Mid-Cap Challenges Bring Bumps to Dick Clark's Firm.

DICK Clark Productions Inc., the entertainment and restaurant chain mini-conglomerate, has the same challenge faced by literally thousands of small- and mid-cap companies: On Wall Street today, bigger is better, as in market capitalization. Mid-caps without a huge upside story to tell can get lost.

One would think, however, that it would be tough to forget about Dick Clark Productions. Known to generations of pop music fans, Dick Clark Productions produces television programming, occasional motion pictures, and operates 10 eateries named Dick Clark's American Bandstand Grill. Among the shows it produces are "The American Music Awards," "The Golden Globe Awards" and "Dick Clark's New Year's Rockin' Eve," the latter picked up by the Walt Disney Co.'s ABC network until 2005.

But still, Burbank-based Dick Clark Productions last week had-a market capitalization of only $130 million. Moreover, a very hefty 91 percent of shares are owned by corporate insiders, including the ever-youthful maestro himself, Dick Clark, the septuagenarian chairman and CEO who keeps 72.9 percent of shares outstanding in his pocket. Only 900,000 shares are available to be traded, a minuscule float by modern-day standards on the exchanges.

"There isn't enough float or market cap for anyone on Wall Street to care," said Bill Mason, Pepperdine University professor and money manager with Cullen Fortier Asset Management in Woodlands Hills.

In fact, Mason owned Dick Clark stock "a few years back," but has sold his position, although he says he might buy back in, now that the company's stock has sagged a bit. The big mutual funds and national brokerage houses who dominate Wall Street today need to buy, trade and underwrite in stocks that have hundreds of millions, and preferably billions, of dollars of stock outstanding and trading, noted Mason.

The lack of Wall Street interest is showing up in Dick Clark Productions' wobbly stock price. Back in late 1999, it hit a 52-week high of $20.91 a share. It hit a low of $8.62 a share on Oct. 10, but as of last week had bounced up to the $13 range.

As Mason points out, there is almost no "institutional sponsorship" for the stock (the network of brokerages and mutual funds that can decide to "support" a stock through a bad quarter, or issue "buy" signals on the stock, if they think a good quarter or two is pending). Indeed, there is no institutional analyst coverage on the stock, leaving investors, institutional or individual, a little blind if they are considering a purchase.

Even if Dick Clark Productions performs well, and for a sustained stretch, the Street may yawn and chase the next high-tech fad, or go into oil stocks, or look for stocks that offer dividends, such as real estate investment trusts (REITs), said Mason.

But as pointed out on the Motley Fool Web site back in May, it is not as if Dick Clark Productions has nothing to recommend it. The company is doing reasonably well in the entertainment business, has no debt and, its restaurants at least are not a drag on profits. In the fiscal year ended June 30, 2000, Dick Clark Productions reported $10.4 million ($1.01 a share) in net income, up nicely from $2.7 million (27 cents) in fiscal 1999. Revenues jumped to $92.3 million from $72.3 million. In its latest reported quarter ended June 30, Dick Clark Productions reported net income of $3.3 million (31 cents a share), up handsomely from a loss of $2.3 million (25 cents in the red) in the year-earlier period. Revenues surged to $27.5 million from $14.0 million.

But look past the obvious numbers, suggests Motley Fool. What the company calls operating cash flow surged even more, to $15.0 million in fiscal 2000, from $6.2 million in 1999. In a nutshell, Dick Clark Productions is taking a lot of accounting expenses (not real costs, the kind you pay money for) and deducting them from reported profits.

Dick Clark officials were not available for comment last week. Mason wonders whether Dick Clark shouldn't jettison the restaurant chain and concentrate on entertainment, with the hopes of selling out someday to an entertainment giant.

SUMMARY

Business: Television programming, eateries

Headquarters: Burbank

CEO: Dick Clark

Market Cap: $130 million Dividend Yield: N/A*

Total Liabilities: $10.95 million P/E Ratio: 12.94

Long-Term Debt: None

(*.) Dick Clark Productions pays stock dividends, but not cash dividends.