The first quarter marked Liberty Digital’s initial entry into cable programming via its interest in Game Show Network, said Lee Masters, President and CEO of Liberty Digital. Game Show Network has passed 34 million subscribers and has terrific growth momentum. We just named Rich Cronin as President and CEO. His expertise in programming, network distribution and branding will be pivotal in enhancing the value of GSN. In addition, the Department of Justice recently approved the merger of DMX with AEI, positioning us to close the transaction this month. We plan to leverage the scale of the combined companies to grow our worldwide digital music delivery business rapidly while taking advantage of cost savings opportunities.
For the quarter ended March 31, 2001, the Company reported revenues from its Music segment, related to the ATT Broadband annual payments and DMX MUSIC, Inc. operations, of $27.7 million, a 30% increase from $21.3 million for the same period in the prior year. The increase in the quarter resulted primarily from continued growth in the commercial music business. To date, the Company’s other business segment, Interactive Media, has not generated any revenue.
During the first quarter, the Company’s adjusted EBITDA (operating income from continuing operations before interest, taxes, depreciation, amortization, stock compensation and other expense, net), increased to $4.4 million from $78,000 during the same period in the prior year. Adjusted for one-time expenses related to executive stock appreciation rights exercises in the prior year, adjusted EBITDA increased $1.1 million or 33% from $3.3 million during the same period in the prior year. The growth in adjusted EBITDA is primarily attributable to the performance of DMX MUSIC, which increased its EBITDA contribution 220% to $1.24 million, as compared to $388,000 for the same period in the prior year.
On a reported basis, the Company’s net loss for the quarter ended March 31, 2001 was $32.7 million as compared to reported net income of $63.8 million for the same period in the prior year. The reported net loss for the period versus reported net income for same period in the prior year is primarily attributable to changes in stock compensation expense (income) accruals as a result of changes in the Company’s stock price during the period. Adjusted for the impact of stock compensation expense (income), the net loss for the quarter ended March 31, 2001 would have been $15.3 million versus a net loss of $16.0 million for the same period in the prior year.
In light of the developmental nature of much of the Company’s business, the impact of changes in the Company’s interests in public and private entities that are not consolidated subsidiaries, and the volatile nature of stock compensation expense accruals, reported earnings may continue to fluctuate widely. As a result, the Company views adjusted EBITDA as a more consistent measure of the operating performance of its businesses.
