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Al Gore's Current Media: An Inconvenient IPO

Al Gore likes awards, and awards like him.

He famously won the Nobel Peace Price. People think he won an Oscar, but he really just stood on the stage. He has, though, won an Emmy, a Webby, and two Quill awards, which is like a poor man's Pulitzer for books.

He has yet to win a Grammy (it would be entertaining to see him try), but drew wild applause just by presenting one.

Now Gore is looking for accolades on Wall Street - namely, that old brass ring known as an IPO. A successful public offering is awarded most often to companies with proven profits, the promise that those profits will grow and a business plan that seduces investors into steamy fantasies of capital gains.

Gore's company, Current Media, has none of those right now.

But it does have Al Gore. His brand is so bright and shiny these days that it might prove a powerful intoxicant, leading investors to let Current slip into the public markets.

That would be too bad, because Current Media isn't ready for prime time. It's being rushed out in a premature stage, and reading the company's S-1 filing, you can't help feeling that it's going public now largely because it's close to running out of cash.

That's not to say Current is badly run. It's an intriguing hybrid, a trendy if low-profile love child of a cable channel and a social networking site. I spent some time looking at its videos, and while they're hit-and-miss, the hits are pretty good. And it has experienced managers, chief among them co-founder Joel Hyatt, who has an even more eclectic background than Gore.

As a utilities regulator in California, Hyatt shot down an idiotic proposal to make people dial 11 digits even when calling a next-door neighbor. He worked with Bill Gross' Idealab, one of the rare Internet incubators to hatch some good eggs; he has lectured on entrepreneurship at Stanford's business school; and he joined Hewlett-Packard's (HPQ) board last year.

So unless you were to dig into the S-1 filing, you might think this IPO could fly. But it probably won't, because it shows some key signs of an undercooked IPO.

First, Current Media isn't profitable. Far from it, in fact: It has lost $37.4 million since it started recording revenue less than four years ago. Compare that with $140 million in aggregate revenue, and you have a company that has spent $1.27 for every $1 taken in.

As bad as that sounds, that excludes the 8% return it has paid to preferred shareholders for the past three years. Throw that in, and Current has put out $1.41 for every dollar in revenue.

Even so, Current Media hasn't been unprofitable every single year. In 2004, it posted a profit of $460,000 on revenue of $14 million. That was because it bought Newsworld International, a cable channel for global news junkies, for $71 million in May of 2004.

For the last eight months of that year, the no-nonsense news channel stayed profitable. But in 2005 -- once it was transformed into the hipper, youth-oriented Current TV -- the losses began. Current's 2005 loss was $14.3 million, more than 30 times the previous year's profit.

Current Media took Newsworld International, a modestly profitable gumball machine, and turned it into a neon-lit producer of sourball jawbreakers.

Here's another fishy thing: Although the company's losses are dark and deep, it has gone around boasting of profitability this past year. Liz Gannes, a blogger at NewTeeVee.com, called the company on it. It turns out Current's profit was based on EBITDA cash earnings. That is, it excluded depreciation and amortization, interest payments and stock-based compensation.

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