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JUST two days after its first AGM, Burleigh-based SurfStitch (ASX:SRF) has made good on its aggressive acquisition strategy, saying it is set to pay $15 million for Garage Entertainment and its associated company TMG.
The online retailer announced it will pay cash and shares to buy the extreme sport video producer, which has a library of more than 3000 titles which it distributes through its own video-on-demand platform and dedicated TV channels.
Garage Entertainment, founded by Nick Cook and Mick Lawrence in 2009, is behind a number of notable titles including the controversial Bra Boys documentary - a segment about Maroubra's notorious surf gang.
The acquisition adds to SurfStitch's growing network which includes surf content network Magicseaweed and online publisher Stab magazine, which it purchased for close to $14 million and 4.8 million shares.
SurfStitch says the acquisitions will help to create a full media and content spectrum to support the company's strategy of becoming a destination site for customers to connect with everything related to action sports.
It says Garage Entertainment will accelerate and increase the group's exposure in the content product and digital video-on-demand world.
"Our demographic spends 1.2 hours daily on online TV, second only to social networking," says SurfStitch CEO Justin Cameron.
"Statistics show that the mass market engages through TV, digital subscription and apps. And we are not alone in recognising this trend.
"Netflix is a significant contributor to network audience projection decline. Amazon Prime has made significant investment in original content to bolster the popularity of Amazon Prime membership.
"We have a head start in the arena today we have significant short-form content capabilities, a community of engaged users and marry commerce alongside it. Garage Production and Entertainment allows us to fulfil the mass appeal of subscription video-on-demand."
SurfStitch reaffirmed its FY16 guidance of $15-18 million in EBITDA - double last financial year's result.
The company's shares are sitting around $1.99, above the December 2014 listing price of $1.
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