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Current to go Public

current tv ipoAl Gore may not have created the Internet but he is Chairman and one of the co-founders of Current Media, parent company of Current TV. Now, he and his colleagues are getting ready to take it public.

Current TV was founded in 2002 and launched in 2005 as a 24/7 cable and satellite TV network focused on news and information. The channel and its affiliated website differ from traditional programming in that they rely heavily on user/audience participation.  Relying on what they’ve named “Viewer Created Content” (VC2), approximately a third of Current TV’s on air broadcasts comes from non-fiction submissions.  It’s news from pop culture to politics from young adults, in their own perspective.

According to the preliminary S-1 registration filed with the SEC, the company is looking to raise up to $100m in the IPO.  There will be class A and class B common shares after converting interests to corporate shares from their current LLC organizational structure.  

How many of the available 200m Class A shares will be sold to the public, and the expected offer price, is not yet disclosed. 

A guess  at valuation can be made from the most recent stock grants.  These grants, dating to October 25, 2007 were issued at a Common Stock Fair Value of $11.46/ share.  An IPO pricing range of $13 to  $16/share would not be unrealistic.  That would mean about 7m shares will be sold.

The preliminary prospectus doesn’t provide all detail but it does include financial statements, salary information and risk disclosures.

Among the details:
•In 2007, the company had revenue of $63.7m and net losses of $17m.  In 2006, revenues were $37.8m and losses $14.3m.  As Chairman, Al Gore and CEO Joel Hyatt each earned $1.05m in salary and bonus for 2007.

•Only about 16% of revenue in 2007 was generated from advertising.  84% of revenue in 2007 came from affiliate fees paid by cable, satellite and telecommunications operators.

•The company has restated their consolidated statement of cash flows for 2005 and their our consolidated balance sheet at December 31, 2006 to correct for past accounting errors.  Per the disclosures “the restatements are evidence of a significant deficiency in internal controls.”

•Class A shares, which are those being sold, will have a single vote per share.   Class B shares, held by the founders and other prior investors, will have ten votes per share.

•The company is carrying cash of about $2.2m but has debts of $36.5m which are due in May, 2008.  If the financing is not completed, they have a credit facility established with JP Morgan Chase to refinance as needed.

•Through partnerships, Current’s TV site is reaching more than 51m households in the U.S. and U.K.  (41m are in the US).  Distribution relationships have been established with Comcast, Time Warner, DirecTV, Dish Network, Sky, and Virgin Media Cable.   

JP Morgan, Lehman Brothers and Pacific Crest Securities are underwriting the IPO.

No time table for the offering has been revealed.


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