Broadcasting Telecasting (Oct-Dec 1963)

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THE MEDIA Pay TV public stock sells out 1st day GOVERNMENT CONDITIONS IMPOSED ON STV PRECEDING STOCK SALE Investors testified to their belief in the future of pay TV last week in the most specific fashion — by backing it up with $15,720,000. That sum was spent Wednesday (Oct. 30) for 1,310,000 shares of stock in Subscription Television Inc. at $12 a share. The stock was put on sale Wednesday morning by 61 brokerage firms and before the day was over the issue had been completely sold out, according to a spokesman for William R. Staats & Co., Los Angeles investment firm which acted as representative of the underwriting group. Organized earlier this year (Broadcasting, July 22, et seq.), STV received authorization to put its stock on public sale on Tuesday from the California Corporations Commission and the following morning from the federal Securities and Exchange Commission, with which a registration statement had been filed in August. News stories about the company and its plans to begin operation of its closed circuit program service in Los Angeles and San Francisco next spring with the games of the San Francisco Giants and the Los Angeles Dodgers as its primary program fare (scheduled to begin by July 1964 with 20,000 subscribers in each city) inspired investigations by both the state and the federal agency before official clearance was given. Even then, the California Corporations Commission placed a number of conditions on permitting STV to offer stock in the new company to the public. Public Comes First ■ Holders of STV stock before the public offering were required to put 1,114,806 of their 1,328,972 shares into escrow, not to participate in any dividend distribution until they are released by the state. This will be until the company has been legally liquidated, with all new stockholders receiving $12 a share plus 60 cents a year (5%) cumulated from the date of purchase, or until STV has had earnings of not less than 6% for a period of from three to five years. These restrictions were considered necessary because of the intangible nature of the company's assets, the commission explained, noting that STV's actual cash investment before the public offering amounted to approximately $250,000. Among the major stockholders of STV in advance of the public offering were Reuben H. Donnelley Corp., with 66 150,000 shares; Lear Siegler Inc., 150,000 shares; National Exhibition Co. (San Francisco Giants), 54,000 shares; Los Angeles Dodgers, 71,000 shares; Donald D. Harrington, 60,000 shares; N. B. Hunt, 75,000 shares; Caroline Hunt trust estate, 25,000 shares; Tolvision of America, 613,417 shares. In addition, some of these constituted a group of "direct purchasers" who were committed to purchase additional stock at $12 a share (with no underwriting commission) as follows: Donnelley, 130,000 shares; Lear Siegler, 130,000 shares; Mr. Harrington, 20,000 shares; Mr. Hunt, 85,000 shares, and the Caroline Hunt estate, 25,000 shares. Stock sold through the brokerage firms carried an underwriting discount of $1.05 a share. Weaver Running The Show ■ Officers of the company are: Sylvester L. (Pat) Mr. Weaver All sold out Weaver Jr., president and treasurer; Robert F. MacLeod, vice president, assistant treasurer and assistant secretary; Richard C. Hemingway, vice president, and John Nelson Steele, secretary. Mr. Weaver has been board chairman of McCann-Erickson International and previously was president and board chairman of NBC. He has a five-year contract with STV. Mr. MacLeod was formerly publisher of Seventeen magazine; earlier he had been vice president and advertising director of Hearst magazines and publisher of Harper's Bazaar. Mr. Hemingway has been vice president of Tolvision of America. Mr. Steele has been a partner in the law firm of Hughes, Hubbard, Blair & Reed. STV directors include Mr. Weaver and Mr. Hemingway. Also: John G. Brooks, Lear Siegler board chairman: John J. Burke, senior vice president, Lear Siegler; Matthew M. Fox, president, Tolvision of America; N. B. Hunt, independent investor; Hamilton B. Mitchell, president, Reuben H. Donnelley; Donald A. Petrie, attorney, who was president of the Hertz Corp. until the end of 1961; Donald Royce, senior partner, William R. Staats; James L. Stolzfus, an employe of Reuben H. Donnelley. Three more directors will be added, bringing the total number to 13. Mr. Weaver is also president and chief executive officer of Programs, a wholly-owned STV subsidiary', which has contracts for the TV rights to the Dodgers and Giants games and for cultural and other special program material controlled by Sol Hurok, impresario. Mr. Fox is chairman and Mr. Hemingway is vice president of Programs. Tom Gallery, former NBC sports director, is also a vice president of Programs and director of sports programing. Mr. Weaver, who was unavailable for interviews last week, was present at an annual stockholders meeting on Oct. 30 in Jersey City, N.J., of the National Exhibition Co., which owns the Giants. Also in attendance was Hamilton Mitchel, president of the Donnelley Corp. Bank Conditions ■ Security First National Bank, Los Angeles, and Wells Fargo Bank, San Francisco, have agreed to lend up to $2.5 million apiece to STV on or before Oct. 31, 1966, at 5V2 % interest, subject to: STV having 120,000 subscribers; actual revenue having averaged $1 1.33 per month per subscriber for six months immediately preceding each borrowing, plus installation charges averaging $10 per subscriber or actual collections averaging 85 cents over the $11.33 per subscriber per month, and STV having expended all but $2 million of the net cash proceeds from the sale of stock. STV is to pay a commitment fee of Vi % per year on the unused part of the unterminated commitment, which may be terminated in whole or in part at any time without BROADCASTING, November 4, 1963