News Show Gives Small Cap Firms Screen Time

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News Show Gives Small Cap Firms Screen Time
Host Donald Baillargeon

When Washington and Colorado legalized recreational marijuana earlier this year, Sterling Scott, chief executive at GrowLife Inc. in Woodland Hills, went on TV to let the world know his company was ready to grow like a weed.

He made his appearance on “MoneyTV,” a financial news program filmed in a Burbank studio and carried on niche broadcasters and cable channels.

The idea was to make people aware that they could invest in the GrowLife’s stock, which trades for pennies a share. He told the program’s host, Donald Baillargeon, how legalization could expand his business of selling marijuana-growing equipment.

But it wasn’t your typical cable news arrangement, where a publicist pitches a producer. Instead, GrowLife paid for the air time as part of a package worth more than $10,000. Scott said he’s seen benefits from making appearances on the show and may return.

“It’s a platform that gives microcap companies an opportunity to reach a broader audience,” he said. “Since we began those appearances, we’ve had substantial interest and liquidity in our security.”

The show targets retail traders more than institutional investors. The latter can’t buy stocks below a certain threshold.

Nobody would confuse GrowLife shares, which were trading on the over-the-counter market for about 4 cents last week, with IBM stock. But after the legalization news, trading volume spiked. Tens of millions of shares were exchanged daily, exceeding volume for the likes of Apple Inc. and others. That’s when Scott went on “MoneyTV.”

Many of the companies featured don’t have that kind of news to ride on. L.A. companies that have been featured on the program are biofuels firm OriginOil and Imaging3 – a Burbank 3-D medical imaging business that filed for Chapter 11 last year.

Baillargeon, a former advertising executive and radio station owner, said the goal is to be informational, although he did not dispute that the program is an advertising service for stocks.

However, he doesn’t give stock picks on air and doesn’t own shares of the companies on the program, which he said distinguishes the service from the many email marketing newsletters telling people to buy penny stocks without making it entirely clear that the writers are shareholders.

“I want to make sure that when someone watches a series of interviews, they have a good idea of what this company is all about,” he said.

Baillargeon launched the program in 1996, seeing an opportunity to cover public companies that CNBC wouldn’t care about. At press time, he was preparing the program’s 800th episode.

He initially paid for air time on independent local stations around the country. He now trades his programming for some ad revenue.

Audience reach

He’s strung together deals to make the show available in a broad array of markets, for example, digital channel KFLA (Channel 8.3) in Los Angeles, which is an affiliate of Atlanta-based network Tuff TV, and the Comcast Entertainment Television channel in Colorado, in addition to a slew of international channels. Baillargeon said the show is available in some 150 million households worldwide but estimates that some 750,000 to 1 million people actually tune in. The programming isn’t rated by Nielsen.

He said the show does best when interest in the stock market peaks but that it maintains its audience even in less-than-ideal times.

“If we weren’t pulling for the affiliates, we’d get canceled,” he said.

The programs are also posted on YouTube. A press release goes out once that happens to alert people checking their stocks on Yahoo or other sites that the interviews are up.

A staff of about five people handles camera duties and postproduction work.

The program makes most of its money from booking guests.

Baillargeon said he makes deals with about 60 to 80 companies a year, which pay between $11,500 and $17,250 for up to eight appearances in three months. Baillargeon said annual revenue for “MoneyTV” typically falls between $650,000 and $800,000. He said he keeps the production budget low enough to maintain a profit.

There is vetting to make sure companies are legitimate. But the world of microcap stocks is volatile and at times murky.

At least one local company that was featured on the program, Imaging3, experienced a meteoric rise in its stock price – from 3 cents to $1.95 – around the same time its chief executive, Dean Janes, made a “MoneyTV” appearance claiming Food and Drug Administration approval for the company’s 3-D imaging device was expected. After the device failed to gain approval, Imaging3 went into Chapter 11 bankruptcy last year.

Baillargeon said he does not believe Janes used the program to spread misinformation. He recently invited Janes back to the program free of charge to explain his company’s plans to emerge from bankruptcy. Janes did not respond to a request for comment.

Kurt Divich, a partner at Integrity Investor Relations in Las Vegas who handles investor relations for GrowLife, said he does not personally tell clients to make appearances on MoneyTV, but that it is one of many ways a microcap company can spread the word, in addition to booking more traditional media appearances.

“I think ‘MoneyTV’ delivers some value,” he said. “Decent press helps evangelize the story.”

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