Disc Makers Spinning Off Big Losses

Canada’s Cinram only the latest DVD maker to report huge quarterly pain

Last Updated: March 3, 2010 @ 3:24 PM

While digital distribution continues to take its toll on the bottom lines of movie studios, record labels and videogame makers, the companies that burn DVDs and CDs are in some pretty bad pain of their own.

This was in evidence Wednesday, when Canadian DVD and CD replication giant Cinram reported a $20.9 million loss for the fourth quarter. The company reported a loss of $31.5 million for all of 2009.

Revenue in the fourth quarter — the high-volume part of the year for disc makers — was down 9 percent to $556.8 million, with all part of the business declining.

Despite a 53 percent uptick in revenue from Blu-ray disc replication, overall home entertainment revenue for Cinram declined 2 percent in the fourth quarter, with the company burning 426.7 million DVDs during the period compared to 435 million in the fourth quarter of 2008.

And at least for Cinram, things would seem to be getting much worse, with its biggest client, Warner Home Video — which accounts for 32 percent of its sales — set to move its business to Technicolor this summer.

Despite all these challenges, however, Cinram CEO Dave Brown told investors there is still enough life left in physical media for the company to go on for at least a decade.

“Physical media is still being embraced by the consumer markets, and its migration to digital download and other non-physical strategies have all been far slower than many previously forecasted,” he said.