RLJ Entertainment, Inc. (NASDAQ: RLJE), today announced financial results for the quarter ended June 30, 2017.

Second Quarter 2017 Highlights:

• Digital Channels paying subscribers increased 63% from the second quarter of 2016 to over 550,000.

• The Digital Channels segment contribution income from continuing operations, after direct costs and expenses increased 76.5% to $2.2 million from $1.3 million in second quarter 2016.

• Total net revenue increased 19.3% year-over-year to $18.8 million, driven largely by a 72.1% increase in Digital Channel revenue. Revenue for the Wholesale Distribution segment grew 2.8%, driven by stronger licensing deals and distribution sales.

• Gross margin increased 21.5 percentage points to 51.7% from the second quarter of 2016 driven by (i) rapid growth in our higher-margin Digital Channels segment and (ii) a greater number of higher-margin licensing deals in the Wholesale Distribution segment.
• Net loss was $1.1 million compared to $0.2 million in the second quarter of 2016, as the improved operating performance of the business was more than offset by a $6.5 million increase in the fair value of stock warrants.

• Adjusted EBITDA was $3.9 million, an improvement of $4.3 million from the second quarter of 2016. The improvement is primarily attributable to the continued growth of the higher-margin Digital Channels segment as well as stronger performance in the Wholesale Distribution segment.

• On June 20, 2017, the Company broadened its strategic partnership with AMC Networks, Inc. ("AMC") to accelerate its content investments and other strategic initiatives, expanding the AMC Tranche A Term Loan from $13.0 million to $23.0 million and converting interest payments entirely into common stock at a fixed conversion price of $3.00 per share on both the Tranche A Term Loan and the Tranche B Term Loan. AMC also exercised $5.0 million of its Tranche A Warrants into RLJE common stock at $3.00 per common share. Additionally, dividend payments on the preferred stock held by Robert L. Johnson were eliminated through 100% conversion of his preferred stock into common stock at $3.00 per share.

Robert L. Johnson, Chairman of RLJ Entertainment, stated, "RLJ Entertainment's continued subscriber growth across platforms is firmly establishing Acorn TV and UMC as compelling OTT brands with strong consumer draws. Standalone channels targeting specific audiences represent an immediate and long-term growth opportunity. The company's plans to increase investments in compelling content, enhanced engagement and marketing, and widening geographic footprints are timely and designed to generate positive returns for investors."

Miguel Penella, Chief Executive Officer of RLJ Entertainment, stated, "We delivered strong second quarter results through continued focused execution on all fronts, driving both Digital Channel subscriber growth and Wholesale Distribution revenue growth while significantly improving our operating efficiency. Our increased investments in carefully curated, high-value programming, intensified marketing and broadened distribution to support the growth of our Digital Channels are paying off. As we enter the second half of the year, we are poised for a very strong 2017 and expect to build additional momentum with a robust line-up of original and exclusive Digital Channel content, very strong pipelines in our IP licensing and wholesale business units, and incremental investments in our future growth. As we advance our digital strategy, we are increasingly confident in our ability to achieve our objective of one million Acorn TV and UMC combined subscribers within the next 18 to 24 months."

Nazir Rostom, Chief Financial Officer of RLJ Entertainment, commented, "Continued gains in Digital Channel subscribers and a return to growth in Wholesale Distribution resulted in expanded gross margins within both segments as well as significantly improved EBITDA of $3.9 million. We signed a few new Wholesale Distribution licensing deals in Q2 that helped gross margin to exceed normal levels, and we expect a return to normal levels (approximately 40%) for the second half of the year. For the full year, we are increasing investments in marketing and programming and also expect to deliver Adjusted EBITDA growth versus last year."

About RLJ Entertainment, Inc. RLJ Entertainment, Inc. (NASDAQ: RLJE) is a premium digital channel company serving distinct audiences primarily through its popular OTT branded channels, Acorn TV (British TV) and UMC (Urban Movie Channel), which have rapidly grown through development, acquisition, and distribution of its exclusive rights to a large library of international and British dramas, independent feature films and urban content. RLJE's titles are also distributed in multiple formats including broadcast and pay television, theatrical and non-theatrical, DVD, Blu-ray, and a variety of digital distribution models (including EST, VOD, SVOD and AVOD) in North America, the United Kingdom, and Australia. Additionally, through Acorn Media Enterprises, its UK development arm, RLJE co-produces and develops new programs and owns 64% of Agatha Christie Limited. For more information, please visit RLJEntertainment.com, Acorn.tv, and UMC.tv.