primarily on reduced costs from lower activity and reduced staffing at our Production Services unit. SG&A, advertising and depreciation expenses were essentially unchanged for the quarter compared to the second quarter of 2009.

Our operating loss for the 2010 second quarter was $1.7 million compared to $1.3 million in the second quarter of 2009. The increase in our operating loss was primarily due to our decreased subscriber revenue, net of reduced losses at our Production Services unit and increased advertising revenues.

Our net loss for the 2010 second quarter was $1.2 million, or ($0.05) per diluted share, compared to a net loss of $937,000, or ($0.04) per diluted share, in the prior-year period. For the 2010 six-month period, our net loss was $2.7 million, or ($0.11) per diluted share, compared to a net loss of $2.3 million, or ($0.09) for the prior-year period.

Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, was $17,000 in the 2010 second quarter, compared to $1.0 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $829,000 for the 2010 second quarter compared to $2.7 million in the prior-year period.

For the six-month period, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled ($687,000) compared to $1.1 million in the prior-year period. For the legacy Outdoor Channel business, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and acquisition and integration costs, totaled $1.8 million for the 2010 six-month period compared to $4.2 million in the prior-year period.

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