RENTRAK CORPORATION
One Airport Center
7700 N. E. Ambassador Place
Portland, Oregon 97220
August 11, 2000
From Rentrak's Board of Directors
To Our Shareowners:
You have an important decision to make at the upcoming Annual Meeting of
Shareowners on September 19, 2000. Who do you want to run your company? Let us
discuss the allegations and the facts and update you on our plan to maximize
shareowner value.
The Allegations
A dissident group led by Paul Rosenbaum has launched a costly and self-serving
proxy fight in an effort to gain control of YOUR company. This so-called
"Committee for the Achievement of Rentrak Excellence" accuses your board and
management of not making shareowners a priority, of trying to entrench ourselves
by "raising barriers to shareowner democracy" and of not having the strategic
vision required to maximize shareowner value.
CARE? OR CARELESS?
What are the Dissident Group's True Interests?
The dissident group is calling itself "CARE." But we believe that their history
and self-serving motives indicate that they care more about their interests and
care LESS about yours. Let's look at their history.
o In October 1999 Mr. Rosenbaum approached Rentrak about delivering Cyberian
Outpost as a client of Rentrak's e-fulfillment subsidiary, 3PF.COM. In
return for this promise to deliver, Mr. Rosenbaum demanded that he
personally receive 1 percent of the 3PF stock. The Company never entered
into an agreement with Mr. Rosenbaum. Could this have been a precipitating
factor in Mr. Rosenbaum's decision to launch this proxy fight?
o In May 2000 Mr. Rosenbaum approached Rentrak about buying his shares at a
price more than double what he would have been able to sell at on the open
market. In June 2000 an attorney representing certain CARELESS members
contacted Rentrak seeking to sell their shares under similar onerous
terms. In July 2000 another CARELESS member contacted Rentrak to discuss
selling his shares under similar terms. Is the group motivated by
long-term shareowner value or are they only looking out for themselves?
o If CARELESS wins the proxy contest, they intend to present a bill to
Rentrak shareowners for the group's costs of litigation and the proxy
solicitation. Do you want to pay those costs?
o Consider that your existing board of directors and affiliates own nearly
13 times as much stock in Rentrak as the CARELESS nominees. Who do you
think will better represent your interests?
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Your vote is extremely important to ensure that Rentrak maintains the
experienced and independent board and management already in place.
PLEASE SIGN AND RETURN THE WHITE PROXY CARD TODAY.
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<PAGE>
The CARELESS Nominees Lack Experience in the Video and Fulfillment Industry
According to their proxy statement, not one of their nominees has any experience
in the video or fulfillment industry. Not one of their nominees is Chairman,
President, CEO or an officer of any public company. One of their nominees is a
retired politician and one is public policy consultant. Two of their nominees
are involved in businesses that involve industrial and household chemicals. What
relevant experience do they bring to a publicly traded video and fulfillment
business?
o For example, look at the lawsuit that Rentrak recently settled with
Hollywood Video. Rentrak and its board have had a business relationship
with Hollywood Video since 1992. In 1999 Mr. Rosenbaum urged the immediate
settlement of the Hollywood Video litigation at millions of dollars less
than what Rentrak actually achieved.
o In July 2000 CARELESS sued Culture Convenience Club (CCC) and Rentrak
Japan. We believe the decision to initiate this suit exemplifies their
careless approach for several reasons.
-- CCC is Rentrak Japan's #1 customer.
-- Rentrak Japan is in the final stages of preparing for an initial
public offering in Japan. This lawsuit could interfere with that
process, which would ultimately have negative implications for
Rentrak as a 9 percent owner of Rentrak Japan.
-- Over the years, Rentrak has received nearly $14 million of royalties
from Rentrak Japan.
o The CARELESS group has not articulated a strategic platform for Rentrak's
long-term growth. In July 2000 one of their board nominees said in a sworn
deposition that he didn't know what PPT meant or 3PF was!
Your Board has Extensive Experience in the Video Industry
Let's look briefly at some of the credentials of your board of directors:
o Rentrak board members have a combined 43 years of managing public
companies as Chairmen, Presidents or CEOs. Our directors have a combined
110 years of managing video businesses, other than Rentrak.
o Our directors currently serve as Chairmen or CEOs of seven companies.
o Four of our directors currently or in the past have served as Chairmen or
CEOs of public companies.
o All but two of our directors have managed businesses in the video
industry.
o Chairman and CEO, Ron Berger, originated the unique concept of PPT and has
served on the Board of Directors of the Video Software Dealers'
Association.
o One of our directors founded CCC, which is the third largest video
retailer in the world.
o One of our directors created and served as founding President of The
Disney Channel and Walt Disney Home Video. Another of our directors was
President of Twentieth Century Fox Telecommunications, Chairman of Fox
Video and CBS/Fox Video and a director of Twentieth Century Fox Film
Corporation.
<PAGE>
Our #1 Priority is You, Our Shareowners
Look at our track record and our focus on long-term growth. At Rentrak, the
senior management team and board continually search for new and innovative ideas
to deliver value to shareholders.
Our 3PF subsidiary is a recent example of our initiatives. Basically, we took a
single common function of distribution and fulfillment of our own products and
turned it into a business that is expected to add significant shareowner value.
In fiscal 2000 3PF revenues increased 11 percent to $11.6 million. Although not
profitable during the year, we made substantial investments to triple the
available warehouse capacity and developed technology and software
infrastructure to support current and expected rapid future growth.
Another example is the Retailer Loan/Investment Program that we initiated to
encourage growth of certain video retailers and to increase Rentrak's revenues
from those retailers. Through this program, Rentrak obtained long-term contracts
with retailers and increased revenue and earnings. Although there have been
significant write-offs under this program, last fiscal year 19 percent of our
PPT revenues were generated by retailers originally or currently in the program
or their successors.
Our Board Interests are Aligned with our Shareowners
Our board has declassified itself and all members will stand for re-election at
this year's annual meeting. Our directors' interests are aligned with the
interests of all shareowners. Again, consider that your existing board of
directors and affiliates own nearly 13 times as much Rentrak stock as the
CARELESS nominees.
Our Strategic Plan Delivers Shareowner Value
Rentrak's management has a proven track record of success and a strategic plan
for growth.
o In the past four full fiscal years alone Rentrak has generated $22,939,034
in pre-tax income. It has done so despite operating in a rapidly shifting,
maturing business; viewed by many - including Mr. Rosenbaum himself - as
obsolete.
o Your management has achieved these results by growing our retailer
customer base, by adding the product of MGM, Dreamworks and Paramount to
that of FOX, Universal and Disney, and by expanding our business by
processing Blockbuster's data for several studios.
o Concurrent with this performance, Rentrak's management and board of
directors have developed three new businesses:
-- BlowOut Video has grown from three to seven stores, and is today
solidly profitable.
-- Website Services has launched a website, formovies.com, which now
offers consumers information on videos at over 10,000 of the
continent's roughly 30,000 stores. No other website comes close.
Unlike most internet-related businesses, which continue to suffer
significant losses, formovies.com is already profitable!
-- 3PF.COM has grown over the four years from an in-house distribution
department with 35 employees, 32,000 square feet of space, 2 outside
clients and $5.2 million in annual revenues to a business which now
has 195 employees, 320,000 square feet, more than 20 outside clients
and $12.8 million in revenues over the past four quarters.
<PAGE>
Your board is focused on long term value. Its plans for the future include
expanding 3PF by providing it with the capital, a seasoned board and management
team, and the creative vision it requires to grow and maximize its value as an
independent entity. Our plans include the expansion of PPT internationally and
domestically while reducing costs to maximize cash generation. Finally, we have
begun a program to monetize certain non-core assets including BlowOut Video and
Website Services.
During the past year, Rentrak actively pursued an initial public offering of
3PF, but due to the collapse of the IPO market in the Spring and other factors,
we decided that the timing was not optimal. In May 2000 we announced the
formation of a separate, independent board of directors for 3PF. With the new
board of directors and our executive management team in place, 3PF is well
positioned to pursue its business strategy. We are actively exploring financing
alternatives and organizational structures, including a potential spin-off to
shareholders, with a goal of maximizing the value of 3PF as an independent
entity.
Because video distribution is undergoing a period of rapid transformation
worldwide, we retained The S. Roberts Company in April to assist us in the
exploration of possible transactions. These may include the sale of part or all
of our PPT video distribution and information processing business to one or more
of the major motion picture studios. The S. Roberts Company is controlled by
Steve Roberts, a member of your board of directors with extensive industry
experience. These efforts are ongoing.
As your board of directors, we are confident in Rentrak's future and strongly
believe we are creating a solid platform to deliver significantly enhanced
shareholder value.
We urge you to give our materials your careful attention. If you received any
materials from the CARELESS group, we strongly recommend that you DO NOT sign
any blue proxy card from them.
Please sign and return the WHITE proxy card.
We are committed to increasing shareholder value. Thank you for your continued
loyalty and support.
Sincerely yours,
RENTRAK CORPORATION BOARD OF DIRECTORS
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If you have any questions, or require assistance in voting your proxy, please
call our proxy solicitor, Corporate Investor Communications, Inc., toll-free at
1-(888) 560-9906.
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Shareholders may obtain information regarding the participants involved in the
Company's proxy solicitation, including a description of their direct and
indirect interests, by security holdings or otherwise, in the Company's Proxy
Statement filed with the Securities and Exchange Commission. Shareholders should
read the Company's Proxy Statement because it contains important information.
The Company's Proxy Statement and related documents and information is available
for free at the Commission's World Wide Web site at http://www.sec.gov. The
Company's definitive Proxy Statement will be available for free from the
Company.
