Big Entertainment to Sell One-Third of its Studio Store
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Big Entertainment Inc. said it signed an agreement in principle to sell one-third of its online Studio Store to a group headed by Internet entrepreneur Eric Illowsky for $4 million in cash plus 50% of a planned Direct Response TV Internet site.
In addition, Illowsky's group was granted an option to acquire an additional 10% interest in Big's e-commerce site for $10 million in cash, exercisable 18 months from the closing of this transaction, or on the date of an initial public offering, whichever comes first.
Illowsky is a former senior vice president of the Sci-Fi Channel, a national cable TV network founded by Big's Chairman Mitchell Rubenstein and its President Laurie Silvers. Before that, Illowsky held a senior level position in the cable TV division of Cox Communications.
In order to implement this transaction, Big said it plans to incorporate a new wholly owned subsidiary of Big called E-Studiostore.com Inc., in which these businesses will be contributed and from which equity to the Illowsky group will be issued. Big will maintain control, although it is expected that Illowsky will be appointed COO of such company and handle day-to-day operations.
Also under development is a Web site to offer virtually any item featured in a Direct Response Television (DRTV) advertisement for products sold on TV using an 800 number for viewers to call. This e-commerce site would complement the Studio Store, utilizing the same Web design, inventory control, electronic data exchange, and administrative infrastructure, the company stated.
Big also reported that second quarter 1998 revenues (for the period through June 30th) increased by 34% to $2,558,290 from $1,910,730 a year earlier. Big reported a loss of $.29 per share for the second quarter, "due primarily to overhead and operating expenses associated with Big's retail kiosk business," the company said.
Big Entertainment owns and licenses intellectual properties, owns and operates entertainment retail outlets, and also owns an interest in mysterypages.com.