Carter

National Lampoon Continues Its Long Slide into Obscurity

Its always funny to me when people write articles and they think that if they put a bunch of history about the company and a few numbers that they sound intelligent...when in reality they have not done much if any due dilligence on the company.
Fact is National Lampoon was mismanaged in the 90's and it took a long time to get the company going back in the right direction.
However, National Lampoon is at an inflection point. The internet business is growing fast and current comscore numbers have monthly unique users over 6M with monthly page views over 100M (that is before acquisitions). These are impressive numbers and if you look at comp valuations (look up break.com and collegehumor.com) where those sites sold stakes putting the companies in the $50M valuation range.
The film business where this author said National Lampoon "once shook the box office" is actually poised to be stronger than ever. Fact is that National Lampoon only saw royalties from those past movies (Animal House, Vacation, and Van Wilder) where today the company is also doing its own in house productions where they have a large % ownership of the titles. They are able to get most of these movies financed from outside investors while at the same time pre-selling the foreign rights and the domestic TV rights for most if not more than the overall budgets of these movies. Basically taking little to no risk while keeping the lucrative DVD upside to themselves.
They are going into production on their 3rd in-house movie...so the results are really only starting to be recognized, but this was a big factor in last quarters operating profit.
The balance sheet definitely needs to improve, but it is misleading. Most of the debt is associated with the movies being produced where the debt is associated with the film and not National Lampoon. NLN also was able to clean up its corporate structure raising over $900k when preferred shareholders converted stock at a 28% premium to the market...
In the last conference call the CEO talked about a likely settlement with Warner Brothers in regards to unpaid royalties on the Vacation movies. At the end of 2006 NLN had a similar settlement with Universal regarding Animal house that was $3.75M. Since there are 3 Vacation movies this settlement will likely be more than the one from Animal House. It is possible they could get a settlement worth more than half of their current market cap! (not that that would be hard at this ridiculous valuation)
In conclusion, my question is...Who hasn't heard of National Lampoon? The brand name has huge brand recognition...if the company continues in the right direction there is really no reason why National Lampoon couldn't be producing their own feature films. There is no reason the next Old School, Superbad, or Pineapple Express couldn't come from National Lampoon...
Keep an eye on this company...