FAB Universal Continues to Build Momentum

Zacks Small Cap Research

By Ken Nagy, CFA

On September 17, 2013, FAB Universal (NYSE MKT:FU), the distributor of digital entertainment, reported it secured music distribution rights from the top 3 mobile phone service providers in China.

The agreements to distribute its copyright-protected digital music content through China Unicom, China Mobile and China Telecom expands FAB’s distribution platform and increases the quantity and variety of its content.

Additionally, by allowing FAB to add a mobile phone channel to its distribution platform, the agreements further leverage the company’s exclusive and acquired copy-right protected digital music content and also reaches new customers for its catalog of FAB-branded digital media and entertainment content.

FAB has a strong foothold in the explosive growth of the entertainment industry in China, which is being propelled by the increasing spending power of a rising middle class and the government stated plans for the industry to become a major economic growth engine over the next few years.

With its strong brand recognition and distribution base, FAB is perfectly situated to capitalize on the industry’s rapid growth, by expanding its distribution network, driving more content through the network, and extending its market leadership and brand strength, all the while positioning the company to take advantage of the increasing rate of internet penetration and expanding internet infrastructure in China.

FAB Universal Corporation is a distributor of global digital media distribution.

The company serves its customers through three segments including: Retail, Wholesale and Kiosk, Licensing/Podcasting.

FAB’s retail division operate 2 flagship stores in which each has over 20,000 square feet and carries the largest selection of copyright protected audio and video products in China, including CDs, VCDs, DVDs, blu-rays, books, magazines and portable electronic devices.

With over 100 suppliers and 80 wholesale customers, the company’s wholesale distribution segment provides audio-video products to large retail stores, FAB license stores and small wholesale/resellers.

FAB’s high-growth Kiosk/licensing/ podcasting segment is delivered through a variety of channels including high-tech, intelligent Media Kiosks, podcast directories, and mobile app market places.

The recent jump in FAB’s year over year second quarter revenues was led by continued gains from FAB’s fast-growing, high-margin digital segment, which includes its Intelligent Media Kiosk business.

Based on proprietary national intellectual property rights, the Company’s Media Kiosks, are ATM style terminals where consumers can download copyrighted music, video games, ringtones, digital books and movies directly to their cell phones, memory sticks or other mobile storage devices.

FAB’s podcasting hosting/distribution or Libsyn subsidiary is the industry’s largest network of independent and professional digital media publishers utilizing RSS (podcasting) as a distribution method for episodic, audio and video shows.

Throughout 2012, Libsyn had approximately 50 million total audience members and 1.6 billion download requests for podcast episodes.

A copy of the latest research report can be downloaded here >> 
 FAB Universal Report

Please visit 
SCR.Zacks.com for additional information on our research and coverage universe, and Subscribe to receive our articles and reports emailed directly to you each morning.

View Comments (3)