Inside Wall Street
LIGHTS! CAMERA! RENTRAK!
Movie rental is alive and well. Just ask Ron Berger, chairman of Rentrak
(RENT), which distributes videocassettes, primarily to home-video stores. He
has just bought 30,000 shares of Rentrak stock in the open market at 6 a
share, boosting his stake to nearly 5%.
Obviously, Berger believes it's worth more. He agrees with the analysts
who value Rentrak at more than 10. A promising source of growth, he says, is
a link with Wal-Mart Stores, in effect since early this year. The retailer
plans to open 110 "supercenters"--combined grocery and general-merchandise
stores--where Rentrak will rent or sell cassettes.
Money manager David Klaskin, president of Oak Ridge Investments, which
manages some $130 million, says Rentrak will be a substantial money maker,
based on plans to widen its reach. The core business alone--called
Pay-Per-Transaction--is worth 6 a share, he figures. Under this PPT system,
Rentrak supplies videos to retailers and shares the revenue each time a
cassette is rented. PPT lets the retailer obtain videos for less than if
bought from conventional distributors. One big moviemaker whose films are
distributed by Rentrak's PPT system is Disney, which has warrants for a 20%
stake in Rentrak.
Rentrak's other ventures, says Klaskin, are worth 4 to 5 a share,
including the movie business that will operate at Wal-Mart and Pro Image, a
retail apparel chain. Klaskin thinks Berger will take Pro Image public, which
he says is worth $10 million to $15 million. Rentrak also owns a 25% stake in
Rentrak Japan, which rents and sells video movies.BY GENE G. MARCIAL