It’s All Falling Apart

October 27, 2005
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From Jim Metrock:

On Monday, Primedia, the parent company of Channel One News, announce that it is considering splitting the company into two separate companies. One would contain the companies that have a bright future and solid earnings potential and the other would have the problem companies like Channel One News.

Also, it was announced that CEO Kelly Conlin is quitting. Both of these were big surprises. Markets don’t like surprises and Primedia stock lost about 1/3 of its value in one day. It closed at a few pennies below two dollars a share. Six months ago it was $4 a share. It was as high as $32 a share a few years ago.

Also Business Week reported this week that U.S. government agencies had cancelled their ads for the second half of Channel One’s year.

If this is true, Channel One’s survival, in its present form, is seriously in doubt. Channel One News is a government-sponsored news program. It relies on taxpayer funded military ads and PSAs to exist. Without government ads it is hard to imagine Channel One News being able to meet its payroll.

Advertisers are more and more considering Channel One an “untouchable.” Ad revenues are evidently continuing to disappoint the powers that be at Primedia. Efforts to sell the company in the past have proved futile. Key people have left the company and with them years of experience.

Now new potential buyers may be coming forward. Obviously the asking price for Channel One News goes down by the day. It may get to a point that a “fire sale” price would interest some investor, although it is difficult to see the value in their ancient TV equipment that is probably close to being fully depreciated. [Most of the schools that still have Channel One equipment received that equipment before 1994. The IRS life span for a TV set, for depreciation purposes, is ten years.]

Primedia has a history of bad decisions. They made a really bad one when they decided to hire Judy Harris as the Channel One CEO to replace Jim “Sugar Daddy” Ritts. They had an opportunity to hire for the first time an educator. They had an opportunity to hire for the first time someone with true journalism credentials. Instead they hired another marketing hack who sees children as a delicious target market. Ms. Harris brings nothing to the job to reassure teachers and parents that Channel One is serious about changing its ugly reputation.

Channel One has hired a PR company called Sloane and Company to send out fabulous sounding press releases about the most insignificant happenings. Each press release begins with the same laughable description of Channel One: “Channel One, the preeminent news and public affairs content provider…”

Sorry, C1, you don’t get to call yourself a “preeminent” anything. That is for others to say about you – and that looks like it is never going to happen.

I wish the lower-level employees well. I hope they understand the serious situation their company is in. For those who relished the exploitation of schoolchildren and who have lined their pockets with the ad revenue from junk food companies and movie studios that advertised sleazy, violent and drug-filled movies, I have nothing but utter contempt.

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