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RLJ Entertainment Inc (NASDAQ:RLJE) has announced that AMC Networks Inc. would be investing $65 million in the company. The investment is part of a partnership agreement between the two entities, which would result in an outreach to two different audience niches, through online video services. The audiences include African-American viewers and viewers of British programming. It should be noted here that RLJE is also backed by the founder of Black Entertainment Television.

Under the agreement, AMC would have the option to acquire 50.1% of the common stock of RLJE. The company noted that it will use the AMC’s loans to finances its senior credit facility and improve working capital. Moreover, RLJE stated that it aims to improve its operational flexibility by funding revised covenants. In addition to this, RLJ hopes to improve the development and distribution of television content and films.

AMC operates Acorn TV and Urban Movie Channel, which tends to attract British program viewers and African-Americans, respectively. However, it has still agreed to provide resources and look for ways the two companies can work together. AMC’s CEO, Josh Sapan, stated in an interview that the asset base is complementary, hinting that the management sees potential in RLJE. Mr. Sapan also stated that his company was looking to expand their business, to provide entertainment over the internet, as pay-TV is observing a decline in the US.

It should be noted here that analysts at TheStreet rate RLJE as a sell, based on the historical performance of the stock itself and its feeble growth EPS. The CEO of AMC noted that online streaming was an attractive technology and his company would like to obtain a deeper market share in this niche. He also claimed that RLJE was a leader in this market.

RLJ Entertainment Inc (NASDAQ:RLJE) gained 14% in terms of its share value, during the October 17 trading session, on a trade volume of 5.49 million, to close at a share price of $2.28.

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