Inside Wall Street
A SLEEPING BEAUTY IN KIDDIE TV
Kid stuff is a big winner these days in the movies--and in TV land. And every week, 62% of all preschoolers, according to A.C. Nielsen, watch PBS. So savvy investors have been buying into companies that excel in the fast-growing business of producing children's shows. One enterprise that has caught heavy hitters' fancy is little-known Lancit Media Productions (LNCT), a leading creator of TV programs for kids and family audiences.
Based on Lancit's "sensational earnings prospects," Richard Geist, editor of Richard Geist's Strategic Investing, says the stock, currently trading at 13 5/8, "could hit 30 in a year or so." That's not all. He believes Lancit is the "logical candidate for a buyout by a major media or toy company." Lancit CFO Gary Stein says they're talking with the big players in media and toys for possible strategic alliances, but there's nothing definite to announce. Lancit has already signed licensing pacts with Fisher-Price for toys, Sony for home videos, and Russ Berie for gift items.
Lancit's The Puzzle Place, featuring multi-ethnic puppet characters, premiered in January. Its ratings are second only to Barney and Friends in the PBS kids' lineup--thus outpacing Sesame Street. Whispers are that Lancit will soon announce deals with a national toy retailer and a department-store chain to market Puzzle Place products.
A second Lancit series is Reading Rainbow, the long-running PBS show that has won six 1995 Daytime Emmy Award nominations. Now in its 12th season, the series adapts picture books appropriate for beginning readers.
Lancit's third program, Backyard Safari, a weekly natural science series for kids in the early grades, is scheduled to air early in 1996.
While Geist expects 1996 to be a big year for Lancit, with estimated earnings of 40 cents a share on revenues of $35 million, he says Lancit should have a breakout in the year ending June, 1997, when productions will be up and running. By then, enough film costs will be written off that worldwide merchandising and licensing revenues will filter through relatively unimpeded to the bottom line, he figures.
Geist, who expects a 1997 net of $1 a share on revenues of $70 million, says Lancit's balance sheet is "stellar," with $10.5 million in cash and zero long-term debt. Despite threatened cutbacks at PBS, says Geist, "Lancit will see a proliferation of opportunities."BY GENE G. MARCIAL