IPO: A Current Plan
Gore’s Network Eyes A $100M Offer
by Mike Farrell -- Multichannel News, 2/3/2008 7:00:00 PM
In this story:
DEBT TO DYLAN
BIG SHAREHOLDERS
WEAK IPO MARKET
Current Media, the San Francisco-based, independent youth-oriented cable network founded by former Vice President Al Gore and entrepreneur Joel Hyatt, is testing the waters of the public markets, filing documents Monday with the Securities and Exchange Commission for a $100 million initial public offering of stock.
Current did not reveal how much stock it would offer, at what price or the timing of the IPO. That should be disclosed in later filings.
The company said it plans to list its stock on the NASDAQ exchange under the symbol “CRTM.” JP Morgan, Pacific Crest Securities and Lehman Bros. are serving as underwriters for the IPO.
| IPO Track Record | |||
|---|---|---|---|
| Current Media is testing the IPO waters, filing documents last week for a $100 million offering. Some recent media issues and how they have fared: | |||
| Company | IPO Date | IPO Price | Stock Price (1/30/08) |
| SOURCE: NASDAQ.com, Yahoo Finance |
|||
| Entropic | 12/7/07 | $6.00 | $5.98 |
| Limelight | 6/7/07 | $15.00 | $6.98 |
| BigBand | 3/14/07 | $13.00 | $5.20 |
| Clearwire | 3/7/07 | $25.00 | $12.49 |
DEBT TO DYLAN
Current said in the filing that it would like to complete the IPO before May, but that may be because the company wants to pay off a $30 million debt due to Dylan Holdings, a subsidiary of NBC Universal, on May 4. Current said in the SEC filing that the proceeds from the offering would be used to pay off $36.5 million in debt — including about $6.5 million in promissory notes — with the rest to be used for general corporate purposes, including acquisitions.
Current was founded by Gore and Hyatt after the two purchased Newsworld International from Vivendi Universal Entertainment in 2004 for $70.9 million. VUE was purchased by NBC Universal in 2004 for $14 billion.
According to the prospectus, it launched its cable network Current TV in August 2005 to 19 million households. It’s currently available in about 51 million homes in the U.S., Canada, the United Kingdom and Ireland.
Current also expects to launch in Italy in the spring, over the Sky Italia satellite-TV network.
Currently, the network has carriage deals with DirecTV, Dish Network, Comcast, Time Warner Cable and AT&T.
Current — which launched its current.com Web site last year — has differentiated itself by relying heavily on content generated by viewers in an effort to attract a young demographic. In its prospectus, Current said that nearly one-third of its programming is viewer-created. Network fare includes news shows, information and lifestyle shows aimed at its target 18-34 year-old audience.
Current also packages its programming in “pods,” or two-to-10-minute segments, a departure from standard network programming blocks of 30 minutes to one hour. Current said in its prospectus that it spent about $31.4 million on programming and production in 2007, up from about $22 million in 2006.
Current, which also operates a Web site — current.com — had revenue of $63.8 million in 2007, according to the prospectus, up from $37.9 million in 2006. The company reported a net loss of $9.9 million in 2007.
Gore, who founded Current in 2002 with Hyatt, received $1.05 million in salary and bonuses in 2007. Hyatt received $1.04 million in compensation and president of programming David Neuman received $1.03 million in compensation in 2007.
BIG SHAREHOLDERS
Gore also is one of Current’s largest shareholders, with about 3.7 million shares of stock. Other big shareholders include Yucaipa Corporate Initiatives Fund (a unit of Yucaipa Cos., run by Ron Burkle, also a Current director), DirecTV and Comcast.
According to the prospectus, Comcast received shares of Current as part of its carriage deal with the network and those shares are subject to forfeiture in 2011 if Current achieves certain subscriber levels. While the number of shares was not revealed, Yucaipa, DirecTV and Comcast were listed as owners of at least 5% of Current stock in the prospectus.
Current has chosen a curious time to test the stock market — the Dow Jones Industrial Average has plunged by more than 800 points since the beginning of the year in the wake of the subprime mortgage crisis and fears of a coming recession.
WEAK IPO MARKET
The IPO market in general has been anemic over the past few years, but it has been especially weak in the media sector.
About four companies in the past year — mainly technology-oriented firms — have launched IPOs and each one has failed to sustain their initial offering price.
Only Entropic Communications, a developer of home-networking semiconductor technologies which went public on Dec. 7 at $6 per share, has been able to trade close to its IPO price — it closed at $5.98 on Jan. 30.
Other issues have done worse, such as Limelight Networks ($15 IPO price, $6.98 on Jan. 30), BigBand Networks ($13 IPO price, $5.20 on Jan. 30) and Clearwire ($25 IPO price, $12.49 on Jan. 30).
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