SHOWTIME begins formal talks to acquire EliteXC

Showtime Networks signaled through a filing with the Securities and Exchange Commission on Thursday its intentions to commence formal negotiations towards an acquisition of ProElite, Inc.

ProElite is the parent company of EliteXC, King of the Cage, Cage Rage, and ICON Sport and has television deals with Showtime, CBS, and Fox Sports Net but has also absorbed losses of approximately $55 million since its inception in late 2006. Showtime is a subsidiary of CBS Corp. and owns an existing 20 percent stake in ProElite.

ProElite warned investors of financial instability in an SEC filing this past August, stating that the company did not have enough resources to function into next year without securing additional financing.

“(The company) expects to report in its Quarterly Report on Form 10-Q that its capital resources are sufficient only until the end of the year, and only if the Company makes significant reductions in operations and expenditures,” ProElite warned in a Aug. 15 NT filing that announced to investors and government officials that it would be late in filing its second quarter fiscal report.

The filing also indicated that ProElite believed it was close to securing an additional $3.0 million in financing needed to allow it to operate through the remainder of 2008. However, the filing also cautioned that the deal to raise the additional capital was not finalized and there was no guarantee that the deal would be closed.

“The Company is actively negotiating to consummate a financing of approximately $3.5 million in secured debt (with a funded amount of $3.0 million after an original issue discount of $0.5 million) and believes a successful closing is reasonably likely,” the filing stated. “But there is no assurance that it will be successful in doing so at all or on a timely basis. Any such failure to obtain financing in the immediate future would have a material adverse effect on the Company’s liquidity and capital resources and ability to continue as a going concern.”

On Wednesday, the company issued another filing revealing that it had been unable to close the deal and that it instead had received a $1 million loan from Showtime.

“The Company no longer believes that a successful closing of the $3.5 million secured debt (with a funded amount of $3.0 million) will occur,” the 8-K filing states. “Although the Company has received $1 million pursuant to the Note, such funds are less than the $3.0 million needed to avoid the consequences described in the preceding paragraph and in the Company’s prior reports filed with the Securities and Exchange Commission. The $1 million funding defers such consequences only for a brief period of time while the Company continues to evaluate its options on how to respond to its severe liquidity problem.”

Indications that ProElite was looking for either a merger or acquisition partner came to light in a Sept. 11 column by CBS and SHOWTIME broadcaster Mauro Ranallo on the website for The Fight Network.

“I contacted Pro Elite head honcho (CEO and Chairman) Chuck Champion and he told me that he had held preliminary talks with a variety of promotions including Affliction,” wrote Ranallo in a blog entry that speculated on a promised major announcement by Affliction last week.

When contacted by FiveOuncesOfPain.com, Showtime Director of Sports Communications Chris DeBlasio declined comment and e-mail and phone messages left for Champion were not immediately returned.

11 COMMENTS
  • Sergio Hernandez says:

    Curiouser and curiouser…

    I wonder how this will all unfold.

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  • XX says:

    stupid

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  • Joseph says:

    So EliteXC will either be owned by Showtime/CBS or merge with Affliction!!! Wow! Huge news coming up!

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  • Batman says:

    I think elite xc, and affliction should merge and get a tv deal with cbs/showtime. That way everyone is happy. Hbo is being difficult with golden boy anyway from what I hear.

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  • Davey D says:

    October 4th is a big day for EXC. They need all the viewer’s they can get. Merging with Affliction could be their answer it seems because there are A LOT of fighter’s between all those org’s.

    Making it all one in the same creates competition for the UFC and a heck of a lot of event’s for the fans to see on many level’s of broadcasting. We’ll wait to see what happens next.

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  • j says:

    An EliteXC/Affliction merge is a possible ggod match.

    EltieXC has the up and coming young fighters and tv contracts while Affliction has legit fighters with a limited roster.

    This could be great exposure for both. How awesome would it be to see Fedor v. Arlovski/Barnett on CBS.

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  • Darrel Smith Jr says:

    A Fedor/Barnett fight on CBS, while great for almost anyone reading this board, is probably not going to do a huge number on CBS. Both of those guys are huge draws for hardcores, but the casual fan CBS wants to draw has no idea who Fedor or Barnett is. Arlovski might have a little more pull with a casual fan from being in the UFC, but still, none of those guys are known by casual fans that CBS would hope to draw. CBS knows they have the hardcores when they do a show, but they want the casual viewer to watch.

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  • J says:

    That’s my point. Fedor and Barnett need mainstream exposure. If you put them on a card with Kimbo vs. Fighter X, both fans will get what they want and the next time you have built enough momentum to pull off a serious PPV.

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  • jdavis says:

    I doubt there will be a merger with any company, why would anyone want to take on ProElite’s $55million in debt? That goes double for Affliction, a company with it’s own money issues already. Showtime will most likely let ProElite fail and buy/take control of it’s assets(which may be the whole reason for this $1million secured loan). They are protecting their investment but that doesn’t mean the company is safe, Showtime/CBS might not want to run EliteXC they might just want to save anything of value out of it, particularly the video catalog.

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  • rob says:

    Isn’t it a sad state of affairs in the MMA world when two of the best Heavyweights in the world (barnett/fedor) “need” mainstream exposure from “fans” – – Am I too naive to think that even the casual fan knows who these two guys are?

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  • Jason G says:

    I feel sorry for whoever spends money to buy this company. I don’t think anyone can argue that whoever buys this (besides the UFC) can make a profit

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