Skeptics who think the home videocassette-rental business is facing tough times may want to see what's showing at Rentrak: continued sales growth. Revenues at the company, which leases (rather than buys) films from studios, then leases them to some 2,000 stores, have climbed from $11 million in fiscal 1989 to $47.4 million in the year ended Mar. 31. In 1993, Rentrak sees sales of $60 million.

That may prove low if Rentrak's deal with Capital Cities/ABC comes to fruition soon. Cap Cities is testing a proprietary "data capture and communications" system to keep track of film inventory and rentals at bigger outlets, including supermarkets and department stores. The Cap Cities system will improve Rentrak's current leasing operations, which enable stores to have more films than they could if they had to buy the films at $45 to $50 each. With Rentrak, they pay an $8 fee per video, of which $6 goes to the studio.

What investors may find especially interesting is Rentrak's growing link with Cap Cities, which will initially buy 2% of Rentrak's stock at 7 a share. Rentrak will also issue warrants for Cap Cities to buy another 2% at 9 1/2 apiece. Rentrak will eventually be obligated to issue warrants, at prevailing market prices, for Cap Cities to buy as much 40% of Rentrak's stock.

After hitting 10 a share last year, Rentrak has fallen to 6. The company lost $232,000, or 3 cents a share, in fiscal 1992. But Chairman Ron Berger expects Rentrak to be back in the black in fiscal 1993. One analyst predicts fiscal 1993 net of 20 cents to 25 cents a share and thinks the stock is worth at least 10.

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