So, Current TV, the three-year-old cable venture co-founded by Joel Hyatt and Al Gore, has filed to go public, and they are seeking $100 million in public funds going forward.
We have some cautionary notes about this one. First, when evaluating the potential of new media ventures, experience indicates that we should evaluate the multiples conservatively, based on the fundamentals, including profitability.
In the case of Current TV, there are indications for concern. Although it has grown its global audience to 51 million (up from 19 million at launch), the Current market share is infinitesimal by industry standards.
The company, which aims to appeal to an extremely attractive demographic (18-34 year olds), has yet to demonstrate its ability to generate a profit. It reported revenue of $63.8 million in 2007 and losses of $9.9 million; up from $37.9 million in revenue and $7.6 million in 2006.
Current also features a web presence, which is de rigueur for media offerings, of course, but until the company can explain how it will grow its advertising revenue from the current portion of 16% of revenue, it seems likely most knowledgeable investors will pass.
Among its sexier features, Current TV relies on users to create advertising spots and also – in a YouTube sort of twist – posts users’ homemade videos along with its staff reports. Most clips are short and to the point, which optimizes the web experience, as well as exploiting the presumed short attention span of its youthful audience.
Interestingly, among the company’s disclosures is the potentially liability of having Gore as such a visible part of its leadership team. Should Gore leave the venture (say, to accept a post in a new Democratic administration) “…our relationships with key distributors and our business could be adversely affected,” the company’s finding discloses.
Yet another reason to sit this one out, for now, in our view…
No comments:
Post a Comment