The tax breaks helped her attract seven investors at a time when her FCC license was her only asset; in return for some $250,000, investors bought about 5% of Crescent City Communications Co., WCCL-TV's operating company. That tided Lamont over until she could obtain about $3.5 million of land, construction, and equipment loans. While waiting for her airdate -- which finally came on March 19, 1989 -- she convinced First City Texas bank to give her $2 million of working capital collateralized with her personal assets. (In all, the bank holds another 20% of Crescent City's stock warrants.)
Lamont was on a roll. She got the state to name her office/production site an enterprise zone. This status frees her from state income and corporate franchise taxes until 1993 and lets her skip some state sales and use taxes during construction. She also qualifies for a tax credit every time she creates a new job.
But WCCL is still running out of money, thanks to negative cash flow that's been about $150,000 monthly. Lamont's original projection of fiscal year 1990's negative cash in the range of $800,000 was already looking too low by October, when cash was in the red to about $500,000. It isn't an expense problem -- she's been keeping labor costs, for example, about 20% below budget. The trouble is ad dollars, which are coming in slower than expected.
So Lamont has decided to sell another 15% stake in the company, which would cut her to about 51% ownership. The deal was still pending at press time, but Lamont hoped to raise another $2 million, thanks in large part to the advantages offered through the minority tax credits. "It's going to give me the money to pay my bills," she says. "That's how I'll hold on until I build the market share I need."
Can she raise this new round of financing? Undoubtedly, given her high-level contacts in the media world and New Orleans' business community. But will it help her hold on long enough to build an audience and turn her station profitable? Will she ever have the programming that viewers want? It all remains to be seen. But, says Wilbert "Bill" Tatum, publisher of the New York City based black newspaper New York Amsterdam News, and one of her earliest investors, "if energy, commitment, talent, and competence can make any venture work, then Barbara Lamont is the person who can do it. I have complete faith in her abilities."
She does have her work cut out for her. Still, Lamont is more than capable of inspiring those around her with her boundless energy and enthusiasm. "I don't want to sound naïve," she confesses from her tiny, windowless office, speaking above the WCCL shows that play from morning till night on her office television set. "But I feel as though we've already succeeded -- just by winning the FCC license, getting on the air, and building something with a high asset value."
She smiles. "It's not that everything else will be easy. But I do believe we're going to make it."
For an update on this company, see Anatomy of a Start-Up Revisited: Broadcast Blues
Research assistance was provided by Leslie Brokaw.
EXECUTIVE SUMMARY
THE COMPANY
Crescent City Communications Co./WCCL-TV, New Orleans
Concept: Launch an independent TV station as the low-cost producer in its market, seeking profitability more by controlling expenses than by building audience and ad revenues. Develop cash flow of $3 million to $4 million in six years in order to sell the station for up to $40 million
Projections: Losses in year one, ending June 30, 1990, of $1.9 million; profits in 1991 of $175,000 on net sales of $3.9 million. Positive cash flow in 1991 of $1.2 million
Hurdles: Building enough of an audience on bargain-basement programming to attract projected ad revenues; getting carried on the cable systems that control access to New Orleans viewers; securing enough capital to hold on until cash flow turns positive
THE FOUNDER
Barbara Lamont, President and CEO,
Crescent City Communications Co. (WCCL-TV)
Age: 50
Source of idea: Former employer suggested she apply for a TV license after the FCC streamlined its procedures for minority applications
Personal funds invested: $1 million
Equity held: 66%
Other businesses started: Notel Inc., a teleport (satellite transmission facility) in New Orleans, in 1988
Other jobs: Reporter, WINS-AM, WNEW-TV; writer/reporter, CBS network, all in New York City; anchor, WNEW-TV; producer, ABC radio network; director of operations, Nigerian Television Authority
Typical workweek: 94 hours
Outside board of directors: Yes
What I lose sleep over: Money
Sources of inspiration: Mother, husband, Winston Churchill, Shirley Chisholm
Why I did this: "Because I want to earn $5 million before I'm 55 years old in order to ensure myself a comfortable lifestyle for the next 60 years."
FINANCIALS
Crescent City Communications Co. (WCCL-TV) Projected Operating Statement ($ thousands)
Year one Year two
June 30, 1990 June 30, 1991
NET SALES $1,738 $3,859
OPERATING EXPENSES
General & administrative 272 294
Accounting & traffic 145 157
Sales costs 339 366
Engineering 353 381
Promotion 273 295
Operations & programming 864 758
Total operating expenses 2,246 2,251
June 30, 1990 June 30, 1991
Net operating profit (508) 1,608
OTHER EXPENSES (FIXED)
Long-term debt -- land 69 68
Loan interest 275 259
Equipment loan/lease 415 443
Amortization & depreciation 663 663
NET PROFIT (LOSS)
After taxes (1,930) 175
Aftertax profit margin -- 4.5%
Cash flow (816) 1,150
WHAT THE EXPERTS SAY
CUSTOMER
