Al Gore's Current Media Plans to Sell Shares in IPO (Update3)

2008-01-28 15:23 (New York)

(Adds comment from analyst in fourth paragraph.)

By Sarah Rabil

Jan. 28 (Bloomberg) -- Current Media Inc., the television news network co-founded by former U.S. Vice President Al Gore, plans to raise as much as $100 million in an initial public offering.

The San Francisco-based company, which owns a Web site and TV network targeted at people ages 18 to 34, will use the proceeds to repay debt of $36.5 million and for working capital and general corporate purposes, according to a regulatory filing today. The amount of stock to be sold may change.

Current Media's planned share sale comes as 25 companies worldwide withdrew or postponed IPOs this month, the most in at least a decade, according to data compiled by Bloomberg. Equity markets have tumbled as subprime-mortgage defaults have led to concerns that the U.S. economy may fall into a recession.

``If they can do an IPO now, it probably means they have good long-term prospects,'' said Francis Gaskins, president of IPODesktop.com Inc. in Marina del Rey, California. ``Gore has name recognition and that will attract affiliates and viewers initially, but then they have to continue to deliver the content.''

Six to Eight Weeks

Current Media could sell stock in as little as six to eight weeks, Gaskins said.

Gore started the company, which changed its name from Current TV, with partner Joel Hyatt, the founder of Hyatt Legal Services. Hyatt is chief executive officer and Gore is chairman.

Current Media owns the Web site current.com, started in October, and a TV network for young people based on viewer- created content. The TV network allows viewers to submit short-form videos, called ``pods,'' that it uses during its on-air broadcast. The company won an Emmy Award last year for creative achievement in interactive television.

Gore and Hyatt co-founded INdTV LLC in 2002 and two years later bought Newsworld International cable channel from Vivendi Universal SA to gain cable and satellite TV distribution. In August 2005, they dropped the channel's existing programming and started Current TV.

Current Media, which has yet to turn an annual profit, lost $9.86 million in 2007. The company said it expects to continue to incur losses in the future as it invests more money to build the business.

The company had sales of $63.8 million in 2007, up 68 percent from the prior year, according to the filing. About 84 percent of its revenue came from affiliate fees last year, and the remainder was from advertising.

Loss Rate

The company's net loss last year was about 15 percent of revenue, an improvement from 20 percent and 58 percent in 2006 and 2005, respectively. Current Media has a loss rate that is ``acceptable for basically a startup in their business'' and may have breakeven ``in sight,'' Gaskins said.

Current Media said it plans to expand internationally and develop its advertising business. About 13 percent of revenue came from outside the U.S. in 2007. Current TV is available in about 51 million households in the U.S., U.K. and Ireland, the company said. The channel's U.S. affiliate customers include Time Warner Cable Inc., AT&T Inc., Comcast Corp., DirecTV Group Inc. and Dish Network Corp.

Gore, 59, and Hyatt, who the company said was 57 as of Dec. 31, each received $1.05 million last year in salary and bonus from the company.

JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and Pacific Crest Securities were hired as the underwriters. All of the Class B common stock will be owned by Gore, Hyatt and their families, the company said in the filing. Current Media plans to trade under the ticker symbol ``CRTM'' on the Nasdaq Stock Market.

The Bloomberg IPO Index, which tracks new stocks in their first year of trading, dropped 9 percent in the past year before today.