MoviePass to spin out from its parent company amid legal woes
The parent doesn't want to be known exclusively for its movie service.
If you're in any way familiar with Helios and Matheson Analytics (HMNY for short), you probably know it only as the owner of MoviePass -- and the company would unsurprisingly like to change that perception. Its board has greenlit a preliminary plan to spin out a subsidiary, MoviePass Entertainment Holdings, that would take control of the shares of both MoviePass Inc. and HMNY's other movie-related assets. The firm isn't shy about the reasoning: it has "become synonymous" with MoviePass ever since taking control of it at the end of 2017, and it believes its "market perception" might improve by spinning out the subscription movie offering. In other words: MoviePass has overshadowed its other businesses, and it wants to remove that close association.
The deal hinges on approval by the SEC, Delaware law (for a plan to distribute shares) and NASDAQ (for listing the spinoff on the stock market).
The timing is curious. New York's Attorney General launched a fraud probe into HMNY mere days ago to investigate claims of misleading investors -- the close association with MoviePass is creating legal trouble for the company in addition to ongoing financial problems. This isn't going to shake off those issues, but it wouldn't be surprising if HMNY saw this as a good time to distance itself from its best-known brand's tribulations.
