WALL STREET RESEARCH EVEN DID 5TH AVENUE CHANNEL. LOOK OUT IVANA TRUMP!!
5th Avenue Channel Corp. (NASDAQ: FAVE) web.archive.org Oct 8, 2000
5th Avenue Channel Corp., headquartered in North Miami, Florida, is an integrated media company focusing on production and distribution of niche television and video content via traditional broadcast channels, including over-the-air, cable and satellite systems, and on the Internet. 5th Avenue Channel's flagship financial news and information program, Net Financial NewsTM is broadcast daily from the Company's production studios and can be viewed in millions of homes on television and the Internet at www.nfn.com. The Company also operates its own wireless cable television systems domestically and abroad, and a subsidiary for business-to-business distribution of consumer products to mass merchandisers, including home shopping networks, retail store chains and wholesale distributors across the country. Trading on NASDAQ under the symbol FAVE, the Company is emerging as a unique content provider capitalizing on the convergence of television programming and the Internet, and as an innovator in net video encoding and transmission technologies, for which the Company has filed for a patent.
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STREET.COM STORY
Did Mel Rosen Make a Sucker of Ivana with a Stock Hype?
By Christopher Byron
Special To TheStreet.com
12/10/98 5:14 PM ET
You know how when somebody says he's going to do something, and then he doesn't do it -- don't you just hate it when that happens? My guess is, that pretty much sums up how Ivana Trump is feeling these days.
For the better part of a year now, Trump has been running all over the place telling people she's going to be starring in her very own cable TV show -- all about how swell it is to be rich and that sort of thing. She's been quoted in newspapers, on TV talk shows, at cable trade conventions, you name it. It's all because, just about a year ago, Ivana got involved with a Miami fellow named Mel Rosen, who set up a privately held company -- the Fifth Avenue Channel -- with her as a 10% minority partner and him as controlling majority owner, on a promise to produce and distribute her show.
That, in effect, allowed Mel to use Ivana's name and image on cable TV -- which is, I submit, not something a celebrity would want unless he or she was very sure about the whole operation's bone fides. Maybe she was and maybe she wasn't. But it's a fair bet she's having second thoughts now. We'll see why in a minute.
In any case, Mel thereupon sold a majority stake in the privately held company that he'd set up with Ivana to a public company he also happened to control, Tel-Com Wireless Cable TV (TCTV:Nasdaq - news). That, of course, transferred control of the Ivana operation from Mel's private entity to his public entity -- which is, I submit, not where a celebrity would want to be if the company in question turns out to have been infested with stock promoters looking to make a quick buck. And that certainly describes the situation at Tel-Com. We'll get into all that in a minute, too.
First, however, we need only note that scarcely had Tel-Com enlisted Ms. Trump than Mel and his chums began mailing documents to investors and stockbrokers all over Wall Street, telling them that Tel-Com would be launching the Ivana Trump show any minute. First, the show was going to launch in May 1998. Then it was going to launch in October. Then, more vaguely, in "the fourth quarter" and now, most recently, according to various press reports, "early next year."
We last wrote about Tel-Com a year ago. We wondered where a company with its pipsqueak financials would ever get the $100 million or more that experts said would be needed for a nationwide launch of a cable channel. (At the time, the company had all of $113,000 of cash on hand, and gross yearly revenues of barely $1 million from an itsy-bitsy cable operation somewhere in Costa Rica and another one in Wisconsin.)
So now that a year has passed, with its endless parade of launch postponements and delays, a question naturally arises: Where's the show? And here's the answer: As that great social philosopher, Chico Marx, said in A Night at the Opera, "There ain't no sanity clause" ... or at least there ain't going to be no Fifth Avenue Channel coast-to-coast cable TV show starring Ivana Trump -- at least not any time soon.
Instead, Trump appears to have become the dupe in what has all the trappings of a classic Wall Street stock hype. It was a hype that appears to have started off as an attempt to goose up Tel-Com's share price on the news of Ivana's pending cable TV show. But when cable stocks cooled off last spring and Internet fever erupted on Wall Street, Mel Rosen switched strategies and on Sept. 11 put out a press release announcing that not only would his company be launching the Ivana show on cable "in October" but it would now be launching a Fifth Avenue Channel Web site along with it. Is anyone surprised?
Nor should we be surprised to learn that when Ivana herself plugged the channel on a TV talk show late last month, Tel-Com's stock price took off on a wild ride from $6 to $25, all within a four-day period spanning the Thanksgiving holiday. Soon after, short-sellers jumped aboard and drove it back down to less than $10. Total take for the "longs" on the way up, and the "shorts" on the way back down: possibly $147 million, and maybe more than that.
It's not yet clear whether this hustle was intentionally orchestrated by those who profited from it or was simply the latest and weirdest freakout yet by oversexed Internet day traders. Either way, a number of creepy figures seem clearly involved.
For starters, there's a trio of "public relations consultants" who were handed big chunks of stock by the company to hype its share price on Wall Street for a year beginning back in December 1996. One or more of the promoters may still hold substantial stock positions in the company even to this day.
One is a North Carolina man named Charles S. Arnold. In his career, Arnold has run everything from a blood bank to a Florida-based pizza-vending-machine business that went bankrupt in 1992. These days, Arnold looks to be the mastermind behind a Web site devoted to touting various stocks to the investing public. One of the companies his Web site is currently recommending turns out to be Tel-Com Wireless Cable TV.
In a similar spirit, there's a sidekick of Arnold's named Richard Fixaris, who is also listed in Tel-Com filings as a consultant. Fixaris has tagged along behind Arnold since as far back as his busto pizza-vending-machine business days. Since then, he has worked for Arnold, publishing a succession of penny-stock tout sheets, several of which are currently billboarded on Arnold's Web site (www.stockmaker.com). Finally, there's an individual named Carl Caserta, who was barred from the securities industry back in 1991 for secretly investing in a penny-stock brokerage firm while he was under suspension from the industry by the Securities and Exchange Commission for an earlier infraction.
Rosen himself insists he had nothing whatsoever to do with any of these individuals, who he said were already working for Tel-Com as "consultants" when he became president and chief executive in May 1997. "I've never met any of them," said Mel, who insists that none are now associated with the company in any way.
On the other hand, there seems to be rather a lot that Mel admits he doesn't actually know about the company he runs. For one thing, he insists, rather oddly, that he just doesn't know who the company's second-, third- and fourth-largest shareholders actually are. Though they collectively accounted for nearly one-third of the company's outstanding shares earlier this year, Mel said he knows only that they bear the names of shell companies in North Carolina, Florida and California. It is instructive to note that at least one of the shells filed so-called Form 144 documents with the SEC on the eve of Tel-Com's late-November price surge. Form 144 filings give holders of unregistered stock the right to sell the shares.
Here's something else Mel apparently didn't know about his company: that up until Nov. 27, it had been employing an admitted felon as its "investor relations consultant." Tel-Com's vice president and general counsel, Sandy Simkin, said it came as an embarrassing surprise when the company learned, on Friday, Nov. 27, that its own investor relations man -- an individual named Howard Edrich -- had plead guilty to possession of stolen property as part of securities fraud in New York in 1992.
Simkin said Edrich actually never worked for Tel-Com at all, but rather for an outside "investor relations firm" hired by the company called "Palm Investments." Nonetheless, he said he himself personally dismissed Edrich "the very instant" he learned of his unsavory past. The Dec. 7 issue of Barron's reports that in the weeks leading up to Tel-Com's price explosion, Edrich and Arnold jointly made calls on several investors in New York, trying to sell them stock in Tel-Com at a discount on its then market price.
Given all the foregoing, one cannot help feel a certain sympathy for the plight of Trump. Though others have clearly made a bundle off her public trumpeting of Tel-Com's plans to make her an Internet and cable TV star, Ivana herself has little to show for her grand ambition of becoming a prettified Robin Leach. Instead, she's done herself the huge disservice of looking like a patsy when it comes to the ways of high finance -- the very taint she managed artfully to escape in her divorce dealings with her ex-husband.
According to Simkin, Trump was issued a modest 10,000-share block of Tel-Com stock in late summer "in lieu of salary" for her position as chairman of the board of the Fifth Avenue Channel. By Simkin's reckoning, Trump's shares were worth roughly $4, or about $30,000 to $50,000 when issued. (On Dec. 10, Tel-Com's stock closed at 13 7/8.) Meanwhile, she's been left holding a 10% stake in the Fifth Avenue Channel itself, a pipe dream that won't be worth 10 cents if Tel-Com can't somehow get the show on cable TV. Even the Internet site looks to be, for now at least, an illusion. Visitors to the site are confronted with a logo and not much else.
Rosen insists that he could launch the cable show "next week" if he wanted -- and that the launch of the Internet site is only days away. In an interview for this story, he told me that, if necessary, he will finance the whole operation out of his own personal funds. Maybe that's because, as Mel describes it, the show has the earmarks of a cheapo operation that might not actually cost all that much. It certainly won't be the "24-hour-a-day luxury lifestyle" programming service the company promoted in the beginning. Instead, the plan now seems to be to distribute the show via satellite to obscure UHF broadcast stations as a backdoor route onto various local cable systems through so-called "must-carry" rules.
Even at that, no UHF stations will be carrying it in the New York market. As a result, if the show ever does get off the ground, the only friends of Ivana's who will likely get to see it will be Los Angeles insomniacs willing to tune in to UHF Channel 62 between midnight and 6 a.m. -- the only such major market station that has so far agreed to carry the program.
Look, this has gone on long enough. Tel-Com was a basket case when we wrote about it a year ago, and nothing has happened since then to make us change our minds. Balance sheet cash has dropped to $36,500, shareholder equity has shriveled to 17 cents per share and negative cash flow from operations has more than tripled, to $606,000 for the nine months ended Sept. 30 as compared to the year-earlier period. With revenues still running at a mere $1.5 million a year and losses piling up at a $3 million-a-year clip, this company can't afford to launch anything new, let alone a cable TV show and an Internet site at the same time.
Bottom line? If Mel Rosen wants to pump his own personal funds into those projects, then let him. As for everyone else, the message seems to be clear enough: Stay away. However one wants to look at it, the money in this stock has already been made. There's nothing left but a bottomless rat hole of losses, all the way to China.
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Christopher Byron's column appears in the New York Observer, and he also writes a Wall Street and investing column for Playboy. He is the former assistant manager editor for Forbes, the Wall Street correspondent for Time and the Bottom Line columnist for New York. Byron holds no positions in any of the stocks discussed in his column. While he cannot provide investment advice or recommendations, he invites you to comment on his column.
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