September 21, 2003 – New York Times reports that PRIMEDIA is still trying to sell Channel One News.
When a company buys another company they do a due diligence investigation into the company being bought. If this investigation is done poorly it can mean a disaster for the purchasing company. PRIMEDIA has hired Allen & Company of New York City to try to find someone, ANYONE, to buy Channel One. Allen & Company is in a tough position. They will make big money if they find a buyer, BUT if they mislead the buying company by minimizing the opposition to Channel One, then Allen & Company and PRIMEDIA can be sued by the buying company. Allen & Company represents the selling company, but they have a duty to present the buyers lawyers, doing the due diligence, with accurate information. Channel One News is highly controversial. It has become more so in the last few years. A buyer has to be given the full picture of this company. If not, then somebody is going to see somebody in court.
Obligation has not been contacted by Allen & Company or by any prospective purchaser. We are not boasting about our importance, indeed, in the scheme of things, Obligation is fairly insignificant, but a proper due diligence would include at least a brief conversation with several organizations and people across the country that oppose this company’s business practices. Pity the foolish company that believes what Channel One executives tell them about the company’s future prospects.
If a purchaser can’t be found for Channel One News, then we believe the company will have to be drastically scaled down to survive. PRIMEDIA hints about an even worse fate than that in their SEC filing several months ago. Notice the language. “…CAPITAL INVESTMENT WILL BE REQUIRED after 2003 to CONTINUE CURRENT BUSINESS OPERATIONS…” That is “Run-For-The-Exit” scary language for any company. Lawyers don’t put that in their 10-Qs unless they absolutely have to. What you read below is not taken out of context. This is the total wording related to Channel One News.
“The Company anticipates that a capital investment will be required after 2003 to continue the current business operations and to maintain profit margins at Channel One. PRIMEDIA expects spending would begin in 2004 and extend over a three-year period. However, management is pursuing alternative solutions which would decrease the required capital investment of the Company and provide additional significant revenue streams.”
From “Contingencies” section of Primedia’s Quarterly Report (SEC form 10-Q) published 5/15/03.
