A Queer Deal

It took six long years, but gay network Q Television is finally up. Technically speaking. Too bad no one is watching. The Palm Springs, Calif.-based network sends programming to a satellite, where it's available to cable or DBS operators that want to carry it. So far, all have passed.

Q Television, which is composed largely of an eight-hour wheel of old movies and TV reruns, has had a deal with Time Warner Cable for eight months. The catch: It's only a "hunting license." The network has to persuade each local system to take the channel.

That doesn't keep Q Television CEO Frank Olsen from expressing unwavering confidence in his idea, even in the face of competition from Viacom's MTV Networks, which is launching gay channel Logo. Olsen contends that the MTV offering will be too bland to appeal to gays and lesbians. By contrast, Q plans to offer sexier gay films, ones (such as My Girlfriend's Boyfriend) that merit an R-rating.

"I'm not afraid of Viacom," he says. "I don't think Viacom can put real
gay television out there."

Such bravado in the face of a mighty competitor isn't the only unusual thing about Q Television. Another is its financial structure. Parent Triangle Multi-Media is a penny-stock company with more than 1.2 billion
shares outstanding. (That's almost as many as Viacom.) Triangle stock is trading at 6/10 of a cent per share, which puts the value of the company at around $7 million.

A bigger surprise: Q Television's recent hiring of Michael Marcovsky to handle negotiations with cable operators. Marcovsky is an industry vet who was embroiled in two financial scandals in the past decade. In 1998, the Federal Trade Commission alleged that he deceived investors in two failed startups: My Pet TV and Children's Cable Network. Four years earlier, he was cast out of Nostalgia Network by his backers—including the Unification Church—who accused him of financial mismanagement, such as improperly steering company cash to his attorney.

In announcing Marcovsky's deal with Q Television, the network proclaimed that the executive "joins" to "lead carriage-contract negotiations." Its Web site listed him as chairman, president and CEO. Olsen, however, says Marcovsky just has a 30-day consulting agreement and that the title was a mistake. (It was trimmed from the site shortly after it was pointed out.)

Olsen says he began learning bits of Marcovsky's full background only after
hiring him. "I'll ask him about that," Olsen says, adding, "That wasn't in his résumé."

For his part, Marcovsky minimizes his past tangles. Raising the FTC action is a "rehash" of old news, he says. "You're going to say, 'These are the times he's fallen off the bicycle. We don't want to see him get back on his bike.'"

Marcovsky was a prominent target of the FTC's "Project Risky Business" investigation of telemarketing investment pitches. The 1998 complaint charges that he was involved in an operation that raised $16.5 million for a venture backing My Pet TV and Children's Cable Network.

Instead of securing conventional long-term deals with cable operators, the telemarketing operation sold small investors on the idea of getting distribution by buying time on systems' leased-access channels, then trying to sell ad time.

Very little of the cash went into the networks.

Of the $16.5 million raised from investors, the venture paid 65% to the phone sales operation. Another 20% went to Olympic Entertainment Group, the company Marcovsky headed as CEO. Marcovsky denied any wrongdoing but, in 1999, agreed to pay a $172,000 penalty, according to a settlement document.

He says his company wasn't involved in the pitches to investors, only in licensing programming to the partnerships the investors formed.

At Nostalgia, Marcovsky brought in Concept Communications, a company backed by the Unification Church, to invest in the network, aimed at adults 55-plus. During a fight for control, Concept and other major investors began scrutinizing tiny Nostalgia's lavish spending, including a $650,000 payment to Marcovsky's lawyer. At the time, Marcovsky said he was sacked. Today, he says, "I lost a control fight."

So why did Olsen hire Marcovsky to represent him with companies like Comcast, DirecTV and Cox? Marcovsky was recommended by an unnamed TV-industry contact. Olsen tapped Marcovsky after a three-hour meeting. "I learned more from him in three hours than I learned from others in four years," Olsen says.

Now, though, he's re-evaluating his choice, reiterating that Marcovsky's consulting agreement could be canceled within 30 days. Says Olsen, "I don't think he can do too much to me in 30 days."