Founders Al Gore and Joel Hyatt launched Current TV to widespread ridicule in 2005. Why launch an expensive
TV network for low-budget short form video? More than two years later, Gore and Hyatt have an interesting answer: Their network still has a tiny audience. But its distribution agreements with cable and satellite alone are valuable.
The company, which wants to raise $100 million via IPO, has filed a prospectus which shows impressive revenue growth from its cable distributors. Affiliate revenue was $53.8 million in 2007 from the likes of Comcast, Time Warner and DirecTV, up 44% from the year before. But its ability to extract an average $0.11/month per subscriber from cable operators looks mostly like a reflection of Gore’s ability to ink favourable cable deals.
Absent from the prospectus: Any concrete data on who’s watching Current TV. The network is not yet Nielsen rated, meaning that the network attracts so few eyeballs that real ratings would do more harm than good. Not surprisingly, advertising has been minimal, accounting for less than $10 million of its $63.9 million revenue. Last year the company lost $9.8 million.
The opportunity for Gore & Co. is to get an audience, boost distribution beyond the current 41 million homes in the U.S., and start bringing in more ad dollars, which generally eclipse distribution fees for healthy cable networks. An Internet win would be nice, too. Current’s Web site bombed in its first iteration but re-launched at current.com this fall to some journalistic fanfare.
Current wants to use the IPO proceeds to pay off its $37 million debt, due this spring; expand the network internationally; and to fund possible “acquisitions of complimentary businesses.” Along the way it had better acquire some viewers; without them they company’s only value will be its distribution agreements.
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