It's official: Financial News Network and United Press International are up for sale.
Infotechnology Inc., the cash-strapped company that has controlling interest in the two news organizations, yesterday announced that it has hired New York investment bankers Wertheim Schroder & Co. to seek out potential buyers for its news properties and other operations. Last month, the company had said it would consider selling some assets as a possible solution to its problems.
In a three-page statement, Infotech co-chief executives Alan J. Hirshfield and Allan R. Tessler said they hope that carving up the company and selling off its parts will enable Infotech and its affiliates to pay off some $160 million in bank loans and other obligations that it owes. Last month, the companies announced they lacked the cash to meet daily operating expenses or debt repayment.
"Discussions with our banks are on-going," Infotech said in the prepared statement.
Infotech owns 47 percent of FNN, a cable television channel that broadcasts business news to an estimated 35 million households. Several analysts said that likely buyers for FNN included Turner Broadcasting System, Time Warner Inc. and General Electric Co., owner of CNBC, a cable business news network that is FNN's major competitor.
Analyst Mark Riely of the New York investment banking firm of MacDonald Grippo Riely Inc. said FNN's cable division, devoid of any liabilities, is worth an estimated $200 million. But others said it was difficult to pin a price tag on the company until they have a better understanding of FNN's financial records.
Last month, the outside auditors for Infotech and FNN, Deloitte & Touche, resigned over an accounting dispute with the companies. Deloitte refused to sign off on the companies' fiscal 1990 financial statements and disavowed their previous endorsement of the fiscal 1989 reports. The events, coupled with last month's forced departure of C. Steven Bolen, the chief financial officer of Infotech and FNN, have left investors and analysts without any reliable financial picture of the companies.
Infotech also owns 97 percent of Washington-based UPI, which it bought in early 1989. After failing to turn the ailing news service around, the company has laid off hundreds of employees, closed bureaus in five states and asked employees to accept major pay concessions.
UPI officials have said they have had several inquiries from parties interested in buying the wire service but declined to name them. On Monday, executives warned that the news service will be forced into liquidation in less than two weeks unless its union employees accept a 35 percent pay cut for 90 days. A spokesman for the Wire Service Guild, which represents the employees, said the union is recommending rejection of the proposal.
"UPI looks like a sad situation," said Paul Marsh, an analyst for the investment research firm Bateman Eichler, Hill Richards in Los Angeles.
In its statement, Infotech also said it is continuing to investigate allegations of fraud that surfaced last month. So far, however, the company said it has found only one instance "in which company funds were improperly paid and not properly identified," and that the incident, involving former Infotech and FNN chief financial officer Bolen, had been disclosed last month. Bolen was forced to resign after an investigation alleged that he had paid himself bonuses of $795,000 that "were not properly authorized." Bolen could not be reached for comment.