FIRST-TO-MARKET CABLE CHANNELS WITH STRONG BRAND NAMES COMMAND PREMIUM VALUATIONS
While the Recovery Network is a unique cable channel, it is following a common formula for success. Other networks, such as Classic Sports Network, Black Entertainment Channel, and Court TV, were first-to-market in their respective niches and have all succeeded by developing a strong brand identity. Recovery Network could represent an ideal acquisition candidate based on comparison to the valuations of some recent mergers and acquisitions. Mergers and acquisitions in the industry have proven that first-to-market cable channels with strong brand names command premium valuations. For example, in October 1997, with revenue expectations at approximately $9 million for ‘97 and only 11 million subscribers, Classic Sports Network was purchased by ESPN for $175 million, just two years after its launch.
Premium Valuation Examples:
Classic Sports Network, launched in 1995, has close to 11 million subscribers. With an estimated $9 million in revenue expected in 1997 (Paul Kagan and Associates), Classic Sports Network was sold for $175 million to ESPN (80% owned by Disney) in October 1997.
Court TV, launched in 1991, has approximately 32 million subscribers and even though unprofitable, is estimated to be worth up to $350 million.
E! Entertainment, launched in 1990, has close to 43 million subscribers and was sold January 1997 to Comcast and Disney at a valuation of $550 million.
Black Entertainment Channel, launched in 1980, aired initially from 11 p.m. to 2 a.m. on Fridays. Black Entertainment Channel currently airs 24 hours per day to approximately 47 million subscribers. In October 1997, a group led by Liberty Media Corp. and Robert Johnson, Chairman and CEO of BET Holdings (NYSE-BTV), the public company that owns the Black Entertainment Channel, proposed to purchase the company for $48 per shares, representing a $800 million valuation. Just recently it was acquired by Liberty Media Corp for $1 billion.
The Learning Channel, owned by the Discovery Channel, has approximately 60 million subscribers and is valued at more than $700 million.
The Nashville Network and Country Music Channel were sold for a combined price of $1.55 billion to Westinghouse Electric Corp. in February 1997.
The Family Channel, produced by International Family Entertainment Corp., (NYSE –FAM), began airing in 1982 and June 1997 was sold to Fox Kids Worldwide for $1.9 billion.
Discovery Channel started with approximately 156,000 subscribers in 1985 and now has over 60 million subscribers and is worth an estimated $3.7 billion.
USA Network has approximately 73 million subscribers. The Sci-Fi Channel, a subsidiary of USA Network has approximately 46 million subscribers. In October 1997, Seagram sold the USA Network along with the Sci-Fi Channel to the Home Shopping Network for $4.1 billion.
Recent Developments
Recovery Network and TCI Online Holdings Increase Funding of Joint Venture; Funds to Further Speed Development of Interactive Behavioral Healthcare Service
-Feb. 5, 1998--Recovery Network and TCI Online Holdings Inc., a subsidiary of Liberty Media Group, announced today that they will provide an additional $500,000 ($250,000 each) in funding for their 50/50 joint venture, RecoveryNet Interactive. RecoveryNet Interactive was formed to provide a public web site to offer an extensive array of information on behavioral problems and recovery and fee-based services for managed-care employee-assistance programs. The additional funding will be used primarily to further develop the technology for the service. To speed the development, RecoveryNet Interactive has retained Digital Evolutions of Los Angeles, a company backed by MicroSoft co-founder Paul Allen. RecoveryNet Interactive previously announced a five-year license agreement with Merit Behavioral Care Corp., the nation's leading managed behavioral health care company, to offer customized RecoveryNet Interactive products to more than 21 million individuals covered by Merit's 800 corporate clients. Merit is in the process of being acquired by Magellan Health Services Inc., which will increase the number of covered individuals to 60 million.
Recovery Network Enters Into "Landmark Public/Private Partnership" with National Clearinghouse for Alcohol and Drug Information (NCADI) --Feb. 20, 1998
Recovery Network (NASDAQ:RNET/RNETW) today announced that it has entered into a "landmark public/private partnership" with the National Clearinghouse for Alcohol and Drug Information (NCADI), an agency of the Substance Abuse and Mental Health Services Administration (SAMSHA). The partnership was announced today by Bill Moses, president and chief executive officer of Recovery Network. Under terms of the partnership, Recovery Network and NCADI will jointly participate in a marketing effort to provide Recovery Network's audience with NCADI's solution-oriented information to people seeking assistance with drug and alcohol abuse prevention and treatment service providers. This marketing partnership between NCADI and Recovery Network will cover telephonic informational services (Helpline), audio and film resources, and print information and Internet services.
Recovery Network Forms New Direct Response Marketing Unit --March 18, 1998--
Recovery Network, Inc. (NASDAQ:RNET/RNETW) announced today the formation of The Pathways Store(TM), an on-line direct response marketing service. The Pathways Store will offer Recovery Network viewers and supporters videos of programs aired on The Network, as well as the Pathways Collection(TM) of outstanding books, videos, and audio tapes on a range of behavioral and mental health issues. Scheduled to be available via the Worldwide Web at pathwaysstore.com, The Pathways Store will offer works dealing with alcoholism, substance abuse, addiction, depression and eating disorders, as well as other behavioral and mental health problems. All works will be specially priced for Network viewers.
Recovery Network Announces '24 STRAIGHT: AMERICA'S DAY OF RECOVERY,' Set For March 24, 1999 -- Recovery Network (NASDAQ:RNET/RNETW) and the Partnership for Recovery & Prevention today announce "24 STRAIGHT: AMERICA'S DAY OF RECOVERY" for March 24, 1999. The Recovery Network and the National Partnership for Recovery & Prevention today said they will initiate an unprecedented national event to create America's first 24-hour nationwide forum of community-driven events to address and highlight the positive values of freedom from abuse of alcohol, tobacco and illicit drug use, addiction, of being "straight" or "sober." 24 STRAIGHT will coordinate the combination of unique interactive local activities/events leading up to and on the day of March 24, 1999 throughout communities, schools and businesses, culminating with an historic televised special that will reflect the collective voice of America.
Recovery Network News, Executive Summary and Weekly Sweep of 1400 News Sources is Now Online -April 9, 1998-- Recovery Network (NASDAQ:RNET/RNETW) and its National Partnership for Recovery & Prevention today announces the launch of Recovery Network News, a new Internet news service addressing substance abuse prevention, treatment and recovery issues.
Donald Masters, Recovery Network executive vice president and chairman of its advisory board, and chair of the National Partnership for Recovery & Prevention, said: "Recovery Network News collects significant stories from a sweep of 1400 general information sources and presents them as a headline news service for
the substance abuse prevention and recovery field. We want to bring recovery and prevention issues to the general public with the expectation that increased awareness of the problems associated with
these topics will lead to more effective solutions." Masters added: "The Internet can be one of the most anonymous ways of collecting intimate information. Recovery Network News is now another avenue in which, on an individual basis, we can bridge the disconnect between the stark realities of substance abuse and addiction and society in general, and the very real possibilities in the recovery and healing process available to them." Recovery Network News is being launched as a free service and is expected to remain free. Electronic mail delivery will be provided to all interested parties to enroll as free subscribers. "We will eventually solicit corporate advertising support in supporting this important service within the recovery and prevention field," he noted.
Recovery Network Expands To Four-Hour Daily Programming --April 24, 1998--The Recovery Network, Inc. (NASDAQ:RNET/RNETW) announced today it will expand its fall line-up of daily programming from two hours to four hours beginning in Fall 1998. The new Fall programs will be hosted by such well-known personalities as Whoopi Goldberg, Whitney Houston and
Tom Selleck.
Recovery Network Launches Monthly Chat Room--April 29, 1998—The Recovery Network Inc.(NASDAQ:RNET/RNETW) announced today the launch of a monthly Internet chat room for people with addictions, substance abuse and behavioral issues. The Network also announced that Yahoo!(R)(NASDAQ:YHOO) (www.yahoo.com), the world's leading Internet Directory, will promote The Recovery Network through public service banners on the Yahoo! Network, effective May 1, 1998.
According to The Recovery Network, Recovery Chat will allow people to discuss their problems and seek advice from prominent national health professionals. The goal of Recovery Chat is to give people access to an anonymous open forum for help and identifying, understanding, and coping with the recovery process.
www.chat.recoverynetwork.com.
Recovery Network Announces Program Origination and Dedicated Satellite Transponder Agreement With Group W Network Services--May 28, 1998-- Recovery Network (NASDAQ:RNET/RNETW) today announced that it has engaged Group W Network Services, a division of CBS Corp., (NYSE:CBS) for program origination, master control operations, uplink and protected C-band satellite transponder transmission on Pan Am Sat's Galaxy 7. Combined services will be provided under a five-year multimillion-dollar contract. The transmission will use Scientific Atlanta's state-of-the-art Power-Vu compression technology. Recovery Network President and CEO Bill Moses, in announcing the deal, said: "We are delighted with our new agreement with Group W. With a protected transponder and complete master control and uplinking services, Recovery Network is now set for its planned expansion to delivery of its programming 7 days a week, 24 hours daily to cable systems throughout North America." Mr. Moses added that in the fall Recovery Network will launch a four-hour daily programming bloc that will be rotated six times every 24 hours.
Recovery Network Announces Affiliation Agreement with National Cable Television
Cooperative (NCTC) of Lexena, KS.-- June 11-- Recovery Network (NASDAQ:RNET/RNETW) today announced that effective May 27, 1998, it has finalized an affiliation agreement with the National Cable Television Cooperative, Lexena, KS to cover all launches of the service to its members. The NCTC is a national membership organization representing over 8 million cable households through various mid-sized to smaller MSO (Multiple Ownership Systems) that represent over 1,200 systems. Members include, but are not limited to, Jones Intercable, Rifkin and Associates, CableOne, NPG News Post Gazette, Galaxy
Communications and Triax Communications. It is expected that the new homes will be brought online this Fall as part of an expanded programming lineup carried by Recovery Network's dedicated transponder provided under a previously announced agreement with Group W Network Services, a division of CBS Corp. (NYSE:CBS). Under terms of that agreement, Recovery Network will receive program origination, master control operations, uplink and protected C-band satellite transponder transmission on Pan Am Sat's Galaxy 7. Combined services under the Group W Network Services agreement will be provided under a five-year multimillion-dollar contract.
Recovery Network to Present John Bradshaw's 'Homecoming,' 10-Part Series On The Affected 'Inner Child' -- July 9 -- Recovery Network, Inc. (NASDAQ:RNET/RNETW) announced today it that has reached an agreement with best-selling author John Bradshaw, one of this nation's primary figures in the field of family counseling, to license the 10-part Emmy-nominated series "Bradshaw On Homecoming," produced by KQED \ San Francisco. Bill Moses, President and Chief Executive Officer of Recovery Network, in announcing the deal, said that Recovery Network is taping new segment introductions with John Bradshaw. The Bradshaw segments will join Recovery Network's expanded schedule when the network moves to a daily four-hour programming bloc the month of September. The Bradshaw segments will be aired on Wednesdays during the fourth hour of Recovery Network programming (Editors: please check local cable systems operators for telecast times). The first "Bradshaw On Homecoming" segment, entitled, "The Problem of the Wounded Child, will be seen on Recovery Network on Wednesday, September 2nd.
Recovery Network Signs Letter of Intent with Community Anti-Drug Coalitions of America--Aug. 11, 1998-Recovery Network (NASDAQ:RNET/RNETW) announced today that it has signed a letter of intent with the Community Anti-Drug Coalitions of America (CADCA) to enter into a co-production agreement to create and televise substance abuse prevention, education and coalition building
programming. The agreement was announced today by William D. Moses, president and chief executive Officer of Recovery Network and Nelson Cooney, president, Community Anti-drug Coalitions of America (CADCA). Under the terms of the agreement, CADCA would provide content programs covering substance abuse prevention and coalition development aimed at creating drug-free communities. The programs will be produced by the National Guard and Florida National Guard's Multi-jurisdictional Counter-Drug Training facility located on the campus of St. Petersburg Junior College. The National Guard will also provide satellite distribution of the programming to facilities located in communities across the nation. Recovery Network will provide its professional, creative and technical production and programming expertise to the venture, as well as a commitment to air the programming as a regular staple of the Network's program lineup. Moses said, "We're thrilled with this agreement with CADCA. We
believe that this cooperative programming venture provides an effective grassroots community-based element that complements the unprecedented $2 billion anti-drug media campaign recently launched by
the President and the Office of National Drug Control Policy (ONDCP), in collaboration with the Partnership for a Drug-Free America (PDFA). The campaign will purchase radio, television and newspaper advertisements to dissuade young people from taking illegal drugs."
Recovery Network Launched On Dedicated Satellite Transponder; New Programming Added to Fall Line-Up --Sept. 22, 1998—Recovery Network (NASDAQ:RNET/RNETW) announced today the successful launching of the network's programming utilizing its own dedicated satellite transponder, uplinking service and complete master control provided by Group W Network Services, a division of CBS Corp. (NYSE:CBS). The network also announced an expanded fall line-up of daily broadcasts to four-hour blocks featuring new and original programming. In announcing the success of the Recovery Network's launch, Bill Moses, Chairman and Chief Executive Officer, said, "We are excited to offer a new fall schedule, which includes original and licensed programming that is devoted entirely to social and behavioral health issues. Through our expansion, we now offer talk shows, documentaries, dramas and other genres, some of which are hosted by well-known celebrities, or authors that are targeted exclusively to the more than 100 million Americans who suffer from or are affected by substance abuse, eating disorders, violence, depression, child abuse and other issues."
Recovery Network, Inc. Expands Original Exclusive Programming; Two New Series
Address Sexual Addiction and Youth Movement Against Drugs and Alcohol --October 19, 1998—Recovery Network (NASDAQ:RNET/RNETW) announced today that it has launched two original series as a further commitment to original and exclusive programming. The new series are "Hidden Addiction," which taps into the burgeoning national issue of sex and love addiction, and "Straight Edge," a documentary about young musicians who play their music hard and fast but preach and lead a sober lifestyle. Bill Moses, Chairman and Chief Executive Officer of the Network said, "Although mainstream media has made these topics top-of-mind for the past months, Recovery Network is the only network to tackle subjects like sex addiction head on, and that sets us apart from the other networks."
Management Team
William D. Moses / Chairman & Chief Executive Officer - With the company since 1994, Mr. Moses was named the Chairman of the Board of Directors in August 1998 and has been a member of the Board of Directors of the Company since 1995. In 1993, Mr. Moses co- founded Access Television Network, Inc. (ATN) and served as a Director for three years. Previously, he was Managing Partner of Axiom Partners, a New York investment and banking firm. He also serves as honorary chairman of Cable Positive and was the recipient of the 1998 Ellis Island Gold Medal Award for humanitarian work.
Gary Horowitz / President - Mr. Horowitz has been President of the Company since July 1998. Previously, he was President, CEO and a director of Harmony Holdings, Inc.; publisher, CEO and a director of L.A. Weekly; and President of Jenkins, Covington, Newman, Inc., a television production organization.
Donald J. Masters / Executive Vice President - Mr. Masters is Founder and former Director of Access Television Network, Inc., and is responsible for activities of the National Partnership for Recovery and Prevention. Mr. Masters is former Vice President and General Counsel of United Cable Television Corporation, where he helped develop the Discovery Channel, E! Entertainment, Preview Guide and several home shopping channels.
John Wheeler / Senior VP, Operations - A twenty-two year veteran of the cable and
communications industries, Mr. Wheeler began at Cablevision of Long Island. He held senior positions at Vision Cable Communications, Inc. and Showtime Entertainment. Mr. Wheeler was Vice President of Marketing at Metro Mobil CTS, Inc. and was President of Cellular System Management, Inc.
Michael Clark / Vice President of Finance – The Company's Vice President of Finance since August 1998, Mr. Clark previously served as Vice President/Treasurer of Associated Financial Group, Inc. ("AFG"), Controller for Quest Resources, and Assistant Controller for Valley Cable TV. Mr. Clark also served as an auditor for Arthur Young & Co. in Los Angeles. He is a graduate of the University of California, Santa Barbara and has a Master of Science degree from the California State University at Northridge.
Nimrod J. Kovacs / Vice Chairman of the Board of Directors – Mr. Kovacs has been a director of the Company since October 1996 and serves as Vice Chairman of the Board of Directors. Mr. Kovacs is currently President of Eastern European Electronic Distribution & Global Programming Group of United International Holdings, Inc. ("UIH"). Previously, Mr. Kovacs directed UIH's investments, which included Kabelkom in Hungary, Kabelvision in Sweden, Kabel Net in the Czech Republic, Multicanal in Portugal, and HBO Czech/TV Max in the Czech Republic. He was also President of NJK International, an international media consulting company. From 1982 to 1989, Mr. Kovacs was responsible for the investments of United Cable, and subsequently United Artists, in the Discovery Channel in the United States and Europe, E! Entertainment, Think Entertainment, Preview Guide, Bravo UK, and several home shopping channels.
George H. Henry / Director and Chairman of the Executive Committee – Mr. Henry served as Chairman of the Board of Directors from May 1997 to August 1998 and has been a director of the Company since December 1995. Mr. Henry has recently been named Chairman of the Executive Committee. Currently, Mr. Henry has been President of G. Howard Associates, Inc., a private investment firm. Previously, Mr. Henry was a Vice President in the Corporate Finance Department of the predecessor of Schroder & Co. Incorporated, an investment banking firm. Mr. Henry is a director of PhoneTel Technologies, Inc., a publicly traded telecommunications company. Mr. Henry is also Chairman and Chief Executive Officer of ATN. Mr. Henry is also a trustee of Mitchell College.
Charlotte Schiff-Jones / Director – Ms. Schiff-Jones has been a director of the Company since July 1998. Since 1997, Ms. Schiff-Jones has been a consultant to the Company, concentrating on affiliate marketing strategy and community outreach projects. Previously, she was the president of Gamut Media, a strategic marketing and creative services agency; a consultant to the President and CEO of Time Warner Cable Programming; and president of Schiff-Jones Ltd., a consulting firm.
The Future
Recovery Network is a ground floor digital media and health care business opportunity.
Recovery Network is developing multiple revenue sources that extend beyond the traditional cable television revenue streams of advertising and cable license fees, including online healthcare services (Recovery Interactive), sales of products and services (Recovery Direct), telemedicine (Recovery TeleCare™), and government and foundation funding (other income). The Company benefits from significant cross-promotion from media under the Recovery Network, Inc. umbrella, with each medium supporting and reinforcing the other. Taken together, the Company believes these sources of revenue will allow it to become a high- revenue, high-margin multiple media business.
We give new meaning to community service. Recovery Network, with the participation of local cable affiliates, is fulfilling the original purpose of cable television: to serve community interests. Under the umbrella of COPE (Community Outreach Programs & Events), Recovery Network works closely with cable affiliates and its own National Partnership for Recovery and Prevention (a coalition formed by Recovery Network of more than 50 prominent health, recovery and prevention organizations that reaches 40 million people) to develop events that highlight regionally relevant issues and
their impact on communities.
CORPORATE HEADQUARTERS
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Telephone: (310) 393-3979
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For further information contact investor relations at 1-888-338-3367
This publication is an advertisement on behalf of Recovery Network, Inc. and may not be construed as investment advice. This advertisement does not provide an analysis of the Company's financial position and is not a solicitation to purchase or sell securities of the Company. Readers should consult with their own independent tax, business and financial advisors with respect to any investment, including any contemplated investment in the advertised Company. All information contained in this advertisement should be independently verified with the advertised Company and by an independent financial analyst. The Publisher, its affiliates, officers, directors, subsidiaries and agents (collectively, “the Publisher) of this advertisement has been compensated by the Company. Compensation includes sixty thousand dollars in cash. In preparing this advertisement the Publisher has relied upon information received from the Company, which, although believed to be reliable, cannot be guaranteed. This advertisement is not an endorsement of the Company by the Publisher. The Publisher is not responsible for any claims made by the Company. You should independently investigate and fully understand all risks before investing. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements which are not historical facts contained in this advertisement are forward-looking statements that involve certain risks and uncertainties, including, but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, government approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties. |
