For nearly six years Maggie Wilderotter has poured her energy and skills into making Wink Communications Inc. a leading provider of interactive television, pulling ideas out of the lab and making them reality. As president and CEO, she has watched the stock soar and plummet, certain in either case that Wink was worth the effort.
Now, rather than proceed with another round of fund-raising in an increasingly hostile market, Wilderotter and Wink's board have decided to secure the company's future by ceding independence. If all goes as planned, by the end of the third quarter Wink will be nestled snugly within Liberty Media as an asset of the newly minted Liberty Broadband Interactive Television subsidiary (LBIT) in a deal worth nearly $100 million to Wink shareholders.
LBIT, headed by former Gemstar-TV Guide co-president Peter C. Boylan III, will be one step closer to its goal of creating a dominant force in interactive television services. Based in Tulsa, LBIT made its debut in May with Boylan as president and CEO and news that Liberty would acquire controlling interest in OpenTV Corp. from MIH Limited for its new subsidiary. The deal for control of the ITV middleware company was valued at $185 million. Liberty Media owns 90% of LBIT; Boylan owns the rest.
Boylan was already sounding out Wilderotter about bringing Wink into the fold. ?Pete Boylan and I have known each other for several years and he had approached us a couple of months ago when they were forming Liberty Broadband,? Wilderotter recalled. Boylan and other Liberty executives declined to be interviewed.
The match would give Liberty ITV access to more than 6 million cable and DBS homes with 10 million on the immediate horizon ? and another 10 million pledged ? along with considerable intellectual property and ITV expertise for the bargain-basement price of $3 per share. It would give Wink the money it needs to stay afloat. Without this deal, Wilderotter would need to raise $35 million to $40 million over the next six to 12 months just to break even.
The choice: Would Wink be stronger standing alone or as part of a larger and better-funded entity that could provide it with a longer runway to accelerate?
?This way we have the best of both worlds,? Wilderotter said. ?The timing was just right.?
Asked whether LBIT had promised to put a certain amount of money into Wink, Wilderotter said no, adding: ?When you pay approximately $100 million for an asset you don't do that with the intent of not making it work.?
Unlike some high-tech companies that flew too close to the sun and melted, Wink's business woes are primarily due to sector and market problems ? a brutal stock market, tough advertising times and a slowdown in MSO plans. In fact, Liberty Broadband was created to take advantage of unique opportunities in areas that are out of favor with investors.
Analysts like the strategy. ?I think it's a good idea for Liberty,? said Matthew Harrigan, a senior research analyst at Janco. ?It's not a fashionable space right now, to say the least, so there are some opportunities.?
The Carmel Group's Sean Badding calls the Wink acquisition a ?no ? brainer,? particularly because of its presence in both cable and DBS. ?Layer on top of that the OpenTV investment and really you see what [Liberty chairman] John Malone's strategy is right now ? he's really becoming the next Paul Allen. He picked Wink up at a perfect time.?
Observers and even some insiders thought Wink might indeed end up as part of Allen's Vulcan Ventures or maybe Charter Communications, which holds 6% of Wink's shares and offers the service to its digital customers. The ties between the companies are already strong; in addition to Charter's interest, Wilderotter has relied on Paul Allen and his top adviser, Bill Savoy, for advice while Vulcan's Digeo uses Wink as its distribution platform.
But Allen's cable-centric strategy might have caused problems for platform and distribution agnostic Wink.
?Liberty gives Wink the opportunity to stay very neutral,? Wilderotter explained. ?We're not taking sides from an ownership perspective. We support a lot of different stakeholders.?
Neither company is saying much about what actually will happen should the merger go through. The blueprints call for Wilderotter and her team to remain in place. Still, Wilderotter's future is a question mark for Carmel's Badding. ?Pete Boylan has always been known as running the show; he controls the show. With Maggie on board I don't know how that's going to work out.?
Wink shareholders have to approve the deal.
?Once that close takes place it gives us the opportunity to sit down with Pete Boylan and his team and really map out the strategy,? said Wilderotter. ?How do we want to integrate? What makes the most sense to accelerate, and how can we shorten time to market??
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