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Microcap & Penny Stocks : GAAY - Triangle Broadcasting Company (was TBCS) -- Ignore unavailable to you. Want to Upgrade?

To: GARY DECARLI who wrote (340)	6/7/1999 7:47:00 AM
From: Jacalyn Deaner	Respond to of 2118

OT but relevant to the business aspects of GAAY from FORBES 5/31/99: Up & Comers Exploiting a niche is smart. Moving beyond it is sometimes even smarter. Can you be too focused? By Robert La Franco KATHERINE WOLFE'S greatest strength could turn out to be her shortcoming. Like a lot of small-niche players, she has an enviable growth rate (35% a year), high gross margins (40%) and a field virtually all to herself. Although sales are up 55% in the first quarter, she might be topping out already. New Almaden, Calif.-based Wolfe Video is the country's leading distributor of gay- and lesbian-themed movies (R-rated, not X). Wolfe also sells titles from the likes of Paramount, Twentieth Century Fox and Walt Disney that resonate with gays—among them: In & Out; Priscilla, Queen of the Desert; and G.I. Jane. Although all the big moviemakers use large distributors to move videos, there remain some sales to be gleaned by Wolfe via hundreds of specialty shops, selling niche videos to major retailers, an Internet site and a 75,000-person mailing list of devoted customers. Hollywood Entertainment Group recently hired her to stock newly developed gay-video sections. Says Wolfe, age 51, "We own this market, and we want to keep it." But is it a market worth owning? After 14 years in business, Wolfe Video is still tiny. Last year it earned $100,000 pretax on $1.6 million in sales. Staying too focused can sometimes be a serious drawback—as Epitaph Records (punk rock), Oakley (sunglasses) and Karl Kani (urban fashion) have all learned. Wolfe got the idea for the company in 1985, after managing an ad agency for nearly two decades. While producing a documentary on breast examinations that aired on a local cable channel, she discovered that there was an opportunity to distribute videos made specifically for women. By the early 1990s she was distributing mostly health-related and women's-issues titles to schools, clinics and specialty shops through a small mail-order business. In 1992, when she was doing about $125,000 in sales, Wolfe got a big break. Comedienne Lily Tomlin agreed to let Wolfe Video handle her performance videos. Revenues jumped, to $450,000. Emboldened, Wolfe began browbeating studio executives into giving her a shot at distributing select titles for women and, later, for gay men. Since then there have been opportunities to grow—but very few taken. "We've wanted them to expand outside of the typically gay film," says Betsy Caffrey, vice president of special markets at Columbia Tri-Star Home Video. "But up to this point they have not been interested." What are some possible sources of growth? Wolfe could create a broader "women's issues" brand, or add gay-specific books, toys, collectibles and licensed merchandise. A step in the right direction: She now holds exclusive rights to selected titles, although none of them are blockbusters. She could also take a page from the script of Howard Maier. His Manhattan-based video firm, which distributed tapes aimed at kids and fitness fanatics, latched on to an exercise tape called Buns of Steel in 1988. Maier popularized Buns, expanding it into a line of tapes that hit $40 million in sales in 1993, half of the exercise tape market. A year later he sold out to Time Warner for $20 million. Wolfe says she's now looking for a buyer. But she clearly doesn't have the franchise to demand big bucks. With few assets besides a useful mailing list and a close knowledge of the gay market, she would probably be lucky to see between $1 million and $3 million, says one industry insider. "Every company deals with limitations," shrugs Wolfe. True—but not all of them are self-inflicted. \| back to top \| Read more: By Robert La Franco Entrepreneurs Up & Comers From May 31, 1999 Issue May 31, 1999 Table of Contents: