Interactive-television-software company ACTV Inc. has filed
documents with the Securities and Exchange Commission to issue 4.6 million shares of
common stock, including underwriter overallotments, in a follow-on offering that it hopes
will raise about $163 million.
ACTV said in the filing that the money will be used to pay
down debt -- a $6 million note from U.S. Bancorp -- and for general corporate purposes,
including acquisitions.
ACTV has two main proprietary products:
"HyperTV," a software product that enables operators and networks to customize
advertising to individual television viewers; and "Individual Television," which
enables viewers to select their own camera angles and call up specific information for
certain shows.
Although Individual Television has had most of its success
with sports programming, the company has also entered into agreements with leading
pay-per-view service In Demand to make the product available for movie, concert and
theater presentations.
Underwriters for the offering are Credit Suisse First
Boston, Bear Stearns & Co., Lehman Bros. Inc. and Salomon Smith Barney.
So far, ACTV has been a developing-stage company, with
little revenue and big losses. But as cable operators begin upgrading their systems for
new interactive services and cable set-top manufacturers roll out digital boxes on a
larger scale, its fortunes have improved.
According to Paul Kagan Associates Inc., it was estimated
that 5.1 million cable subscribers would have digital set-tops by the end of 1999, growing
to 28.6 million in 2003 and 47.6 million in 2008. ACTV believes it is positioned to take
advantage of that growing demand with its software.
The company also has other revenue streams in mind as the
rollout of digital boxes increases.
In November, ACTV formed Digital ADCO Inc. with General
Instrument Corp. to develop applications for the delivery of addressable advertising to
cable subscribers.
And the company also plans to create a data warehouse to
compile, aggregate and analyze user information that will be made available to programmers
and advertisers as a fee-based service.
According to the prospectus, ACTV reported revenue of $1.3
million for the nine months ended Sept. 30, a 26 percent increase over the same period in
1998. Losses increased during the period to $15.9 million compared with $9.9 million in
1998.
Investors also seem to believe in the company's
potential, and they have driven the stock, as well as others in the interactive-television
arena, to lofty heights in the past year.
ACTV, which traded at around $2 per share in November,
closed Jan. 18 at $40.
A lot of ACTV's future is riding on the success of
Individual Television, which it hopes to make available to cable operators for use on
their digital-cable services. Although the company has tested the service in a few
AT&T Broadband & Internet Services systems, it has derived no revenue from the
service yet.
But this could change fairly quickly: ACTV has entered into
several master licensing agreements with each of Fox Sports Net's 19 owned and
affiliated regional sports networks to provide content. So far, the company has licensing
agreements with Fox Sports Net Southwest, FSN West, FSN Northwest, Sunshine Network and
FSN Bay Area.
The company expects its first launch to be with FSN
Southwest, which has 6 million subscribers in Texas, Louisiana, Arkansas, Oklahoma and New
Mexico. A second launch would be made with FSN West, which has 4.8 million subscribers in
Southern California.
