Educational entertainment leader,
LeapFrog Enterprises Inc.
), recently penned a new multi-year agreement with
Lions Gate Entertainment Corp.
) to develop, produce and distribute four brand new animated DVD
and digital movies. The movies, featuring updated characters, new
adventures and new subject learning syllabus, are slated to be
released in early 2014.
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Lions Gate is a film studio engaged in the production and
distribution of motion pictures for theater and straight-to-video
release and also television programming for cable and broadcast
networks. The company has a strong track record of producing
small and mid-budget specialty films.
The partnership is not new to LeapFrog. The company joined forces
with Lions Gate way back in 2008. Since then, the companies have
released 12 animated DVDs that featured well-liked LeapFrog
characters such as Scout & Friends, Leap, Lily and Tad. The
new treaty portrays their commitment to children for entertaining
yet educational movies which are apt for their age.
With the signing of the new agreement, LeapFrog has extended the
distribution rights of Lions Gate on its movie catalog. Lions
Gate now possesses the worldwide distribution rights to both
physical and digital content from the new movies. In addition,
LeapFrog has preserved its rights to distribute the new content
on its own proprietary digital platforms.
As a matter of fact, the new agreement immediately follows
LeapFrog's recent announcement of two new programs - Magnificent
Museum of Opposite Words, and Adventures in Shapeville Park. Both
are due to be launched in January 2013.
We remain impressed with LeapFrog's core strategy to boost its
educational entertainment platform. Earlier this month the
company added Barbie to its award winning learning platform
through the collaboration with the world's largest toy company -
). Till date, the company's strong home entertainment section has
sold roughly nine million units.
Emeryville, California-based LeapFrog recently reported earnings
of 60 cents per share in the third quarter of 2012, which breezed
past the Zacks Consensus Estimate of 41 cents. With this, the
company achieved the record of nine consecutive quarters of
higher earnings. At the end of the quarter, LeapFrog's products
were available in over 45 countries and used by teachers in
around 100,000 U.S. classrooms.
We are maintaining our long-term Outperform recommendation on
LeapFrog. It carries a short term Zacks #2 Rank (Buy).