THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, August 15, 1995 TAG: 9508150246
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Medium: 66 lines
International Family Entertainment Inc. said Monday that it has agreed to sell its recently acquired Ice Capades unit, but it will retain the right to reacquire a majority interest in the ice show for 10 years.
Virginia Beach-based IFE also said that its net income for the second quarter more than doubled from the year before thanks to soaring profits at its flagship, the cable-TV network Family Channel.
IFE bought the assets of the Ice Capades, America's oldest ice-skating show, in February for $10.2 million. After a falling out over the ice show's lackluster attendance last season, skating legend Dorothy Hamill quit as president of the skating company.
That led IFE on a search for a management company that also would take an equity stake in the ice show. David R. Humphrey, an IFE senior vice president, said IFE's board and senior management ultimately decided to sell the show in its entirety to the selected management company, which he declined to name.
Under terms of a letter of intent, the buyer will issue to IFE notes for $10.2 million - essentially an IOU - with an annual interest rate of 7.5 percent. The notes are due in 2005. Up until that time IFE retains the right to convert them into a majority stake in the ice show and the rest of the assets of the management company.
Humphrey gave little information about the management company, other than to say it is run by a former major-league baseball player and manages various sports events. He added that the management company has lined up a major corporate sponsor for the Ice Capades' 1995-96 tour, but he was not able to identify the sponsor.
Ice Capades executives were unavailable for comment Monday.
Under the planned arrangement, Humphrey said the Ice Capades will still be closely allied with other IFE operations, including The Family Channel.
The sale will give the management company an extra incentive to manage the ice show well, he said, adding that IFE will benefit, too. ``We expect it to generate positive cash flow and we'll be the primary beneficiary of that because we'll get the income stream off those notes.''
IFE's second-quarter earnings of $4.01 million, or 11 cents a share, were up from earnings of $1.89 million, or 4 cents a share, in the same period last year. Revenues increased 21 percent for the quarter, to $62.4 million.
The Family Channel was the main reason for the profit jump. The U.S. version of the channel posted a 52 percent increase in operating profits, to $17.2 million in the latest quarter, as fees from ads and cable subscriptions soared. Meanwhile, the British version of the channel narrowed its operating loss to $2.35 million in the latest quarter from $3.1 million the year before.
Operating losses at IFE's rapidly expanding Cable Health Club network and its MTM Entertainment unit widened.
``We were pleased with IFE's financial and operating results for the quarter,'' IFE President Timothy B. Robertson said in a statement. ``We are making tangible progress in our new businesses and The Family Channel growth continues to strengthen IFE financially and expand its family entertainment franchise.''
Also Monday, IFE disclosed that it paid $4 million in cash for the previously announced purchase of a 20 percent stake in Body by Jake Enterprises Inc., a health and fitness merchandiser and film-production company headed by bodybuilder Jake Steinfeld. by CNB