Nothing boffo about TV-movie producer RHI's stock offering

Much of the pulp TV programming that RHI Entertainment Inc. churns out is a lampooner’s dream. "Killer Wave." "Blood Monkey." "Black Swarm." You get the picture.

That didn’t stop investors from handing the New York-based production company $189 million in its initial public stock offering on Wednesday.

But by the end of the stock’s first session of trading, the people who bought in may have been feeling like one of the hapless victims in RHI’s horror fare: "What was I thinking opening that door?"

The deal was priced at $14 a share late Tuesday, well below the $16-to-$18 range RHI hoped to get. But even $14 turned out to be too high: The stock immediately fell as trading began Wednesday, dropped as low as $13 and closed at $13.50. An instant discount is never a good sign for a new offering.

RHI is the production vehicle of the Halmi family -- Robert Halmi Jr., 51, and his father Robert Sr., 84. Their niches are made-for-TV movies and TV miniseries, some of which have been critical successes (the Western "Lonesome Dove" in 1989, for one). RHI’s 2007 science fiction series "Tin Man," a reimagining of "The Wizard of Oz," was the biggest ratings hit in the Sci Fi channel’s history.

A lot of what the Halmis have produced over the last 30 years, however, has just filled content space on the networks and cable. Critics be damned, the Halmis love to put their own stamp on remakes of the classics: "Moby Dick," for instance, and "Gulliver’s Travels."

Nothing wrong with that. Except that RHI, in its current incarnation, is bleeding red ink. It needed the IPO to help pay off crushing debt, not to directly fund a new era of Halmi productions. . . .

Made-for-TV-movie firm RHI gets less than hoped in IPO

No Emmy for this deal: TV-miniseries kingpin RHI Entertainment Inc. priced its initial public stock offering late Tuesday at $14 a share, below the $16-to-$18 range the company had hoped to get.

RHI, based in New York, is the production house of the Halmi family -- legendary producer Robert Halmi Sr. and son Robert Jr.

RHI was a public firm in the early 1990s until it was bought out by Hallmark Cards in 1994. The Halmis stayed on board under Hallmark’s wing, producing a slew of content for the Hallmark Channel and for other outlets.

They and other investors then bought the firm back from Hallmark in a leveraged buyout in January 2006, with Robert Jr. running the newly independent business. The buyout set the scene for the stock IPO: The Halmis needed capital to pare back the debt from the LBO.

But debt-reduction IPOs often fail to get investors excited. RHI had to settle for less than it wanted.

The company had hoped to raise as much as $225 million by selling 12.5 million shares at $18. Instead, the underwriters of the deal (led by JPMorgan Securities) had to cut the price to $14, although the number of shares sold was boosted to 13.5 million. Gross proceeds: $189 million.

This is no Oscar mill, but RHI claimed nearly half the market for TV miniseries from 2000 to 2007, including "Arabian Nights," "Dinotopia" and last year’s "Tin Man" on the Sci-Fi channel. Its made-for-TV flicks have included "Moby Dick" and "Killer Wave."

The stock is expected to begin trading on Nasdaq on Wednesday under the ticker symbol RHIE.

Movie producer RHI hoping to lure investors in stock sale

A relative rarity was expected on Wall Street this afternoon: an initial public stock offering from a movie producer.

RHI Entertainment Inc., a well-known name in made-for-TV movies and miniseries, was hoping to price an offering of 12.5 million shares between $16 and $18 apiece.

RHI, based in New York, is the vehicle for the Halmi family -- legendary producer Robert Halmi Sr. and son Robert Jr. RHI was a public firm in the early 1990s until it was bought out by Hallmark Cards in 1994. In January 2006 Robert Halmi Jr. and other investors bought the company back from Hallmark. Robert Jr. now heads the business.

RHI, with the Halmis still in charge while under Hallmark's wing, claimed nearly half the market for TV miniseries from 2000 to 2007, including "Arabian Nights," "Dinotopia" and last year’s "Tin Man" on the Sci-Fi channel. Its made-for-TV flicks have included "Moby Dick" and "Killer Wave."

The company’s basic pitch to investors is that it can make movies for relatively low price tags and reap a long-term profit stream from its expanding content library.

But the Halmis’ greatest need at the moment is to cut the debt load incurred in buying the firm back from Hallmark. That’s where most of the money raised in the IPO would go: debt reduction. And that usually doesn’t make for a thrilling pitch to potential stock investors.

JPMorgan Securities and Banc of America Securities are managing the IPO.

Weather Channel may be GE's prize as Time Warner balks

From Times staff writer Meg James:

Everybody talks about the weather. Time Warner has decided not to do anything about it.

The media giant today withdrew its bid for the Weather Channel, leaving only General Electric Co.'s NBC Universal unit and its partners as potential buyers for one of the most widely available cable channels in the U.S.

In late afternoon, privately held Landmark Communications, which owns the Weather Channel, weather.com and several newspapers, announced that it had entered into exclusive negotiations with the NBC Universal consortium, which includes private equity firms Blackstone Group and Bain Capital.

Landmark's decision earlier this year to auction the Weather Channel hasn't turned out to be the slam-dunk some on Wall Street anticipated. The early line was that the property could fetch as much as $5 billion -- an amount that most media companies immediately determined to be unrealistic.

Initial bids came in around $3 billion to $3.5 billion, according to people close to the negotiations. Companies that expressed interest early on, including CBS Corp. and Liberty Media, quickly stepped back.

By early this month, the auction was down to just two bidders: Time Warner, which owns the cable channels CNN, TBS, and TNT, among others; and the NBC Universal group.

Time Warner declined to discuss its decision to withdraw. But Chief Financial Officer John Martin said last week the world's largest media company would be "extremely price disciplined and price sensitive" in its pursuit of the company.

The stock market apparently thought that was the right approach: Time Warner's shares jumped 52 cents, or 3.5%, to $15.43 today, while GE edged up just 10 cents, to $29.15, after hitting a 52-week low on Thursday.

Expedia's back in the buyout rumor mill, but Diller scoffs

Stop me if you’ve heard this one before: Expedia Inc. might be a buyout target.

Shares of the online travel services firm jumped as high as $23.81 today, from Tuesday’s close of $21.74, on rumors that Chairman Barry Diller might want to take the company private.

The stock pulled back after Diller, attending a conference in Carlsbad, Calif., seemed to deride the buyout talk. Reuters reports from there: "Asked by a reporter whether to believe rumors that he wanted to take the company private, Diller replied: 'I wouldn't.' " He went on: "I am so suspect of current markets and the hedge funds and momentum selling/buying. I think there is a plot behind everything."

Hmmm.

Expedia’s shares settled at $22.75, up $1.01 (or 4.6%) for the day but still down 28% year to date.

The company also was in the buyout rumor mill in early April. That one was good for a 15% jump in the stock April 1-2.

Given Diller’s penchant for deal-making, investors in his companies have to live with the possibility that anything could happen. Last June he announced that Expedia would buy back more than 40% of its shares. But the buyback total was slashed by 80% after financing dried up amid Wall Street’s credit crunch. Which raises the question of whether credit would be any easier to get today for a full buyout of the firm.

Diller, of course, now is busy with plans to split his IAC/InterActive Corp. into five companies later this year.

Photo: Barry Diller. Stuart Ramson/RushmoreDrive.com