In this weekly column, I will comment on the past week's goings-on in WOW, and whatever else it occurs to me to discuss :-) I also hope that a big part of the column will be printing and responding to your e-mails. So please send them in (the address is thatthing35@yahoo.com)!
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5/29/01: Working Without a Net
This week's big news is Friday's press release from WOW, entitled "WOW Amends its Distribution Agreement with M/G Perin, Inc." First of all, can I just comment on the poor quality of the writing in this press release? The grammar is truly awful. Anyway, M/G Perin was WOW's syndicator -- the folks responsible for making the arrangements to get WOW's television shows on the air. "Amends", in this context, would be better stated without the first two letters -- "ends." M/G Perin will not be distributing any new WOW programming. As of Sept. 30, they will no longer distribute the re-runs in the US, and as of Dec. 31, they will no longer distribute the re-runs internationally.
Interestingly enough -- and something I was unaware of -- M/G Perin owned 1,839,556 shares of WOW stock. I suppose that they were paid in partial ownership of the company, and not in cash. Somehow, I doubt it would be easy for WOW to score that same type of deal with a new syndicator. Anyway, to end the business relationship between the two companies, M/G Perin returned all of that stock to WOW, and WOW also paid M/G Perin some undisclosed amount of money.
I have to say that to me, this announcement doesn't signify much either way. WOW needs a cable deal to survive. Syndication isn't going to work. WOW's brief TV run proves that it's almost impossible for them to make money if they pay stations to broadcast the show. The only way that syndication works for WOW is if the stations broadcast the show for free... and I don't think you're gonna get too many stations who are going to go along with that. So, since I think cable is the only real option, I don't see the details of WOW's syndication deal as being all that important.
What this does do is take away a safety net. Now, if they don't get a cable deal and they don't get another syndicator, the federation will be so dead that even David McLane will have to admit it.
WOW undoubtedly realizes that there's no way to spin this event, in and of itself, as being good. So they resort to their usual "yeah, we know this looks bad, but something good is gonna happen real soon, we promise" approach. In the press release, WOW tries to sell us on the idea that they are going to take the stock that M/G Perin returned, and use it to purchase another business in a stock deal. Needless to say, WOW doesn't have the money to go buy another company with cash, so a stock swap is the only way such a purchase could be made.
Admittedly, this is an interesting concept. If the business they purchase is profitable, it can absorb WOW's losses. But unfortunately, much like the previous "miracle" solution of asking TV stations to broadcast the show for free, the problem is getting the other guy to agree with it. You've got a wrestling company here with no wrestlers, no TV deal, a small fanbase, and tons of debt. Pretty much their only asset is a brand name that says "really cheesy" to most wrestling fans and "we had to cancel their pay-per-view" to PPV and cable companies. Why would a profitable business possibly want to sell themselves in exchange for this company's stock? And the business they acquire has to be profitable right now for it to be useful to WOW... it can't be something that may be profitable a couple years down the line... WOW needs the money now.
I just can't see it happening... I can't see how anything worthwhile could be purchased with WOW stock, much less something that can miraculously solve all this company's problems in a couple of months. What they really need is for someone to dump a few million bucks into the company they already have, thus making that company potentially worth something.
Obviously, we'll have to see how it turns out. But it's been four months of inactivity now, and absolutely no announced progress has been made either towards getting WOW out of debt, or towards getting the show on TV. The clock is ticking quite loudly now.
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