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Blockbuster deal! MoviePass buys Moviefone from Verizon

Hello! And welcome to Movie...Pass?MoviePass, the ticket subscription company, is buying Moviefone, the 29-yea...

Posted: Apr 5, 2018 10:53 PM
Updated: Apr 5, 2018 10:53 PM

Hello! And welcome to Movie...Pass?

MoviePass, the ticket subscription company, is buying Moviefone, the 29-year old movie directory service.

A lot has changed since Moviefone first started. It's hard to imagine now, but people used to call a number for movie times. Moviefone became so popular that its famous "Welcome to Moviefone" greeting was parodied in a famous "Seinfeld" episode.

Moviefone still has a website and app, but it retired the 777-FILM phone service in 2014. (Seinfeld's Kramer must be pleased. "Why don't you just tell me the name of the movie you've selected?")

AOL, now part of Verizon, bought Moviefone in 1999 for $388 million. But MoviePass isn't spending nearly as much to get Moviefone. MoviePass majority owner Helios and Matheson Analytics will pay Verizon only about $23 million for Moviefone -- $1 million in cash and a mix of HMNY stock and warrants worth about $22 million, according to a Securities and Exchange filing Thursday.

So why does MoviePass want Moviefone? MoviePass CEO Mitch Lowe told CNNMoney it wanted access to Moviefone's film and TV show content.

"Our subscribers want to connect with Hollywood and hear more about what's going on in the film industry," Lowe said. "They'd like to have MoviePass recommend movies to them and Moviefone is iconic."

Lowe, a co-founder of Netflix and former president of DVD rental kiosk service Redbox, added that he hopes the acquisition will be a "great funnel to attract new members" to MoviePass, which currently has more than 2 million subscribers.

Related: Can MoviePass be the Netflix of theaters?

Ted Farnsworth, CEO of Helios and Matheson Analytics, added that the marriage of MoviePass and Moviefone will hopefully lead to more advertising revenue.

"MoviePass is growing at warp speed. Put it and Moviefone together and it gives us more advertising opportunities," Farnsworth said in an interview with CNNMoney. "This is a great strategic move for us."

MoviePass arguably needs more ad sales to convince skeptical investors that its business model of buying tickets from theaters and then offering them to subscribers at a discount through monthly and annual subscription plans is viable for the long haul. MoviePass lets people see a movie a day for $7.95 a month -- it recently cut its price from $9.95.

Shares of Helio and Matheson Analytics have plunged nearly 55% this year. Investors are worried that MoviePass won't be profitable anytime soon.

Part of the problem? We live in an era of so-called peak TV. Netflix, other streaming services and big cable TV networks are churning out more and more quality shows that eat into the time people have to go to movies.

Investors also worry that the big chains that MoviePass currently buys tickets from -- AMC, Regal and Cinemark -- may eventually look to cut out MoviePass and launch their own subscription services or other lower-priced deals.

Regal, which is now owned by UK-based Cineworld, has experimented with charging more for tickets during peak movie times and less at times when attendance tends to be lighter. Think of it as Uber-style surge pricing, but for movies.

And Cinemark unveiled Movie Club, a monthly plan that lets people buy a movie ticket a month for a discounted price of $8.99, last year.

Related: MoviePass CEO says unlimited movie service is leading to huge growth

That deal obviously isn't as good as the one a day plan offered by MoviePass. But Cinemark will also allow Movie Club members to roll over unused tickets every month, bring friends at the lower price and offers bargains on concession stand items.

Lowe isn't too concerned about competition though. He said he's convinced that MoviePass will continue to work closely with the big chains -- even if Wall Street is nervous.

"We have to prove we are a driving force in getting more people into theaters. We have to try and put our money where our mouth is," he said.

Indiana Coronavirus Cases

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Cases: 708779

Reported Deaths: 13226
CountyCasesDeaths
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Lake51761946
Allen39224672
Hamilton34549405
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Elkhart27356432
Vanderburgh22081394
Tippecanoe21853212
Porter17935299
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Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1054807

Reported Deaths: 18991
CountyCasesDeaths
Franklin1225191356
Cuyahoga1074592069
Hamilton783261168
Montgomery50176996
Summit45557909
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Butler37768570
Stark31513895
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Mahoning20946583
Lake20067362
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Delaware18085130
Licking16149207
Fairfield15757197
Trumbull15627460
Medina14922259
Greene14706236
Clark13660293
Wood12806185
Portage12431196
Allen11352229
Richland11067198
Miami10548214
Muskingum8717127
Wayne8594209
Columbiana8569226
Pickaway8439121
Marion8390135
Tuscarawas8387240
Erie7600154
Hancock6730123
Ross6707146
Geauga6553146
Ashtabula6530165
Scioto6295101
Belmont5634158
Union558447
Lawrence5470102
Jefferson5343147
Huron5314114
Darke5273121
Sandusky5189120
Seneca5139120
Washington5087107
Athens503856
Auglaize476284
Mercer471984
Shelby456590
Knox4397108
Madison423959
Putnam421799
Ashland413488
Fulton410567
Defiance404296
Crawford3883101
Brown386955
Logan374476
Preble371098
Clinton362160
Ottawa357978
Highland347459
Williams328674
Champaign321557
Jackson308551
Guernsey307549
Perry290549
Fayette278048
Morrow275939
Hardin264764
Henry264366
Coshocton259857
Holmes253499
Van Wert239262
Pike233831
Gallia233446
Adams229152
Wyandot227553
Hocking209759
Carroll189447
Paulding168838
Meigs141738
Noble132937
Monroe128941
Morgan106823
Harrison105636
Vinton81614
Unassigned02
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