The Primedia company is seriously off its ad projections for the fourth quarter following a challenging 2006. Channel One is part of Primedia's Education division, which performed poorly in the third quarter. For the first nine months of the year, ad revenue in the education segment fell 27.8%, to $17.1 million from $23.7 million, while third-quarter ad revenue fell to $3.7 million from $4.2 million, off almost 12%.
According to executives familiar with Primedia, the company has been quietly talking to prospective partners, including Walt Disney Co., about a possible sale. One executive close to Primedia said talks never progressed after Disney failed to show interest in the company, which has been a target of activists who are against advertising in schools. A Disney spokesman said the company would not comment.
Fears of more regulation
The service has also struggled amid a marketer pullback on kid-targeted food and beverage ads over fears of greater regulation. That coupled with a decline in federal spending on the channel has hamstrung the in-school network.
"Channel One continues to struggle on the revenue side as it has had a much lower than expected 2006 fourth quarter selling season. As a result, we're expecting Channel One to deliver roughly two-thirds of the revenue that we had originally planned for 2006, and we're in the process of assessing the business," said Dean Nelson, Primedia chairman, president-CEO, during a third quarter earnings call Nov. 1.
"We continue to look at a number of strategic options for this business," a Primedia spokesperson said.
No more Cingular ads
Channel One is run by CEO Judy Harris, who joined in March 2005 after working at PBS as exec-VP businesses and at Discovery Communications. The company delivers programming along with two minutes of advertising to school classrooms and common areas, like cafeterias. Since 1990, the network has outfitted schools with free TV and VCR equipment as part of an agreement to air newscasts with the ads during school hours. Channel One News reaches more than 7 million secondary-school children in 11,000 schools and has in the past won a Peabody for its coverage of issues for young people.
The home page of ChannelOne.com hosts U.S. Army "All American Bowl" football game ads, but had carried banners for Pepsi products and Cingular this year. Cingular is no longer appearing on its home page.
"Our advertising decisions often cause us to add some properties and drop others in our ongoing effort to ensure that we reach the right audience with the right messages," a Cingular spokesman said. "That said, we are not going to comment one way or the other on individual decisions."
Primedia, which is 60% owned by Kohlberg, Kravis, Roberts & Co., last week sold 17 outdoor magazines and accompanying web properties to InterMedia Partners for $170 million, including titles such as Guns & Ammo and Game & Fish.
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Alice Z. Cuneo contributed to this report.