THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, January 30, 1996 TAG: 9601300276
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Medium: 68 lines
Sell The Family Channel?
That's essentially what Wall Street wheeler-dealer Mario Gabelli implied Pat Robertson plans to do sometime this year, according to this week's edition of the Barron's investment newspaper.
Gabelli, whose mutual funds own about 13 percent of IFE's stock, identified the Robertson-led International Family Entertainment Inc. as one of about 10 companies that he considers takeover candidates in 1996.
Executives of Virginia Beach-based IFE, parent of The Family Channel, declined to talk about the report. ``It's our policy not to comment on speculation,'' said David R. Humphrey, an IFE senior vice president.
Analysts who follow IFE pooh-poohed the sellout idea. And so far, so have stock investors. IFE's Class B shares edged up by 25 cents a share, to $12.87, in light trading Monday on the New York Stock Exchange. At that price, IFE is valued at more than $520 million.
For IFE to be taken over, analysts pointed out, Pat Robertson and his son, Timothy, would have to agree. That's because they control IFE through their ownership of special Class A shares in the company. Each Class A share has 10 times the voting power of each share held by all other IFE stockholders.
Neither the father nor the son, who serve as chairman and president, respectively, of IFE, has given any indication he intends to exit the business.
``To my knowledge, they're not looking to be acquired,'' said E. Breck Wheeler, an analyst for Nashville, Tenn.-based J.C. Bradford & Co. ``If I were rating possible acquisition candidates, I wouldn't put this one high on the list.
Paul T. Sweeney, an analyst for Wheat First Butcher Singer in Richmond, said he wasn't surprised by Gabelli's comment about IFE. The investor has a history of identifying companies in which he has a large stake as takeover candidates, particularly when the companies' stock has been lagging, Sweeney said.
IFE's shares are trading well below their 52-week high of $16.50, after adjusting for a recent 5-for-4 stock split. The stock is also priced well below that of many other entertainment companies on the basis of price-asset ratios.
But the reason, Wheat First's Sweeney said, is ``that most investors don't think it's a takeout candidate.'' He said the Robertsons, through their investments, have given every indication they're at IFE for the long term. They've launched a number of TV-programming businesses, particularly overseas, that are losing money but have great potential, he said.
Sweeney pointed out that even if the Robertsons wanted out, Tele-Communications Inc., through its Liberty Media programming arm, has first dibs. TCI, the nation's largest cable-TV operator, owns a 20 percent stake in IFE. It has the first right to purchase the Robertsons' controlling shares should they decide to sell.
The Robertsons, along with TCI, ended up in control of IFE in 1990 after a $250 million leveraged buyout of The Family Channel from Virginia Beach-based Christian Broadcasting Network, which Pat Robertson also chairs. They took the company public two years later in a $150 million stock offering - and have led a half-dozen acquisitions or startups since then. They now own only about 12 percent of total IFE shares, but managed to keep control through the ``supermajority'' voting rights granted with their Class A stock.
Most of Pat Robertson's IFE shares are in a charitable trust. ILLUSTRATION: Pat Robertson
by CNB