The numbers keeping coming up bad for Channel One.
Form 10-Q for ALLOY INC
9-Sep-2010
Quarterly Report
Media
Media segment revenue in the second quarter of fiscal 2010 was $14,993, an increase of $225, or 1.5%, from revenue of $14,768 in the second quarter of fiscal 2009. The increase was primarily due to increases in our Digital, Alloy Education and Display Board businesses of $790, $720, and $190, respectively, which were partially offset by decreases in our Channel One business of $1,000 and Alloy Entertainment and print businesses of $470.
Media
Media segment cost of goods sold in the second quarter of fiscal 2010 was $3,843 an increase of $2,186, from cost of goods sold of $1,657, in the second quarter fiscal 2009. The increase was primarily due to an increase in net production costs for Channel One ($2,130) and increased payroll costs ($100), which were offset by a decrease in temporary labor ($25).
Uh-oh.
Earlier this month Alloy Media and Marketing, Channel One’s parent company, released their 2nd quarter 10-Q statement (quarter ending July 31). Public companies are required to tell the public each quarter, via their 10-Q statements, how they are doing. There are three 10-Qs each year and one 10-K at the end of the year.
We pulled out the above statements from the “Revenue” and “Cost of Goods Sold” section of Alloy’s statement. Channel One News is in their Media division.
Comparing this year’s 2nd quarter to 2009’s 2nd quarter, we find the Media companies had a modest increase in revenue $225,000. (Note: All figures above are in thousands.) However, the Cost of Goods Sold amount increased $2,186,000!
Channel One News seems to have had a truly terrible second quarter. On the revenue side, several companies in the Media division increased their year-to-year revenue, but Channel One had a decrease in revenue of $1,000,000! This is even worse than it seems because the 2009 figures were pretty weak coming in the middle of a severe recession.
On the Cost of Goods Sold side, Channel One had a $2,130,000 increase in “net production costs.” This is odd because Channel One News fired their in-house production people in the summer of 2006. Channel One News first had a company called Team People produce their show in Washington, D.C. When that went bad within a year, Channel One News was allowed to use a small corner of an NBC studio in New York City. NBC got fed up with Channel One and that relationship ended after two years in 2009. Now CBS is producing the show but it now appears that CBS News must be charging Channel One for production costs. Previously it was assumed that CBS was producing the show in exchange for the free promotion of their network.
If this is true and Channel One News now has a major increase in their production costs then it is difficult to see how Channel One can continue in its present form.
