e enjte, 14 qershor 2007

The demise of the IFL?

The IFL created quite a buzz when it began broadcasting shows on Fox Sports Net back in May of 2006. It created an even bigger buzz when the IFL was prominently featured on a 60 Minutes episode which aired in December of 2006. That show ignited a storm of interest in the emerging company, causing its stock price to skyrocket from $3 per share to a whopping $17 per share in a matter of a couple months.

Lately, however, things have not been going so well for the fledgling, team-based organization. On May 29 of this year, an IFL registration statement went effective, allowing its shareholders to legally sell their stock to the public. Like lemmings running for the cliff, everyone started dumping and as a consequence, IFL’s stock price has gone down faster than a Tijuana crack whore on Cinco De Mayo. As of June 14th, IFL's stock is sitting at about a buck a share.

And just when you thought things could not get worse, it appears that their contract with Fox Sports Net may not be renewed. Back in January of this year, the IFL signed a letter of intent with Fox, which set forth a proposed plan for a three tier television and media alliance. Tier 1 centered around extending the contract for IFL to be broadcast on Fox Sports Net for additional three year terms. Tier 2 involved extending the contract for IFL to be broadcast on MyNetwork through 2008. Tier 3 (the big one) was a joint venture between IFL and Fox whereby Fox would obtain a significant stake in the company and the IFL would get a $6 million investment, among other things, in return.

But back in May, while announcing semi-publicly that the MyNetwork deal had been extended (tier two of the letter of intent), nothing was said about tiers 1 or 3, which were the real moneymakers. The odd timing and manner of the announcement seemed to signal that something was wrong. Although the IFL had consistently announced official press releases for pretty much any minor and insignificant activity of the company that could possibly construed as newsworthy, for some reason, they did not disseminate this news fully to the public. The silence was deafening.

Today our fears were confirmed. The IFL filed a current report with the SEC announcing that although the deal with MyNetwork had been extended, they were unable to reach a definitive agreement with respect to tiers 1 or 3. Pursuant to their letter of intent, Fox was only obligated to negotiate tiers 1 and 3 through May 31. In addition, their current contract to be broadcast on Fox Sports Net expires this month. And while the current report states that “the company and the Fox Entities are continuing to negotiate definitive agreements and are continuing to telecast IFL programs”, this surely cannot be a good sign for the IFL fan fans out there.

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