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Cinema Movies

Movie Rental Industry

Key Redbox releases this year (with domestic box office total in millions from ww.boxofficemojo.com):

o 11/19: The Conjuring ($138) Planes ($90), The Internship ($45), Paranoia ($7), The To-Do List ($3)

o 11/26: Red 2 ($53), R.I.P.D. ($34)

Key Redbox releases last year (with domestic box office total in millions from www.boxofficemojo.com):

o 11/20: The Expendables 2 ($85), Abraham Lincoln: Vampire Hunter ($38), Seeking a Friend for the End of the World ($7)

o 11/27: Brave ($234), Lawless ($37), Step Up Revolution ($35)

Over the next two weeks, there are three rental releases that grossed over $50 million in domestic box office compared to three last year. DVD rentals for the upcoming two-week period should be roughly flat with the same period last year. Outerwall (NASDAQ:OUTR) management appears committed to a shareholder-friendly approach.

We believe guidance is reasonable, EPS and adjusted EBITDA guidance suggest expenses are under control, and the company’s new capital structure and share repurchase strategy reflects management’s commitment to harvesting all available cash and returning a significant amount to shareholders. We cannot say enough about management’s responsiveness to the concerns of the company’s shareholders. In October, an activist shareholder filed a list of concerns, and Outerwall management addressed virtually all in its earnings conference call. In particular, we are impressed that the company is willing to add a layer of debt and run its business to generate cash, which it intends to return to its shareholders.

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