MicrocapAlliance.com
Special Situation: Sunburst Acquisitions (OTC:BB:SBAQ)
By Dave Reiner
06-21-00
Our Special Situation report on CDKnet (OTC:BB:CDKX) last week was a big hit with investors as the stock climbed to nearly $4, and this week we've got another rising star for you to sink your teeth into.
Now that the convergence wave is finally sweeping over Hollywood, it is time to seek out the content providers that will be positioned to capitalize on the trend. It appears that one of the most profound providers, Hollywoodbroadcasting.com, may merge with Sunburst
Acquisitions, Inc. (OTC:BB:SBAQ). On May 12, Sunburst Acquisitions, Inc. (OTC:BB:SBAQ ) announced that it signed a non-binding Letter of Intent relating to the completion of a business combination transaction with HollywoodBroadcasting.com, Inc.
I recently toured Hollywood Broadcasting's facilities and I was fascinated with their operations. Anthony Hopkins was recently there and Phillip Noyce (the Director of the Bone Collector) was there last week filming a segment of his latest movie. In my conversations with CEO Thom Mount, the following components of the company's business model were highlighted:
1. The company has a very smart revenue model. Content will not only be broadcast over the Internet, but it will be sold to domestic and international cable markets. Programming will be 30 or 60 minutes in length and Internet broadcasts will be divided into 8-minute segments.
2. Content is king and Hollywood Broadcasting is committed to producing quality. The power of a good concept in television cannot be underestimated. Look at how much success CBS is having with their recent idea - the TV show, "Survivor". All it takes is one winner to generate millions in revenue. Hollywood Broadcasting plans to
stream up to 20 shows plus a variety of specials by the end of 2000.
3. Hollywood Broadcasting's business model focuses on stringent cost control. In the early stages of Internet Broadcasting, cost efficiency on the production side is critical. The company leases cutting-edge facilities which include a THX certified Dolby digital surround sound, 380 seat stadium style theatre with 35MM and digital projection capabilities, an Avid Media Composer 1000 with 24-frames-per-second editing, and Protools sound editing systems.
Also, productions are shot in large segments to keep the hourly production rates low.
4. All of Hollywood Broadcasting's shows will be produced in high-definition format, which will increase the value of its library of shows.
5. Internet activity is built into each broadcast and since nearly every show revolves around celebrities and notable personalities, the company has the ability to attract a significant following.
Hollywood Broadcasting can be visited at:
hollywoodbroadcasting.com
About Sunburst Acquisitions, Inc. :
The Company's business plan is to seek, investigate, and, if
warranted, acquire one or more properties or businesses. Such acquisitions may be made by purchase, merger, exchange of stock, and may encompass assets or a business entity, such as a corporation, joint venture, or partnership. The Company intends to seek opportunities demonstrating the potential of long-term growth.
Price: $1.97
Shares Outstanding: 8.8M
Estimated Float 1-2M
Chart:
host.wallstreetcity.com
Recent News:
May 12 - Sunburst Acquisitions and HollywoodBroadcasting.com Enter Merger
Negotiations: biz.yahoo.com
April 26 - Sunburst Acquisitions IV, Inc.:
biz.yahoo.com
More about HollywoodBroadcasting.com:
Much like the birth of network television following World War II,
the year 2000 finds Hollywoodbroadcasting.com (HB.C) uniquely
positioned to take advantage of the radical technological growth of
the world's newest global distribution system ? the Internet. HB.C
is rapidly becoming the definitive full-service original content
netcaster. HB.C creates high-quality, professional hour and half
hour proprietary content and assists other providers with the
production, sales, and marketing of their products, either through
HB.C's own web portal or through more traditional distribution media,
by combining interactive, original high-definition web programming,
with the ability to re-purpose that content for secondary uses and
traditional cable satellite broadcast and home video outlets. HB.C
has created a corporate model which will actual generate revenue.
Revenue will be generated by:
- Selling advertising on HB.C's website and around its original
content programming.
- Receiving paid sponsorships in connection with HB.C as a provider
of interesting, specific and cutting-edge traditional media programs
both domestic and international (satellite/cable broadcast, home
video and internet).
- The sale of HB.C "re-purposed" content into other domestic outlets
(for example, cable and video) as well as international sales.
- Exploiting e-commerce and merchandising possibilities, both at the
consumer level as well as certain "B to B" possibilities.
- Pay per view subscriptions for certain live coverage events.
Stringent Cost Control is a critical component of HB.C's business
model. HB.C is a proven cost-effective producer of high-quality
content. Superior cost control enables HB.C to enjoy a much lower
business model risk profile relative to other competing webcasters,
and certainly traditional broadcasters. This cost-efficient
production lowers HB.C's breakeven revenues and thus lowers the
overall business model risk to HB.C's shareholders.
HB.C has a fundamental commitment to economic stability and Superior
Shareholder Returns. In addition to the lower risk business model,
HB.C enjoys because of its emphasis on low cost production, its
revenue pattern also lowers risk. HB.C recognizes advertising and
sponsorship revenues immediately upon webcasting the contracted
program(s); this serves to offset the majority of current production
costs. As the number of shows for each program grows, they are then
sold into secondary markets. Revenues from these sales are booked
only as clients use the material, which typically occurs over a two
to three year period. This revenue pattern helps to stabilize profits
over time. HB.C also creates a constantly growing asset through the
ownership of the copyright and library values of the intellectual
property HB.C finances and creates in high-definition format.
Thom Mount founded HB.C. Mr. Mount was the President of Universal
Studios for ten years and has produced over fifteen motion pictures,
including Bull Durham, Frantic and Tequila Sunrise.
HB.C can be visited at its website at: www.HBC-live.com
The SBAQ profile will be posted later today on the web site and it
will provide you with further information on the company.
Have a prosperous week! Dave Reiner |
