From Jim Metrock:
When Channel One’s parent company, PRIMEDIA, Inc., announces their quarterly earnings, they have a conference call that allows analysts to ask questions of the top brass. Usually, there are few comments or questions about Channel One. That is changing as Channel One’s fortunes continue to deteriorate.
Here are sections of today’s release that deal with Channel One News:
“The Education and Training Segment continues to be challenged, with revenues declining 16.5% and Segment EBITDA falling to a loss of $100,000. This segment is expected to stabilize before year end 2004.” “Education and Training Segment revenues were $26.8 million in first quarter 2004, down $5.3 million or 16.5%. Advertising revenues, which are all from Channel One, were $10.0 million, down $1.6 million or 13.8% in the first quarter 2004. Gains from additional health and beauty brands, movies, and telecommunications firms were offset by reduced spending from food and beverage accounts… Education and Training Segment expenses were $26.9 million in first quarter 2004, down $0.8 million or 2.9%. Education and Training Segment EBITDA was $(0.1) million, down $4.5 million in first quarter 2004.
Key action steps to improve performance in the Education and Training Segment include: Improving Channel One’s sales effectiveness, by better addressing the growing retail and health and beauty aids sectors.”
Translation: If miracles don’t start happening, management will do something about Channel One and the other two companies (Workplace Learning, Films for Humanities) in the Education and Training division. “Challenging” is a word use with great care.
The investing public is being warned. In the conference call this morning, Kelly Conlin, the CEO of PRIMEDIA used the words “very challenging” when talking about Channel One News. Conlin also said that this group of three companies represents only 8% of PRIMEDIA’s revenue. Channel One News is a lot less significant than we thought. He said that even though this segment of their business was the smallest, it is requiring the most attention. He said there has to be a lot of “heavy lifting” to improve these companies. The other two companies may improve – Channel One News won’t. Channel One News is dying. Only a fool would think otherwise.
No tears here. Indeed, this summer is the time for parents, teachers, students, activists, and other taxpayers to begin efforts in their states to remove Channel One from all public schools. Channel One finds themselves in a “perfect storm” of trouble. There equipment is needing to be replaced and upgraded and they don’t have the money to do so. Advertisers are leaving the company. Channel One can hire all the extra salespeople they can find and it won’t help. Companies will not pay top dollar to advertise on the extremely controversial in-school show. Why risk the good name of your company to have your product plugged on C1N? Add to this mix, the fact that “Casino Jack” Abramoff, Channel One’s ace lobbyist is under investigation and is no longer carrying Channel One’s water on Capitol Hill. Add to all this, the moronic decision making by C1N to continue to advertise movies, TV shows and music acts. This outrages teachers and parents and is fueling the calls for the removal of Channel One from schools. The “perfect strorm” is about to get even worse for C1N. Stay tune. Read the 4th quarter 2003 results.
