Alloy’s CEO Matt Diamond
Plunging revenue attracts him to C1N.
From Jim Metrock:
I listened to this morning’s Alloy conference call. The purpose of the call was to discuss and answer questions about the company’s acquisition of Channel One and another company.
After Alloy’s CEO Matt Diamond talked about why Channel One was a great purchase, he opened the lines up for questions. There was a question about Channel One’s financial numbers. Why did Channel One’s revenue go from $42 million in 2004 to $35 million in 2005 to $24 million in 2006? In answering this, Alloy’s CEO Matt Diamond said something truly amazing.
He said that one of the "attractive things" about Channel One was this steady decline in revenue. What?!
He went on to say that because he – Matt Diamond – knows why this decline happened (Primedia did not want to invest in upgrading Channel One and that frighten advertisers away), then he knows how to correct it and bring Channel One back to its glory days. If life and business were so simple.
Mr. Diamond made it very clear how pathetic Channel One’s situation had become. He told listeners to the conference call that Alloy "got (Channel One’s) assets for NOTHING." It is shocking to hear it said so plainly. Three years ago, there was talk that a sale of Channel One could bring over $250 million. Now Alloy says they will own all of Channel One’s assets which include $5 million in cash in exchange for assuming "certain" (not "all") liabilities and a promise to upgrade the infrastructure of the delivery system.
On that note, in Alloy’s press release yesterday Mr. Diamond mentioned Alloy will spend between $8 million and $10 million in capital improvement. We have already commented on how $10 million would be only $1,000 per school, woefully inadequate to make any substantial impact on Channel One’s hundreds of thousands of pieces of early 90’s equipment. In today’s conference call Mr. Diamond said Alloy may spend between $ 7 million and $10 million. (Watch that bottom figure get smaller.)
Twice Alloy executives mentioned that Channel One had "10,000" schools under contract. We have to assume that Alloy knows the exact number of schools with the service – after all they just agreed to buy the company. On Channel One’s web site they still state they have "nearly 11,000" schools. It is another example of how Channel One tends to overstate themselves to the public. We have documented Channel One’s expulsion from America’s classrooms. Now the figure is officially "10,000." Reality is, of course, something different. Many schools aren’t honoring the Channel One contract. The folks at Alloy probably never visited schools in Pennsylvania, Alabama or Utah that are on paper "Channel One schools" but in truth don’t show the program anymore or show it before school starts.
| 5 schools a week end their contract with Channel One. That has been going on every week – every month of the year – for the last 8 years. |
Alloy, Inc. is a relatively small company that is unknown to many parents. Now Alloy will be messing with schoolchildren not in the hallways but during class time. Now Alloy will be robbing kids of needed academic time. The stink of Channel One doesn’t wash off. Alloy is a company that sees kids as a target audience. Alloy will be elevated into the public eye. I can’t imagine that being a good thing for Alloy shareholders.
An interesting note about today’s conference call. After one person asked some questions the moderator opened the lines up for others to speak up. There was silence. More silence. Now embarrassing silence. Then the moderator said that since there were no further questions the conference call was ending. Ouch. Alloy threw a big party and nobody came. There might have been only two people on this conference call, the guy that asked about Channel One’s financial results and me – and I was just listening.
There is no interest in Channel One. The company is done – kaput. Only in the mind of Matt Diamond is there a future for C1N.
One last thing: Very conspicuous in her absence was Channel One’s CEO Judy Harris. Mr. Diamond could have introduced her and she could have said a few words, but no Judy. Alloy’s offices are just a few blocks from Channel One’s in Manhattan. It’s rarely pretty when one company takes over another. This one may be uglier than most.
