Executive
Summary
Television Convergence Network, Inc.
This brochure is intended only to present a summary of the business and products of Television Convergence Network, Inc. to accredited investors who may be interested in the company, its technology and its market. This is not an offer to sell nor the solicitation of an offer to buy securities. Any offering may only be made through the delivery of a confidential Private Placement Memorandum that contains detailed information on Television Convergence Network, Inc.
February
22, 2001
TN Capital Equities Ltd., Placement
(a subsidiary of TerraNova Capital Partners,
Agent
Inc.)
Introduction Television Convergence Network, Inc. ("the Company") was formed by media-industry veterans to help local television stations ("Stations") gain a larger share of the $120+ billion local-advertising market. The Company's direct-response, content and e-marketing platform, which requires no new technical adoption by broadcasters, leverages each Station's large viewing audience and multiple promotional channels to generate increased revenues and enhanced viewer loyalty. Key to the Company's strategy are convergence campaigns that empower Stations to monetize their dual media outlets {broadcast and internet), while helping advertisers and sponsors reach closely targeted audiences more efficiently and effectively. Rather than building its own brand, the Company aggregates portions of Station broadcasts and websites to create a national platform of influential, established brands for the deployment of new forms of marketing, advertising, services and technologies. All of the Company's offering are device-independent, requiring no upgrades by Stations or viewers.
The Company contracts with Stations to provide and manage website extensions in exchange for on-air promotion time. Called the Enhanced Entertainment Platform, these extensions deliver an array of content, interactivity, contests and merchandise to visitors of Station websites. On-air promotion is tagged with the identification of a sponsor/advertiser, who also benefits from an e-mail campaign and lead positioning on the website. The Company anticipates that it will charge only for the value of the onair time in the near term, giving e-mail promotion and web sponsorship as bonuses. This revenue is shared with Stations, providing them income from previously non-revenue-generating promotional time. The Enhanced Entertainment programming Platform will be tailored to reflect each Station's individual
mix, creating, in effect, locally based fan communities for every popular TV show.
Enhancements will include: daily updated entertainment content; interactive features such as chats, bulletin boards, polls and contests; overviews of Station shows, celebrities and topical issues; and a variety of show-specific merchandise and special offers. visits by television viewers and website users. All of these are intended to encourage repeat
The Company also plans to develop integrated advertiser promotions across multiple platforms: on-air, online, opt-in e-mail, point of purchase and print. Weekly contests will utilize consumer-created video, with online voting and on-air broadcast of winning entries. These contests will allow national sponsors to become active participants in local communities, driving repeat traffic to Station websites. The first promotion to be tested is "Our City's Student Athlete Play of the Week." Sponsor interests and objectives will determine additional themes. These promotions will serve as the first step for most Stations toward becoming local broadband platforms. As broadband delivery becomes integrated at the local level, Stations will have a powerful weapon to use to gain advertising market share from now-dominant newspapers. The Company plans to expand its offerings at that time, launching Video Classifieds, Interactive Yellow Pages and additional, video-based and advertiser-supported community services. Background According to a survey by Audience Research & Development/Interactive conducted in 2000, 96% of web users are aware of local Station websites. Additional studies indicate that "Entertainment" ranks among the highest of categories of popular interest on the Internet. Most Stations, while convinced that welltrafficked websites will be essential in the broadbandinteractive future, lack the resources to develop the entertainment component of their websites and generally do not have the staffs needed to create it. Since practically all Station websites now focus primarily on news, sports, traffic and weather, the addition of Company content to their sites will enable Stations to exploit consumer enthusiasm for the entertainment side of television and, in so doing, to build viewer loyalty and generate new revenue, without cash outlay. Accordingly, the Company's plans have received enthusiastic response from numerous Stations around the country.
Strategic
Plan websites have been beta-tested over the past 18 months, and the
Prototypes of Station-customized
Company has entered into agreements with 32 Stations to supply and maintain its Enhanced Entertainment Platform on their sites. In addition, the Company has developed sources of exclusive content through agreements with established television journalists, and has taken steps toward low-cost acquisition of companies with depth in show- and fan-related content. The Company plans to contract with no fewer than 250 of the estimated 1,200 full-power commercial Stations in the U.S. This would enable it to reach in excess of 80% of all U.S. households, thereby offering television-related entertainment content, contests and merchandise to a national market. The Company intends to use the Stations' pre-existing on-air and online audience relationships to generate traffic for its sites. Accordingly, the customer-acquisition costs usually associated with Internet traffic-building efforts will be greatly reduced. In addition, the Company does not rely on any unproven technology nor does it need the deployment of any new interactive television standard to be successful. As we enter the inevitable broadband/interactive hold a competitive transition advantage over their print-oriented future, Stations, with their video orientation, will newspaper counterparts. The Company will video, with Stations
Station websites into local broadband platforms for consumer-created
providing on-air cross-promotion. The Company's business model will be expanded to include such opportunities as local-merchant infomercials, video classifieds, and sponsored video content (e.g., a pet food company branding a video section about local veterinarians). These activities may generate new local channels and will result in the creation of a valuable asset: a large video archive, plus programs that can be sold in home video and television formats throughout the world. The Company will use a portion of the proceeds of its current Offering to complete the technical work related to building its capabilities, hire new operational personnel and begin marketing its services to additional Stations. Immediately following funding, the Company expects to offer its marketing opportunities to media buyers, sponsors and advertisers, and to offer an expanded line of products, additional content and interactive features to consumers. The Company has prepared a five-year financial model for its business, tailored to the revenues realizable from its Enhanced Entertainment Platform. The model makes zero estimation of the effects of any broadband/interactive offerings, which may be very significant. Under these assumptions, the Company anticipates becoming breakeven on a cash-flow basis within 18 months of this funding, at which point it will study the feasibility of an IPO. Five years from funding, the Company projects gross revenue (net of the Station share of all revenues) of $357 million with $170 million of EBIDTA. Management The Company's senior management team is comprised of experienced entrepreneurs television syndication, with expertise in broadcasting, advertising and sponsorship sales, catalog and direct marketing.
David M. Fox, the founder, Chief Executive Officer and Director, has 27 years of television, video and direct-marketing experience, and co-founded four other media companies; Susan B. Theriot, Executive Vice President, has 23 years of direct marketing and merchandising experience, including television and video-related marketing. Robert AItman, who will join the Company shortly, has 22 years of professional television, feature film and documentary production experience and is a pioneer in consumer-generated programming. Peter A. Lund, former President of CBS, Inc., and Don Leeds, a former Managing Director of Veronis Suhler Media Merchant Bank, an investment bank specializing in media and communications, serve as Directors of the Company. Additionally, Les Brown and Tim Brooks, both recognized and respected voices in television journalism, have exclusive contracts with the Company. Inc. The Company was incorporated in Delaware in 1999 under its original name, myTVshop.com,
Its name was changed on September 21, 2000. Its office is located at 230 Park Avenue, Suite 960, New York, N.Y. 10169, and its phone number is (212) 499-7484. The main shareholders are management, TerraNova Capital Partners, and Granite Broadcasting (NASDAQ: GBTVK).
Television Convergence Network, Inc.
For further information, contact:
John F. Steinmetz, President TN Capital Equities, Ltd., Placement Agent
(a subsidiary of TerraNova Capital Partners, Inc.) 14 East 60th Street, Suite 701 New York, New York 10022 voice: (212) 355-6755
fax: (212) 355-6727 email: ifs@terracap.com