Einstein a go go?

By | August 29, 2001 | Feature

Chris Forrester Editor

Einstein TV is suffering cash-flow problems and may close unless an influx of fresh funding can be sourced. WhereitsatTV, a music-based channel is also reportedly about to close and has told its 120 staff it is facing a funding gap following the withdrawal of an expected investor.

The Einstein Channel floated on the UK-based Alternative Investment Market (AIM) in March 2000, raising some GBP7.9 million from investors, and launching on Sky Digital on January 25, 2001. But along with most TMT stocks it had a volatile year. Investor confidence has simply evaporated over the past month. Einstein, which was formed two years ago to offer television production services, in a stock exchange statement, said its cash position and sentiment in capital markets prompted it to review its options, including possibly selling all or part of the company. “The Directors announce that despite tough advertising conditions in the UK television market they remain satisfied with Einstein’s progress and confident that Einstein can develop into a successful worldwide brand.” The statement added it was in talks with potential parties about the possible sale of some assets, but had not begun talks on selling the whole company. However, a significantly more upbeat statement on Einstein’s website, dated August 20 from CEO Steve Timmins, offers “apologies for the delay in this month’s [CEO letter] release, but we have been negotiating an important contract for the last eight weeks, which was finally signed on Friday night [17th]. This means that August has been a good month for the Group with the signing of this five-year funding deal for our TV channel, einstein.tv. Via this scheme, we have been able to bring in a revolving GBP1m that can be used to fund programmes and overheads.”

The market was not impressed. On August 21 the rapid slide in the company’s value continued with its shares slumping 2.5p, or 43 per cent, to 3.25, extending a 21 per cent drop the previous day. Fund manager Dresdner RCM Global Investors sold its entire stake in the company, comprising 975,000 shares, for one penny each, while Halifax Group sold 250,000 shares, cutting its holding to 1.7 million shares, or 4.5 per cent.

According to an analyst the market is concerned about the outfit’s rate of cash burn. As at December 31 last year the company was sitting on GBP3.8 million of cash, meaning that GBP4.1 million had been spent before the channel launched.

This lack of confidence followed two days of highly positive press releases, suggesting a much deeper malaise. A five year co-production deal with Take 3 TV Partnerships, worth GBP1 million a year to Einstein, to co-fund Einstein’s programme-making arm was followed by Einstein’s appointment as European marketing and PR agency for Qatar-based Arabic news channel Al Jazeera.


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