PRIMEDIA Reports Channel One 2005 Results

Yesterday’s press release
from PRIMEDIA (Channel One’s parent company) didn’t have much to
say about C1N:

Channel One took significant steps in
2005. With the appointment of Judy Harris to CEO and President
in April, the division has begun to broaden its revenue base
and is developing partnership and sponsorship opportunities
with corporations and foundations. A new head of sales, Ellen
Flahive, joined in the third quarter. In repositioning its
business, Channel One’s primary objective is to broaden its
revenue base beyond traditional advertising to include corporate
sponsorships of public affair topics that are relevant to teens.
In 2005, Channel One gained major new sponsors including Verizon
and Subway. The 2006 results will benefit from significant
cost cuts in late 2005 and 2006.

During yesterday’s conference call with analysts, PRIMEDIA CEO
Dean Nelson had this to say about Channel One:

On to education. In 2005, Channel One
took significant steps. We appointed Judy Harris to CEO and
President in April. We began to broaden this revenue base and
she is actively developing partnership and sponsorship opportunities
with corporations and foundations. She brought in a terrific
new head of sales in the third quarter. Our primary objective
for Channel One is to broaden its revenue base beyond traditional
advertising to include corporate sponsorships, of public affair
topics that are relevant to teens. In 2005 Channel One gained
new sponsors including Verizon and Subway. The 2006 results
will benefit from significant cost cuts taken in late 2005
and early 2006. Both the filmed media group and PRIMEDIA healthcare
had positive year over year revenue of segment EBITDA growth
in 2005 as a result of the fixes in the respected business
models implemented in 2004. In fact, PRIMEDIA healthcare’s
already booked revenues for 2006 exceeding those posted in
2005. And the Film media group is focused on the roll out of
its digital platform.

Mr. Nelson sounds like he was reading the press release. There
is no enthusiasm anymore for Channel One. For the third quarterly
report, Nelson has offered up the appointment of Judy Harris as
the main reason investors ought to feel good about Channel One’s
turnaround chances. Very soon, Ms. Harris has to produce.

The chart below shows a company that is rocketing towards bankruptcy.

In 1996, when Obligation began it’s national campaign to expose
Channel One News, the company was averaging $350,000 per broadcast
day (assuming 200 days/year). Nine years later, in 2005, Channel
One is averaging a mere $172,000.

If inflation is taken into account, the loss is even more staggering.
Consider also that the population of students in secondary schools
has risen in those years and Channel One News keeps losing revenue.

Schools are walking away from Channel One News. Teachers are turning
the show off. School boards view the Channel One contract as a
joke. Each day, this company loses more schools, more students,
more revenue. Anybody want to buy a washed up company?