Media Notebook: Wolzien Redefines the Concept of Analyst Visibility

Sell-side analysts have lots of credentials: MBAs, CFAs, seven-figure salaries, the ability to write with a straight face patently ridiculous research reports on the companies their firms have banked. (The last two are closely related.) Only rarely, however, do analysts have actual working expertise in the industry they cover. And even more rarely do they have a strategic vision that lasts past the next quarter's earnings report.

But

Sanford Bernstein

analyst Tom Wolzien does. And he has the patent to prove it.

Wolzien hasn't advertised his ownership of the patent, which he was awarded last year for devising a way to link television ads with Web sites that would give viewers more information about products offered in the ads.

"It's a process patent that basically links programming with online, so that you can go straight from viewing a television, straight to an online site," Wolzien says. "It's an icon that comes up on the screen, you push a button, and then you go. ... It's a technology that has application pretty much across the board."

In 1999, that concept may not sound particularly revolutionary. But Wolzien applied for the patent in February 1996, when most analysts wondered whether consumers would ever be willing to send their credit card numbers over the Internet and the biggest commercial sites on the Web were largely pornographic.

But Wolzien, who worked at

NBC

for 16 years before joining Bernstein in 1991, says the synergies between television and the Internet have been clear to him for a while. Television delivers mass audiences but can't provide much in the way of detailed information about a product; the Net lets consumers get as much data as they please but lacks the broad reach of television.

"I thought there might be some potential," he says. Enough, in fact, that he was willing to figure out how to make the process work, as well as foot the "heavy legal bills" that come with a trip to the patent office. And in June 1998, Wolzien got his patent -- and his proof "that I'm thinking ahead on this stuff."

So far, he hasn't signed any deals to license the technology, although he says he has talked to several companies about potential agreements. "Suffice it to say that I'm not giving up my day job," he says.

To minimize the potential for conflicts of interest, Wolzien says he's not trying to license the technology to the companies that he covers, which include cable giants like

Time Warner

(TWX)

and

Cox

(COX)

. Wolzien says Bernstein's compliance department is aware of the patent and he discloses it in his research reports. "In any conversations with clients, I'm very up-front about it," he says.

And the best-performing media stock of 1999 is...

Time Warner? Good guess, but no.

Fox

(FOX) - Get Report

?

Viacom

(VIA) - Get Report

?

Clear Channel Communications

(CCU) - Get Report

?

Try

4Kids Entertainment

(KIDE)

, a tiny New York-based licensing company that has more than doubled to 23 from 11 since Jan. 1. Of course, 4Kids, which has roughly 4 million fully diluted shares outstanding and a market cap of less than $100 million, isn't really in the same league as media giants like Time Warner. But with the help of

Pokemon

, a Japanese video game that's caught on quickly in the U.S., 4Kids may continue to outperform its much-larger cousins for a while.

That, in any case, is the view of Russell Anmuth of

Gotham Holdings

, which owns around 50,000 4Kids shares. Anmuth has been a buyer of 4Kids since the stock traded in the single digits last year, and he continues to like its story.

4Kids makes its money by serving as a middleman between copyright owners like

Nintendo

, which owns Pokemon, and companies that want to license characters or trademarks for toys, clothes and other consumer products. Besides Pokemon, 4Kids represents

World Championship Wrestling

, and earlier this week, the company signed two new deals, including one to represent the

Comedy Central

cable channel. (Unfortunately, that deal doesn't include the

South Park

characters.)

4Kids also distributes children's programming and buys ad time on behalf of kids' advertisers. But Pokemon, an interactive game in which children collect, trade and grow a universe of 150 "pocket monsters," is clearly the driver of the company's recent growth. The game has proven so popular since its arrival in the U.S. last fall that

Warner Bros.

, which has a Pokemon cartoon on its

WB

network, has ordered 52 new episodes of the cartoon and is in talks to distribute a Pokemon movie that's already been shown in Japan.

"Pokemon continues to accelerate," says 4Kids Chairman Al Kahn.

As a result, Anmuth predicts that 4Kids, which earned 18 cents per share in 1997, will report that it earned 80 cents for 1998. (In November, the company said it would earn at least 70 cents for the year, up from a previous estimate of 50 cents.) For this year, Anmuth thinks Pokemon could drive 4Kids' earnings to $1.50 per share or even higher.

Message-board chatter is also helping the stock, as about 1,000 messages have been posted on the Pokemon board on

Yahoo! Finance

since last month. And Kahn acknowledges that 4Kids' thin float can cause exaggerated moves in its shares.

Still, 4Kids is a real company, with real and growing (albeit small) profits. And those are pluses that not all of its larger cousins share.