Al Gore's Convenient IPO

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The board, according to this source, believes Current TV isn't a typical media company in that it has a mission to make sure young people can share their views. Other media companies, including the New York Times Co. (NYT) and Dow Jones (NWS), have issued B shares so that their founders could maintain their editorial voice as well. (The New York Times is now facing a proxy battle with its largest shareholder to elect its own shareholders in a battle of wills with the B shareholders.)

Sorry, but I don't buy the rationale for this preferential treatment. This Class B share stuff just stinks, especially for a man of the people like Al Gore. "That's hardly democratic—with a large D or a small d," agrees University of Delaware corporate governance expert Charles Elson. "The irony is that this is coming from a Democratic leader."

Dissent on the Board?

Who voted Gore and his partner big money and even bigger control? The IPO filing discloses that the compensation committee used an outside counsel to determine salary and bonuses for Gore and Hyatt. But there's also a question as to whether every board member agrees with the way the compensation has been structured.

Clearly the Current Media board made the ultimate decision. The board is filled with former Democrat biggies, including major fund-raisers such as Ron Burkle (a money manager who pals around with Bill Clinton) and venture capitalist Richard Blum, who is married to Senator Diane Feinstein (D-Calif.). But strangely, the IPO is signed by all the board members except two: Burkle and his longtime associate Edward Renwick, who works at Burkle's Yucaipa Companies investment firm. That firm invests money for pensions that include the California Public Employees' Retirement System, a leader in shareholder rights activism.

That leads to the logical conclusion that at least some CurrentTV backers thought the Class B shares were a bad idea. The other independent board members are former MTV president Mark Rosenthal and Orville Schell, director of the Center on U.S.-China relations at the Asia Society. I have no idea what any of them thought since the company, despite repeated requests, would not make any of the board members available during the current quiet period. Individual calls to Burkle and Blum went unanswered; Gore's office declined comment.

There are other red flags in the prospectus. How much of Gore's time will shareholders get for the $1 million or more they're paying him? That is hard to tell. The proxy notes that the former Veep "has a number of other commitments that limit the amount of time he can devote to our business." And, in fact, Gore doesn't even have a contract. Six months down the road—at the end of a lock-up for him to sell his stock—he could bolt altogether, the proxy notes. Were he to leave, the company says, "our relationships with key distributors and our business could be materially and adversely affected."

Is It Worth It?

All of which makes me think this IPO will be one tough sell for JPMorgan Chase (JPM), which is managing the deal for several underwriters. There is no date set for the filing, and Current Media has yet to say how much it intends to ask per share. But SECinvestor.com, which tracks federal filings such as IPOs, figures it could go for between $13 and $15 a share, making Gore's 3.7 million A shares worth somewhere north of $48 million. One assumes that building the value of that stock would give him incentive enough to stick around.

Still, I'm left wondering why anyone would want to invest in Al Gore's dream, worthwhile as it may appear. Sure, he may have tapped into something special, giving voice to folks on the tube by allowing them to post their videos on TV. (Other videos show up on CurrentTV's new online site.) And he does have a crew of young pros who also add their own shows on current events and issues such as the war in Iraq and the drug trade. To get an up-close-and-personal view of Hurricane Katrina, a CurrentTV report came from a New Orleans native navigating the flooded city in his flat-bottomed boat while helping to rescue stranded survivors. A CurrentTV Webcam reported the human misery of folks caught in last fall's southern California fires.

If you're part of the 18-to-34 demographic that Current is targeting (regrettably, that leaves me out), this can be engaging, entertaining stuff. Whether that translates into a sustainable business model is hard to tell. The channel isn't yet rated by Nielsen, although it does have some big-name advertisers like Toyota Motor (TM), Johnson & Johnson (JNJ), and General Electric (GE). Still, they cough up only a little over $9.9 million a year, or about 15.6% of Current Media's $63.8 million in 2007 revenues.

Simply put, this is a very big leap for an investor to make. And not many will want to try. I like Al Gore—his politics, his steadfast defense of a cleaner environment, his forward-looking view of the world around him. The one time I interviewed him, he even sent along his best wishes to my mother, who, as I had told him, was one of those in Florida who voted for him in 2000 (hanging chads and all). But I am totally bewildered by what possessed a good man to make a bad decision like this IPO. Talk about your inconvenient truths.

Grover is Los Angeles bureau chief for BusinessWeek.