THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, November 15, 1994 TAG: 9411150321
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 70 lines
Profit improvements at The Family Channel in the United States and a narrowing loss for its British version helped boost operating income in the third quarter for the channel's parent company, International Family Entertainment Inc.
Virginia Beach-based IFE reported Monday that its third-quarter operating income totaled $5.9 million, up about $500,000 from the same period last year.
IFE's net income, after taxes, was also up - to $5.5 million, or 15 cents a share, in the most recent quarter from $4 million, or 11 cents a share, a year earlier. But the latest quarter included a special, onetime gain of about $2 million related to final accounting for IFE's 1993 purchase of Britain's TVS Entertainment plc.
IFE, headed by Pat Robertson and his son Timothy, posted total revenues of $57.7 million in the latest quarter.
``What's happening now is we're starting to turn the corner on our new businesses,'' said David R. Humphrey, an IFE senior vice president.
He cited the British version of The Family Channel as the prime example. That unit cut its operating loss to $2.7 million in this year's third quarter from $4.1 million a year earlier, thanks largely to a big increase in subscriber fees.
IFE's flagship, the U.S. version of The Family Channel, continued to be IFE's cash cow. It reported operating income of $11.5 million in the third quarter, up from $7.2 million a year earlier. Subscriber-fee increases and a cut in the cost of developing special game programming for the channel were largely responsible.
Humphrey said IFE continues to scale back its once-ambitious plans for game programming. A few years ago, the company was planning to launch a free-standing, 24-hour-a-day game channel on cable TV. It began experimenting with game programs last year on The Family Channel in the U.S. But ad revenues from the shows weren't what IFE expected and an interactive element to the shows, which allowed people to call in and participate, lacked luster.
IFE has also been embroiled in litigation with some Hollywood game programmers who claim that the company lifted its ideas for original shows.
Humphrey said IFE has decided to indefinitely stop producing original game shows for The Family Channel, reducing its game block to just archival shows.
The company does have one other cable network, Cable Health Club, which has been suffering startup pains. It posted an operating loss of $1.3 million in the third quarter, up from a loss of $676,000 a year earlier.
Humphrey said IFE executives are increasingly optimistic about that network's prospects, however. A Federal Communications Commission decision last week allowing cable operators to charge customers up to an additional 20 cents per new channel as part of basic service will help Cable Health Club, he said, because it is offered to cable operators for free.
Another recent IFE acquisition, a chain of live-music theaters, showed some bottom-line improvement in the third quarter. On an operating basis, the division lost $71,000 in the third period. But it was profitable before depreciation and amortization were taken into consideration.
IFE is seeking to add to its foothold in live entertainment with the acquisition of Dorothy Hamill's Ice Capades, announced earlier this year.
Humphrey said IFE has a binding letter of intent to buy the assets of the Ice Capades, but hasn't finalized the purchase because, among other things, the ice show's recent attendance hasn't met expectations.
``We'd like to own it, but we'd like some things to be fixed too,'' he said.
IFE is already the Ice Capades' senior creditor. It advanced the ice show more than $2 million to help launch its current season. by CNB