From the Alert Investor newsletter:
THIS WEEK'S PICK
In our never-ending quest to bring little-known special situations to your attention, this week we bring you another microcap that's just "out of the chute" but with tremendous potential. Florida-based eContent (ETNT,1 1/2,BB) is a play on the convergence of e-commerce and TV, and is positioned to take advantage of the synergies between the two through its aggressive acquisition strategy. ETNT is a vertically integrated e-commerce company that produces high-quality TV programming and internet content to showcase the brand-name products owned or exclusively licensed by the Company. ETNT was founded by the guys who built up the infomercial juggernaut National Media (now on the big board), led by CEO John Sgarlat. Having just agreed to acquire MPI Media, the producer of a slew of fund-raising spectaculars for PBS, ETNT is building an acquisition vehicle in the convergence space that should be a big mover next year.
As a result of the just-announced acquisition of MPI Media, eContent has a five year contract with the Philly PBS affiliate to produce telethon specials for the 346 Public Broadcasting Stations, with over 100 million weekly viewers nationwide. 24 shows have been approved for syndication in the next two years and four shows will debut nationally during the March 2000 PBS Membership Drive. In recent years, MPI has established itself as the most prolific producer of PBS fundraising specials, with "John Tesh One World', "Spirit - A Journey in Dance, Drums and Song', "How to Live Forever, with Gary Null', "Frank Patterson - Songs of Inspiration', "Bobby Darin - Beyond the Song', "Miss Patti Page: The Singing Rage', "Robert Welles - Swedish King of the Keyboard", "Frank Patterson Ireland's Golden Tenor - Ireland in Song', "The Songs of Johnny Mercer'; starring Johnny Mathis, Melissa Manchester, Andy Williams and Peter Nero, "An Evening with Patti LuPone', "Benny Goodman's Greatest Hits' hosted by Ed McMahon and featuring Lionel Hampton and Patti Page, and Jackie Mason's "Look Who's Laughing'. MPI productions broadcast on PBS, ABC, CBS and BBC have been viewed by an estimated 150 million people. eContent selects and retains rights to all products, licenses and brand names featured in the shows and, more importantly, the company will develop and promote specific cross-merchandising opportunities targeted to the program's audience.
Products will be initially offered with an 800 number highlighted during each PBS airing, then cross-promoted and sold through major media, retail and e-commerce outlets. Merchandising relationships are in place with Parade Magazine, USA Weekly, QVC, Borders, Barnes & Noble, Best Buy, Sam Goody's, Target, K-Mart, Wal-Mart and Amazon.com. ETNT's customers become members in an eContent web community that showcases products from eContent's PBS shows and are enticed to make repeat purchases. Since PBS delivers a high demographic group, one that is extremely web-savvy, these pre-qualified members are likely to generate additional e-commerce revenues and profits for eContent.
As a recent research report commissioned by eContent stated "the Company has synchronized this network of sales channels to link the "Power of PBS' to the "Power of the Internet'. PBS viewers become eContent customers ... then eContent Web Members". This is what National Media turned into a science, and that was before the opportunities presented by the web. (If you'll read the press release with that Dirigo research piece - an outfit I've never heard of before - you'll probably chuckle at their "roads are wider, cars are faster... a web user is not a web customer" nonsense, but everyone needs a shtick, I guess, present company included).
Right after changing its name from Media Vision Productions (MVPI), ETNT acquired licensing rights from Spartan Sporting Goods, one of the most widely recognized brands in boxing, martial arts and fitness apparel. In its 40-year history, Spartan has been worn by over 100 title-holders including Rocky Marciano, Muhammad Ali, Larry Holmes, George Foreman, Roberto Duran, Tommy Hearns, Sugar Ray Leonard... and my beautiful wife. In the next 12 months, Spartan will outfit over 50 boxers on fights televised on major networks. Spartan Sporting goods CEO Edward Post called Spartan "the most under-utilized license in the world". Everlast, Spartan's major competitor, capitalized on comparable brand recognition to build a $100M licensing empire. ETNT's Spartanshop.com will offer a wide range of health and fitness-related products and designer apparel bearing the Spartan logo.
ETNT has three more acquisitions lined up and due to be announced shortly. What is essentially a concept stock today is quickly becoming an e-commerce production house and marketing machine that has attained critical mass. You can rest assured the stock will not be unknown much longer.
Despite a short trading history, the stock of ETNT formed a nice base around $1 and looks ready to make a short-term break-out from its current trading pattern, towards the $2-2.50 area. Volume has been rising lately and the MACD is firmly in positive territory, indicating a bullish bias for the next few months. We expect the stock to take out its 1999 high of $3 within 2-3 months and to move even higher, as the company's unique capabilities become better known. I suggest a little patience and hanging on to this stock at least until all the acquired entities are operating together.
This newsletter has received no compensation whatsoever from ETNT.
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