THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, June 2, 1996 TAG: 9606010328
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
TYPE: Interview
LENGTH: 158 lines
As president and CEO of Virginia Beach-based International Family Entertainment Inc., Timothy B. Robertson, oversees a global entertainment business that includes The Family Channel and MTM Entertainment, creator and owner of such classic TV hits as ``The Mary Tyler Moore Show'' and ``Hill Street Blues.''
On paper, he's IFE's second fiddle. His father, Pat Robertson, is chairman of IFE, as well as of Christian Broadcasting Network. It was from CBN where The Family Channel was born and later spun off in 1990 in a $250 million leveraged buyout led by father and son.
But Tim Robertson, 41, is IFE's day-to-day boss.
In an interview last week with staff writer Dave Mayfield, Tim Robertson addressed a wide range of questions. The most important of them, to IFE's roughly 200 Hampton Roads employees, is whether the company is for sale, as some trade-press reports have indicated in recent weeks.
Q Is IFE for sale?
A We have not put the company up for sale. And our very structure makes us bulletproof from a takeover because . . . between (the shares owned by) my father's trust, of which CBN is the ultimate beneficiary, and me personally, if we together don't want to have a deal done, then it isn't going to get done. . . . That being said, we have as one of our long-term strategic goals the development of a stable supply of programming. And to that end, we continue to have a variety of discussions with people ranging from studios to networks. These possibilities could be something as simple as creating a joint venture where we would co-develop programs that would initially run on a broadcast network and then flow to The Family Channel. Or we could co-develop programs with a studio that would ultimately come to us.
Q There's been speculation that you might help facilitate a sale of blocks of IFE stock now owned by CBN or Regent University to one of the broadcast networks or a studio.
A I think it's probably a safe assumption that over the course of time both Regent and CBN are going to seek ways to diversify each of their respective investment portfolios. So there might be blocks available from the two of them. To that end it does make sense for us . . . to have someone who can bring strategic benefit to us to be part of that (ownership) mix.
Q Is it getting harder for you to acquire programming when the program producers, the studio giants like Time Warner, Disney and Paramount, are owning more and more of their own broadcast and cable channels?
A There is a clear competitive issue that we face with the vertical integration that is happening in the business. If Time Warner ends up buying Turner, you have the No. 1 producer of programs for the broadcast networks now having a family of in-house cable channels that it owns. So there's some question as to whether their programming is truly going to be available on the open market.
Q Has what's been going on the industry heightened your interest in utilizing MTM?
A Absolutely. We've pumped a lot of additional development funds into MTM this year. Out of five new shows that we actively put into development at MTM this year, four got picked up (by broadcast networks or in first-run syndication) for the fall. So we're very happy about that . . . When these shows come out of their initial airings, we'll have first crack at them for The Family Channel.
Q Does it frustrate you that the company seems to get noticed most by investors when there's takeover speculation? Your 50 percent growth in earnings and cash flow in the first quarter seems to be getting relatively little notice.
A I'm probably not as frustrated as I once was. There was a point where I got up every day and checked the monitor here and said, `What's going on? Why is it doing what it's doing?' I've come to believe that over the long term that the fundamentals of the company are going to be what drives the stock price. Our fundamental belief is that there are marvelous opportunities that are still available to us in our growing industry.
Q The Family Channel is the cash cow that lets you invest in other opportunities. But is the continuing proliferation of cable channels worrisome to you?
A I was concerned about it about 18 months ago. We were doing everything we could, building shows and cramming all kinds of emotion behind them and our (ratings) numbers weren't budging . . . We had begun to accept the idea that we had to operate from a business model of controlled costs and managed margins. But we've now seen some success and we recognize that we can push the bar a lot higher.
Q The guy you've given a lot of credit to for your programming successes is former ABC Broadcast Group President Tony Thomopoulos, who took over as IFE's programming czar early last year. You've shifted a lot more decision-making to him in Hollywood. Does it make sense for rest of the company to shift there, too?
A The whole company? Oh, man. I don't believe so. There are two issues that face us with that question. One is economic. The other is cultural. The economic issue is pretty cut and dried. We own this building at about $40 a square foot. To lease space in California, we'd pay $35 (per foot) per year. Second, we already impute close to a 25 percent differential in wages to our employees in L.A., and our L.A. employees still complain they have a lower standard of living . . . Cultural issues are also very real. We believe that as The Family Channel, we are better able to maintain our uniqueness and what I would call our specialness if, as the senior decision makers of the company, we stay away from New York and Los Angeles. There's an insular nature to both of those communities which I find personally to be out of the touch with the value system that exists in literally the rest of America. And it provides a certain necessary balance between us and the L.A. contingent. The L.A. contingent brings tremendous energy and vitality to our business, an immediacy and a flair for promotion that has really elevated our on-air look. But all the people who are implementing that - the technical people and graphic designers and editors - are all here in Virginia Beach. And they don't want to live in L.A.
Q I noticed your father turned 65 this year. Has he given you any indication that he plans to step aside as chairman of IFE?
A His role as chairman is an important role. It is a strategic role. He's very involved in the overall policy decisions that we make. He's not poring over weekly ratings reports. My father shows no signs of slowing down at all. He's up early, 5:30 or so every day, runs, works out with weights. And he's got five or six different companies, ministries, organizations, whatever, that he's involved with all the time. He absolutely thrives on the pace.
Q Let's talk about deals you've done. Aside from MTM, the few acquisitions you've made - Ice Capades, a chain of live-music theaters down in South Carolina - don't appear to have succeeded. You sold the Ice Capades within months of buying it and you've lost money continuously on the music theaters. Both mistakes?
A We have learned quite a lot from these deals. In the Ice Capades case, strategically and economically, it's going to prove to be a good deal. . . . But we did not do the level of due diligence on the personalities involved, the management (IFE inherited) that we should have. With Del Wilber (the McLean-based sports marketer to whom IFE sold the Ice Capades) we now have good leadership. We already have two shows contracted - one with Warner for the Warner on Ice tour and the other with MGM for the MGM on Ice tour - both of which have been booked into big arenas with large guarantees. And we've taken the Ice Capades' Cinderella tour, which is out there currently, and booked it at a guaranteed profit into China. We'll be developing a network television special of that show which will be live from Tiananmen Square. What we've structured with Del Wilber is in effect a merger. He's given us notes . in Del's company. . . . And it will then become a subsidiary of IFE.
Q And the theaters?
A At this point, our goal with that property is to consolidate it into somebody that does that for a living. We're in discussions with some people who might be able to do something with it.
Q So if you sell the theaters, I can assume you won't build one in Virginia Beach as you once discussed?
A Yeah. Although we're talking with Virginia Beach about the Ice Capades .
Q What are your major initiatives now?
A We want to wrap The Family Channel brand around other related products: movies, CD-ROM products, Internet-related products and videos. That would be a huge advantage to us. We've already got a joint venture now with Sony to make family movies, two a year. I really believe we have an opportunity to use our brand identity to build something significant in the form of an Internet-related product. . . . China is really the other big thing that's worthy of our attention. There are 200 million television households in China and these are people who are hungry for all types of information: educational programming, entertainment programming, news programming . . . There's going to be a huge demand on the part of advertisers to reach these consumers. And I'm pumped up about FiTT TV (IFE's health and fitness cable-TV network). Once the infrastructure in the United States gets built up, it will be everywhere. We're not losing that much money on it, so we can hang in there and make it a success internationally too.
Q You sound like you're having fun.
A That's the key thing.
KEYWORDS: INTERNATIONAL FAMILY ENTERTAINMENT THE FAMILY
CHANNEL CBN by CNB