DEFM14A 1 d485446ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  x                              Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨   Preliminary Proxy Statement
¨   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x   Definitive Proxy Statement
¨   Definitive Additional Materials
¨   Soliciting Material Pursuant to §240.14a-12

OUTDOOR CHANNEL HOLDINGS, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x   No fee required.
¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

 

   

 

  (2)  

Aggregate number of securities to which transaction applies:

 

 

   

 

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

   

 

  (4)  

Proposed maximum aggregate value of transaction:

 

 

   

 

  (5)   Total fee paid:
   
   

 

¨   Fee paid previously with preliminary materials.
¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
   

Amount Previously Paid:

 

 

   

 

   

Form, Schedule or Registration Statement No.:

 

 

   

 

   

Filing Party:

 

 

   

 

   

Date Filed:

 

 

   

 

 

 

 


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Outdoor Channel Holdings, Inc.

LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Stockholder,

On November 15, 2012, the board of directors of Outdoor Channel Holdings, Inc., a Delaware corporation (“Outdoor Channel”), unanimously approved and Outdoor Channel signed a definitive Agreement and Plan of Merger (the “merger agreement”) with InterMedia Outdoors Holdings, LLC, a Delaware limited liability company (“IMOTSC”).

As part of the proposed transaction, Outdoor Channel and IMOTSC will become separate, indirect wholly owned subsidiaries of InterMedia Outdoor Holdings, Inc., a newly-created Delaware holding corporation (“IMOH”). IMOTSC is a privately held multimedia company focused on outdoor enthusiasts. As a result of the transactions contemplated in the merger agreement, InterMedia Partners VII, L.P. (“InterMedia Partners”), currently a controlling member of IMOTSC, and related parties of InterMedia Partners will hold approximately 67.6% of the outstanding common stock of IMOH, and current holders of Outdoor Channel’s common stock will hold the remaining 32.4% of IMOH’s common stock. IMOH is financing the cash portion of the merger consideration to be received by holders of Outdoor Channel common stock in part through a $140 million term loan facility. Following the consummation of the mergers, IMOH will also have access to a $10 million revolving credit facility. Outdoor Borrower, LLC, a Delaware limited liability company and wholly owned subsidiary of IMOH, has entered into a commitment letter with CIT Finance, LLC relating to the proposed debt financing. As a condition to completing the transaction, IMOH intends to apply for a listing of its common stock for trading on The Nasdaq Global Market (“NASDAQ”), and it is anticipated that its symbol will be “OUTD.”

Upon the consummation of the mergers, each outstanding share of Outdoor Channel common stock will be automatically converted into and will represent the right to receive the following consideration, pursuant to an election made by each stockholder, subject to proration in certain circumstances as described below (and subject to certain adjustments for cash to be paid in lieu of any fractional shares and the like as set forth in the merger agreement): (x) $8.00 in cash, without interest, with respect to each share of Outdoor Channel common stock for which an election to receive cash has been made; (y) one share of IMOH common stock with respect to each share of Outdoor Channel common stock for which an election to receive stock has been made; or (z) with respect to each share of Outdoor Channel common stock for which an election to receive mixed stock and cash has been made or for each share of Outdoor Channel common stock for which no election has been made, a combination of (A) $4.46 in cash, without interest and (B) that portion of a share of IMOH common stock equal to 0.443. You will need to make an election regarding the consideration you will receive for your shares of Outdoor Channel by March 4, 2013. If you do not, then you will receive the mix of cash and stock of IMOH described in clause (z) of the preceding sentence if the merger agreement is adopted by the stockholders.

Upon the consummation of the mergers, holders of IMOTSC common units will be entitled to receive 23,854,227 shares of IMOH common stock in the aggregate in exchange for IMOTSC common units, subject to various adjustments set forth in the merger agreement. Shares of IMOH common stock shall be allocated among the holders of IMOTSC common units in accordance with the merger agreement and the IMOTSC limited liability company agreement.

At the special meeting, Outdoor Channel stockholders will be asked to vote on the adoption of the merger agreement described in this proxy statement/prospectus. Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Outdoor Channel common stock entitled to vote.

Perry T. Massie, Thomas H. Massie, and entities affiliated with Messrs. Massie (collectively, the “Massie Parties”) hold approximately 36% of the shares of outstanding Outdoor Channel common stock. In connection with the merger agreement, on November 15, 2012, IMOH entered into a support agreement (the “Support Agreement”) with the Massie Parties, the members of the Outdoor Channel board of directors and the executive officers of Outdoor Channel (collectively, the “Supporting Parties”). Under the Support Agreement, the Supporting Parties have agreed to vote their shares of Outdoor Channel common stock (i) in favor of the adoption of the merger agreement; (ii) in favor of any proposal to adjourn or postpone any meeting of the Outdoor Channel stockholders if there are not sufficient votes for approval of the matters described in the preceding clause (i); and (iii) except with the written consent of IMOH, against (x) any Alternative Proposal (as defined in the merger agreement) with respect to Outdoor Channel that would impede the mergers or (y) any other action or proposal involving Outdoor Channel that would reasonably be expected to prevent or materially impede, interfere with or delay the mergers.

On November 15, 2012, the last full trading day before the merger agreement was signed, the closing sales price of Outdoor Channel common stock, which trades on NASDAQ under the symbol “OUTD,” was $7.19 per share.

Outdoor Channel’s board of directors has unanimously determined that the merger agreement and the proposed transaction are advisable to and in the best interests of Outdoor Channel stockholders, and recommends that its stockholders vote “FOR” adoption of the merger agreement, “FOR” approval, on an advisory (non-binding) basis, of the “golden parachute” compensation payable or that could become payable to the named executive officers of Outdoor Channel in connection with the mergers and “FOR” approval of the proposal to adjourn the Outdoor Channel special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the Outdoor Channel special meeting to adopt the merger agreement. The proposed transaction is conditioned upon the adoption of the merger agreement by Outdoor Channel stockholders, receipt of applicable regulatory approvals and other conditions described in the attached proxy statement/prospectus.

It is important that your shares are represented at the special meeting, whether or not you plan to attend the meeting. Abstentions and failures to vote will have the same effect as votes “against” the proposal to adopt the merger agreement. Accordingly, complete, date, sign and return promptly your proxy card or voting instruction card in the enclosed postage pre-paid envelope. You may attend the special meeting and vote your shares in person if you wish, even though you have previously returned your proxy.

This document describes the special meeting, the proposed transaction, the documents related to the proposed transaction and other related matters that an Outdoor Channel stockholder ought to know before voting on the proposals described herein and should be retained for future reference. Please carefully read this entire document, including the “Risk Factors” section beginning on page 34, for a discussion of the risks relating to the proposed transaction. You also can obtain information about Outdoor Channel from documents that it has filed with the Securities and Exchange Commission. See “Where You Can Find More Information” for instructions on how to obtain such information.

Sincerely,

Perry T. Massie, Co-Chairman of the Board

Outdoor Channel Holdings, Inc.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the common stock of IMOH to be issued under this proxy statement/prospectus or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The date of this document is February 12, 2013 and it is first being mailed or otherwise delivered to Outdoor Channel stockholders on or about February 12, 2013.


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Outdoor Channel Holdings, Inc.

43455 Business Park Drive

Temecula, CA 92590

(951) 699-6991

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON MARCH 13, 2013

Dear Stockholder:

You are cordially invited to attend the special meeting of stockholders of Outdoor Channel Holdings, Inc., a Delaware corporation (“Outdoor Channel”). The meeting will be held on March 13, 2013, at 9:00 a.m., Pacific Time, at Outdoor Channel’s broadcast facility located at 43455 Business Park Drive in Temecula, California, for the following purposes:

 

  1. To consider and vote upon the adoption of the Agreement and Plan of Merger, dated as of November 15, 2012 (the “merger agreement”), by and among Outdoor Channel, InterMedia Outdoors Holdings, LLC, a Delaware limited liability company, InterMedia Outdoor Holdings, Inc., a Delaware corporation (“IMOH”), Outdoor Merger Sub, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of IMOH, and Outdoor Merger Corp., a Delaware corporation and an indirect wholly owned subsidiary of IMOH.

 

  2. To consider and vote upon an advisory (non-binding) proposal to approve the “golden parachute” compensation payable or that could become payable to Outdoor Channel’s named executive officers in connection with the mergers pursuant to pre-existing arrangements with those individuals.

 

  3. To consider and vote upon an adjournment of the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the special meeting to vote in favor of adoption of the merger agreement.

 

  4. To transact such other business as may properly come before the special meeting and any adjournment or postponement thereof.

Outdoor Channel’s board of directors has unanimously determined that the merger agreement and the proposed transaction are advisable to and in the best interests of Outdoor Channel stockholders, and recommends that its stockholders vote “FOR” adoption of the merger agreement, “FOR” approval on an advisory (non-binding) basis of the “golden parachute” compensation payable or that could become payable to the named executive officers of Outdoor Channel and “FOR” approval of the proposal to adjourn the Outdoor Channel special meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the Outdoor Channel special meeting to adopt the merger agreement.

The board of directors of Outdoor Channel has fixed January 25, 2013 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof. Only holders of record of shares of Outdoor Channel common stock at the close of business on the record date are entitled to notice of, and to vote at, the special meeting. At the close of business on the record date, Outdoor Channel had 25,916,839 shares of common stock outstanding and entitled to vote.

You have the option to revoke your proxy at any time prior to the meeting or to vote your shares personally on request if you attend the meeting.

Your vote is important. The affirmative vote of the holders of a majority of the outstanding shares of Outdoor Channel common stock entitled to vote on the record date for the special meeting is required for adoption of the merger agreement (Proposal No. 1). If a quorum is present, the affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote at the special meeting is being sought with respect to the advisory vote regarding certain executive compensation


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(Proposal No. 2). If a quorum is present, the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the special meeting is required to approve an adjournment of the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the special meeting to vote in favor of adoption of the merger agreement (Proposal No. 3).

Whether or not you expect to attend the special meeting in person, please complete, date, sign and return the enclosed proxy card or voting instruction card as promptly as possible in order to ensure we receive your proxy with respect to your shares. Instructions are shown on the proxy or voting instruction card. A return envelope (which is postage pre-paid if mailed in the United States) is enclosed for your convenience.

If you sign, date and mail your proxy card or voting instruction card without indicating how you wish to have your shares voted, the shares represented by the proxy will be voted in favor of adoption of the merger agreement (Proposal No. 1), in favor of the advisory (non-binding) vote on “golden parachute” compensation (Proposal No. 2) and in favor of an adjournment of the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the special meeting to vote in favor of adoption of the merger agreement (Proposal No. 3). If you fail to return your proxy card, or if your shares are held in “street name” and you do not instruct your broker how to vote your shares by failing to complete the voting instruction card, the effect will be as though you cast a vote “against” the adoption of the merger agreement. If you attend the special meeting and wish to vote in person, you may withdraw your proxy and vote in person prior to the close of voting at the special meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the special meeting, you must obtain a proxy issued in your name from that record holder and present it at the special meeting.

Please do not send any stock certificates or documents representing your ownership of Outdoor Channel common stock at this time. If the merger agreement is adopted by the Outdoor Channel stockholders, you will receive a subsequent letter explaining what to do.

If you have any questions concerning the mergers or this proxy statement/prospectus, would like additional copies or need help voting your shares of Outdoor Channel common stock, please contact Outdoor Channel’s proxy solicitor:

Georgeson Inc.

199 Water Street, 26th Floor

New York, New York 10038

(888) 293-6812 (toll free)

(212) 440-9800 (banks and brokers)

BY ORDER OF THE BOARD OF DIRECTORS,

 

Perry T. Massie

Co-Chairman of the Board

Temecula, California

February 12, 2013


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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Outdoor Channel from documents that are not included in or delivered with this document. You may have already been sent some of the documents incorporated by reference, but you can obtain any of them through the Securities and Exchange Commission website at http://www.sec.gov or from Outdoor Channel, excluding all exhibits (unless an exhibit has been specifically incorporated herein by reference), by requesting them in writing or by telephone from Outdoor Channel at the following addresses or telephone numbers:

Georgeson Inc.

199 Water Street, 26th Floor

New York, New York 10038

(888) 293-6812 (toll free)

(212) 440-9800 (banks and brokers)

or

Outdoor Channel Holdings, Inc.

43455 Business Park Drive

Temecula, CA 92590

(951) 699-6991

You can also get more information by visiting Outdoor Channel’s website at www.outdoorchannel.com. Website materials are not part of this proxy statement/prospectus.

You will not be charged for any of these documents that you request. If you would like to request documents from Outdoor Channel, please do so by February 20, 2013 to receive them before the special stockholders’ meeting. If you request any incorporated documents, Outdoor Channel will strive to mail them to you by first-class mail, or other equally prompt means, within one business day of receipt of your request.

See “Where You Can Find More Information” on page 206.


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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE PROPOSED TRANSACTION

     1   

SUMMARY

     12   

OUTDOOR CHANNEL SELECTED HISTORICAL FINANCIAL INFORMATION

     26   

IMOTSC SELECTED HISTORICAL FINANCIAL INFORMATION

     28   

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     29   

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

     31   

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

     33   

RISK FACTORS

     34   

Risks Related to the Mergers and to an Investment in IMOH

     34   

Other Risks Currently Faced by IMOTSC and Outdoor Channel that IMOH Will Face After Consummation of the Mergers

     40   

Risks Related to IMOTSC and its Business

     40   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     50   

THE COMPANIES

     51   

Information About InterMedia Outdoor Holdings, Inc.

     51   

Information About Outdoor Channel Holdings, Inc.

     52   

Information About InterMedia Outdoors Holdings, LLC

     53   

THE OUTDOOR CHANNEL SPECIAL MEETING AND PROXY SOLICITATION

     62   

Matters Relating to the Special Meeting

     62   

Votes Necessary to Adopt the Merger Agreement

     63   

Proxies

     63   

Changing or Revoking Your Proxy

     64   

Voting in Person

     64   

Proxy Solicitation

     64   

Appraisal Rights

     64   

Other Business

     65   

Outdoor Channel Householding Information

     65   

Stockholder Account Maintenance

     65   

THE PROPOSED TRANSACTION

     66   

General Description of the Proposed Transaction

     66   

Background of the Proposed Transaction

     68   

Outdoor Channel Reasons for the Outdoor Channel Merger

     76   

Recommendation of the Outdoor Channel Board of Directors

     80   

Certain Financial Projections

     80   

Opinion of Outdoor Channel’s Financial Advisor

     83   

Presentation by Outdoor Channel’s Print Media Consultant

     90   

Outdoor Channel Stockholder Vote Required and Support Agreement

     91   

Interests of Certain Persons in the Mergers

     91   

Plans for IMOH After the Proposed Transaction

     102   

Ownership of IMOH After the Proposed Transaction

     102   

Effects on Outdoor Channel if the Proposed Transaction is Not Consummated

     102   

Financing the Mergers

     102   

Regulatory Approvals Required for the Proposed Transaction

     104   

Litigation Related to the Proposed Transaction

     104   

Accounting Treatment

     105   

Material Support and Ancillary Agreements in Connection with the Proposed Transaction

     105   

New Certificate of Incorporation and New By-laws of IMOH

     108   

Federal Securities Laws Consequences

     109   

THE MERGER AGREEMENT (PROPOSAL NO. 1)

     110   

ADVISORY VOTE REGARDING CERTAIN EXECUTIVE COMPENSATION (PROPOSAL NO. 2)

     133   

 

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ADJOURNMENT OF THE SPECIAL MEETING (PROPOSAL NO. 3)

     134   

OUTDOOR CHANNEL MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF OUTDOOR CHANNEL HOLDINGS, INC.

     135   

IMOTSC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF INTERMEDIA OUTDOORS HOLDINGS, LLC

     136   

BOARD OF DIRECTORS, BOARD COMMITTEES AND EXECUTIVE OFFICERS OF IMOH

     166   

ADDITIONAL INFORMATION ABOUT THE COMPANIES

     172   

Executive Compensation of IMOTSC

     172   

Executive Compensation of Outdoor Channel

     174   

Description of Ongoing Litigation of IMOTSC

     174   

Description of Ongoing Litigation of Outdoor Channel

     174   

MARKET PRICE AND DIVIDEND INFORMATION

     176   

Market Prices of Outdoor Channel Common Stock

     176   

Outdoor Channel Dividend Information

     176   

Market Prices of InterMedia Units

     176   

PRINCIPAL STOCKHOLDERS OR HOLDERS OF EQUITY INTERESTS

     177   

Principal Stockholders of Outdoor Channel Before the Proposed Transaction and of IMOH After the Proposed Transaction

     177   

Principal Holders of Equity Interests of IMOTSC Before the Proposed Transaction and Stockholders of IMOH After the Proposed Transaction

     179   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     181   

DESCRIPTION OF IMOH CAPITAL STOCK

     189   

COMPARISON OF STOCKHOLDER RIGHTS

     193   

DISSENTERS’ APPRAISAL RIGHTS

     199   

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     203   

General

     203   

Material Tax Consequences of the Mergers

     203   

Information Reporting

     204   

Backup Withholding

     204   

LEGAL MATTERS

     205   

EXPERTS

     205   

FUTURE STOCKHOLDER PROPOSALS

     205   

OTHER MATTERS

     206   

WHERE YOU CAN FIND MORE INFORMATION

     206   

InterMedia Outdoors Holdings, LLC Consolidated Financial Statements

  

LIST OF ANNEXES

 

Annex A

   Agreement and Plan of Merger, dated as of November  15, 2012, by and among Outdoor Channel Holdings, Inc., InterMedia Outdoors Holdings, LLC, InterMedia Outdoor Holdings, Inc., Outdoor Merger Corp. and Outdoor Merger Sub, LLC

Annex B

   Opinion of Lazard Frères & Co. LLC

Annex C

   Delaware General Corporation Law Section 262

 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE PROPOSED TRANSACTION

The questions and answers below highlight only selected procedural information from this proxy statement/prospectus. They do not contain all of the information that may be important to you. You should read carefully this entire proxy statement/prospectus to fully understand the Agreement and Plan of Merger and the transactions contemplated thereby and the voting procedures for the special meeting. Unless otherwise indicated in this proxy statement/prospectus or the context otherwise requires, throughout this proxy statement/prospectus we generally refer to Outdoor Channel Holdings, Inc. and, where applicable, its consolidated subsidiaries as “Outdoor Channel,” InterMedia Outdoors Holdings, LLC and, where applicable, its consolidated subsidiaries as “IMOTSC,” InterMedia Outdoor Holdings, Inc., a newly formed holding company, as “IMOH,” Outdoor Merger Corp., an indirect wholly owned subsidiary of IMOH, as “Outdoor Channel Sub,” Outdoor Merger Sub, LLC, an indirect wholly owned subsidiary of IMOH, as “InterMedia Sub,” Thomas H. Massie, Perry T. Massie, and their affiliated entities, Musk Ox Investments, LP, The Wilma M. Massie Trust dated June 3, 1994, The Wilma M. Massie Irrevocable Trust dated April 27, 1994, Massie Family Trust dated May 23, 2007, Perry T. Massie & Sandra Lynn Massie Trust dated October 14, 1997, The Perry and Sandy Massie Foundation and The Thomas and Cindy Massie Foundation as the “Massie Parties” and the Agreement and Plan of Merger, dated as of November 15, 2012, by and among Outdoor Channel, IMOTSC, IMOH, Outdoor Channel Sub and InterMedia Sub, as the “merger agreement.”

 

Q: Why am I receiving these materials?

 

A: We sent you this proxy statement/prospectus and the enclosed proxy card because you have been identified as a stockholder of record of Outdoor Channel and the board of directors of Outdoor Channel is soliciting your proxy to vote at a special meeting of stockholders relating to a proposed strategic combination and merger transaction with IMOTSC. You may submit your proxy by completing, dating, signing and returning the enclosed proxy card or, if your shares are held in a brokerage or similar account, by completing their voting instruction card. We strongly encourage stockholders to submit a proxy. You are also invited to attend the special meeting in person although you do not need to attend the special meeting to have your shares voted at the special meeting. We intend to mail this proxy statement/prospectus and accompanying proxy card on or about February 12, 2013 to all stockholders of record entitled to vote at the special meeting.

 

Q: What are the mergers?

 

A: On November 15, 2012, Outdoor Channel entered into the merger agreement with IMOTSC, IMOH, Outdoor Channel Sub and InterMedia Sub. Following the consummation of the transactions contemplated by the merger agreement, Outdoor Channel and IMOTSC will each become indirect wholly owned subsidiaries of IMOH. IMOH is expected to be listed for trading on The NASDAQ Global Market and its symbol is expected to be “OUTD.”

These transactions will be implemented through two separate mergers. Outdoor Channel Sub will merge with and into Outdoor Channel, with Outdoor Channel as the surviving corporation (the “Outdoor Channel merger”), and InterMedia Sub will merge with and into IMOTSC, with IMOTSC as the surviving limited liability company (the “IMOTSC merger”). The Outdoor Channel merger and the IMOTSC merger are referred to herein as the “mergers.” Outdoor Channel Sub and InterMedia Sub are both indirect wholly owned subsidiaries of IMOH.

 

Q: What will stockholders of Outdoor Channel and equity holders of IMOTSC receive in the mergers?

 

A: In connection with the mergers, stockholders of Outdoor Channel will be required to make an election as to the form of merger consideration they would like to receive for their shares of Outdoor Channel common stock. This election is subject to proration, as described below, depending upon the elections made by all other Outdoor Channel stockholders.

 

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Upon the consummation of the mergers, for each share of Outdoor Channel common stock, stockholders of Outdoor Channel will receive the following consideration: (x) $8.00 in cash, without interest (the “Cash Consideration”), if an election to receive cash has been made (each such share, a “Cash Election Share”); (y) one share of IMOH common stock (“IMOH common stock”) (together with cash to be paid in lieu of any fractional shares of IMOH in accordance with the merger agreement, the “Stock Consideration”) if an election to receive stock has been made; or (z) if an election to receive mixed stock and cash has been made or if no election has been made, a combination of (A) $4.46 in cash, without interest (such amount, the “Mixed Consideration Cash”) and (B) that portion of a share of IMOH common stock equal to 0.443 (together with cash to be paid in lieu of any fractional shares of IMOH in accordance with the merger agreement, the “Mixed Consideration Stock”) (the Mixed Consideration Cash, together with the Mixed Consideration Stock, the “Mixed Consideration”). Cash will be paid in accordance with the merger agreement in lieu of any fractional shares of IMOH which a stockholder might otherwise have received pursuant to the mergers, regardless of the election made and after giving effect to proration, if any.

The proration procedures are designed to ensure that the shares of Outdoor Channel common stock are converted into an aggregate of $115,000,000 in cash (the “Available Cash Amount”) and approximately 32.4% of the IMOH common stock outstanding immediately after the consummation of the mergers. If the elections of all of the Outdoor Channel common stockholders result in an oversubscription or undersubscription of the Cash Election Shares, the Available Cash Amount will not be adjusted; it will remain fixed. For example, if the number of Cash Election Shares plus cash paid in connection with Mixed Consideration exceeds the Available Cash Amount then each stockholder making a cash election will receive common stock of IMOH and a pro rated amount of cash. If the number of Cash Election Shares plus cash paid in connection with Mixed Consideration does not exceed the Available Cash Amount, then stockholders electing Stock Consideration will receive a portion of their merger consideration in cash. Stockholders electing Mixed Consideration will not be subject to proration. See “Risk Factors—Holders of Outdoor Channel common stock who make cash or stock elections may not receive all their merger consideration in the form they elected.”

In the event a holder of shares of Outdoor Channel common stock makes an election to receive cash for 55.74% of such holder’s aggregate outstanding shares (counted to the nearest whole share) and makes an election to receive stock for 44.26% of such holder’s aggregate outstanding shares (rounded to the nearest whole share), and indicates its intent on its election form to receive the equivalent of Mixed Consideration for all of such holder’s shares, then such holder’s shares will not be subject to proration.

For more information regarding these proration procedures, see the section “The Merger Agreement (Proposal No. 1)—Merger Consideration.”

Upon the consummation of the mergers, members of IMOTSC (the “InterMedia Unit Holders”) will be entitled to receive 23,854,227 shares of IMOH common stock in the aggregate in exchange for their equity interests of IMOTSC, subject to various adjustments set forth in the merger agreement. Shares of IMOH common stock shall be allocated among the InterMedia Unit Holders in accordance with the merger agreement and the IMOTSC limited liability company agreement.

 

Q: How will stock options and other equity awards of Outdoor Channel be treated in connection with the mergers?

 

A:

At the effective time of the mergers, stock options to purchase shares of Outdoor Channel common stock (the “Outdoor Channel Stock Options”) outstanding immediately prior to the effective time of the mergers, whether vested or unvested, will be assumed and converted into an option to acquire shares of IMOH common stock, on the same terms and conditions as were applicable under each Outdoor Channel Stock Option, including vesting (taking into account any acceleration of vesting that may occur as a result of the mergers) (each, as so adjusted, an “Outdoor Channel Assumed Stock Option”), except that (A) each Outdoor Channel Assumed Stock Option will represent the right to acquire the same number of shares of IMOH common stock (rounded down to the next whole share), and (B) the price per share of IMOH

 

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  common stock under each Outdoor Channel Assumed Stock Option will be equal to the price per share of the Outdoor Channel common stock subject to the Outdoor Channel Stock Option in effect immediately prior to the effective time of the mergers.

At the effective time of the mergers, each equity award (other than an Outdoor Channel Stock Option) entitling the holder thereof to acquire Outdoor Channel common stock (an “Outdoor Channel Equity Award”) will be converted into an equity award to receive shares of IMOH common stock (an “Outdoor Channel Assumed Equity Award”), on the same terms and conditions as were applicable to the Outdoor Channel Equity Award, including vesting (taking into account any acceleration of vesting that may occur as a result of the mergers) except that each Outdoor Channel Assumed Equity Award will represent the right to acquire the same number of shares of IMOH common stock (rounded down to the next whole share).

The above assumes that the Exchange Ratio remains fixed at 1:1 and is not adjusted by a stock split or similar event prior to consummation of the mergers. We will notify holders of Outdoor Channel common stock in the event the Exchange Ratio should be adjusted.

 

Q: What respective percentages of the outstanding stock of IMOH will be held by the stockholders of Outdoor Channel and the equity holders of IMOTSC?

 

A: As a result of the mergers, the stockholders of Outdoor Channel are expected to own approximately 32.4% of IMOH, and the InterMedia Unit Holders are expected to own approximately 67.6% of IMOH. In particular, InterMedia Partners VII, L.P. (“InterMedia Partners”) will hold approximately 63% of the outstanding common stock of IMOH. Pursuant to the Support Agreement (as defined below), the Massie Parties are required to make elections to receive either the Cash Consideration or the Mixed Consideration (or alternatively, an election to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock), and the Massie Parties have indicated that they will elect to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock. No other member of Outdoor Channel management has indicated to Outdoor Channel or IMOTSC the form of consideration he or she intends to elect in the Outdoor Channel merger. For more details regarding the mergers, see “The Proposed Transaction” and “The Merger Agreement (Proposal No. 1).” A copy of the merger agreement is attached as Annex A-1.

 

Q: How do I make an election for the type of merger consideration that I prefer to receive and when can I expect to receive the merger consideration?

 

A: Each holder of record of Outdoor Channel common stock as of the record date for the special meeting of Outdoor Channel’s stockholders will be mailed an election form and other appropriate and customary transmittal materials. Each Outdoor Channel stockholder should specify in the election form (i) the number of shares for which such holder elects to receive the Cash Consideration, (ii) the number of shares for which such holder elects to receive the Stock Consideration, and/or (iii) the number of shares for which such holder elects to receive the Mixed Consideration. Holders may elect to receive one type of merger consideration for all of their shares or any combination of the above. Any Outdoor Channel stockholder who does not make an election to receive the Cash Consideration, the Stock Consideration or Mixed Consideration, or does not provide their election by the deadline will be deemed to have made an election to receive the Mixed Consideration.

 

Q: When is the deadline for me to make an election for the type of merger consideration that I prefer to receive?

 

A: The election deadline will be 5:00 p.m., New York city time, on March 4, 2013.

 

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Q: Can I change my election after the form of election has been submitted?

 

A: Yes. You may revoke your election prior to the election deadline by submitting a written notice of revocation to the exchange agent. Revocations must specify the name in which your shares are registered on the share transfer books of Outdoor Channel, and such other information as the exchange agent may request. If you wish to submit a new election, you must do so in accordance with the election procedures described in this proxy statement/prospectus and the election form. If you instructed a broker, bank or other nominee holder to submit an election for your shares, you must follow your broker’s, bank’s or other nominee’s directions for changing those instructions. The notice of revocation must be received by the exchange agent prior to the election deadline in order for the revocation to be valid.

 

Q: May I sell or transfer shares of Outdoor Channel common stock after making an election?

 

A: Yes, but only if you revoke your election or the merger agreement is terminated. Once you properly make an election with respect to any shares of Outdoor Channel common stock, you will be unable to sell or otherwise transfer those shares, unless you properly revoke your election at or prior to the election deadline or unless the merger agreement is terminated.

 

Q: What are the benefits of the proposed business combination?

 

A: Outdoor Channel’s board of directors unanimously approved the merger agreement after considering numerous factors. Among these factors, the board considered the competitive nature of cable programming, challenges associated with operating a single-channel cable network, and the highly complementary nature of Outdoor Channel’s and IMOTSC’s respective businesses and target markets. The Outdoor Channel board believes that the combination of the two companies offers Outdoor Channel’s stockholders the opportunity to benefit from a continuing equity stake in the combined company with a substantially expanded subscriber base, thereby increasing the combined entity’s scale and market reach and improving the resulting company’s negotiating position with distributors and advertisers.

For a more complete discussion of Outdoor Channel’s reasons for the merger, including a discussion of the Outdoor Channel board’s deliberations and potentially negative factors of the proposed merger, please review the additional information contained under the caption “Outdoor Channel Reasons for the Outdoor Channel Merger” on page 76.

 

Q: What are the relationships among the Massie Parties and Outdoor Channel?

 

A:

Brothers Thomas H. Massie and Perry T. Massie have been directors of Outdoor Channel since 1984. Together with other members of their family, including their father, they founded Outdoor Channel and have been closely involved with its management and operation since Outdoor Channel’s inception. The Massie Parties currently own approximately 36% of the outstanding Outdoor Channel common stock. In connection with the merger agreement, on November 15, 2012, IMOH entered into a support agreement (the “Support Agreement”) with the Massie Parties, the members of the Outdoor Channel Board and the executive officers of Outdoor Channel (collectively, the “Supporting Parties”). Under the Support Agreement, the Supporting Parties have agreed to vote their shares of Outdoor Channel common stock (i) in favor of the adoption of the merger agreement; (ii) in favor of any proposal to adjourn or postpone any meeting of the Outdoor Channel stockholders if there are not sufficient votes for approval of the matters described in the preceding clause (i); and (iii) except with the written consent of IMOH, against (x) any Alternative Proposal (as defined in the merger agreement) with respect to Outdoor Channel that would impede the merger or (y) any other action or proposal involving Outdoor Channel that would reasonably be expected to prevent or materially impede, interfere with or delay the Outdoor Channel merger. Pursuant to the Support Agreement, the Massie Parties are required to make elections to receive either the Cash Consideration or the Mixed Consideration (or alternatively, an election to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock), and the Massie Parties have indicated that they will elect to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel

 

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  common stock. For additional information, see the sections entitled “The Proposed Transaction—Background of the Proposed Transaction,” “The Proposed Transaction—Interests of Certain Persons in the Mergers” and “Principal Stockholders.”

 

Q: What are the relationships among IMOTSC and the principal InterMedia Unit Holders such as InterMedia Partners VII, L.P.?

 

A: InterMedia Partners VII, L.P. is a private equity investment fund that makes control investments in media content providers, particularly those catering to audiences currently undervalued and underserved by mainstream media. InterMedia Partners VII, L.P. is managed by its parent, InterMedia Partners, L.P. InterMedia Partners VII, L.P. is the largest holder of IMOTSC’s outstanding membership interests and after completion of the transactions contemplated in the merger agreement will hold approximately 63% of IMOH’s outstanding common stock.

 

Q: How will the combined company be managed following the mergers?

 

A: Immediately following the mergers, the board of directors of IMOH will be divided into three classes and will be comprised of nine individuals. Initially, five directors will be designated by IMOTSC: Peter Kern, Alan Sokol, Jerome Letter, Jonathan S. Adelstein and Bridget Baker; three directors will be designated by Outdoor Channel (with each serving in a different class from one another): Perry T. Massie, David Merritt and T. Bahnson Stanley; and one director will be the President and Chief Executive Officer of IMOH: Thomas E. Hornish. Mr. Kern, Mr. Sokol, and Mr. Letter are each partners of InterMedia Partners, L.P., which, through its subsidiary, InterMedia Partners, will hold 63% of IMOH’s common stock immediately following the mergers. Collectively, InterMedia Unit Holders are expected to own approximately 67.6% of IMOH’s common stock immediately following the mergers.

 

     Immediately following the mergers, IMOH’s management team will consist of Peter Kern as Chairman of the Board, Thomas E. Hornish as the President and Chief Executive Officer, Thomas D. Allen as the Chief Financial Officer and Chief Operating Officer, Gavin Harvey as President—Television Networks, Jeffrey Paro as President—Publishing, Integrated Media and Branded Content and Catherine C. Lee as Executive Vice President, General Counsel and Corporate Secretary. Mr. Hornish has served as Outdoor Channel’s President and Chief Executive Officer and as a member of its Board of Directors since February 2012 and previously served as Outdoor Channel’s General Counsel from December 2004 until January 2012 and Chief Operating Officer from 2007 until January 2012. Mr. Allen has served as Outdoor Channel’s Executive Vice President and Chief Financial Officer since July 2010 and as its Chief Operating Officer since February 2012. Mr. Harvey has served as The Sportsman Channel, Inc.’s Chief Executive Officer since July 2010. Mr. Paro has served as InterMedia Outdoors, Inc.’s Chief Executive Officer since January 2007. Ms. Lee has served as Outdoor Channel’s Executive Vice President, General Counsel and Corporate Secretary since February 2012.

 

Q: Do any Outdoor Channel executive officers have interests in the mergers that may differ from those of Outdoor Channel stockholders?

 

A: Yes. In considering the recommendation of Outdoor Channel’s board of directors with respect to the merger agreement, you should be aware that certain of Outdoor Channel’s executive officers have economic interests in the mergers that are different from, or in addition to, their interests as Outdoor Channel stockholders generally. The members of Outdoor Channel’s board of directors were aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions. Please see “The Proposed Transaction—Interests of Certain Persons in the Mergers” on page 91.

 

Q: What are the conditions to closing the mergers?

 

A:

Consummation of the mergers is subject to certain conditions, including, among others, adoption of the merger agreement by holders of a majority of the shares of Outdoor Channel stock entitled to vote,

 

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  customary regulatory approvals, no material adverse change in Outdoor Channel or IMOTSC and other customary closing conditions. For more information, see the section entitled “The Merger Agreement (Proposal No. 1)—Conditions to the Mergers.”

 

Q: What are the material federal income tax consequences of the mergers?

 

A: The consummation of the Outdoor Channel merger is conditioned on the receipt by Outdoor Channel of an opinion of Wilson Sonsini Goodrich & Rosati, P.C., counsel to Outdoor Channel, to the effect that for U.S. federal income purposes the mergers, taken together, will constitute an exchange described in Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”), and the consummation of the IMOTSC merger is conditioned on the receipt by IMOTSC of a similar opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel to IMOTSC, in each case dated as of the closing date of the mergers. As a result, a U.S. holder of Outdoor Channel common stock that, pursuant to the Outdoor Channel merger, exchanges the Outdoor Channel common stock for IMOH common stock will not recognize gain or loss upon such exchange. A U.S. holder of Outdoor Channel common stock that exchanges such stock for a combination of IMOH common stock and cash would recognize gain but not loss to the extent of the lesser of the amount of gain realized or the amount of cash received. A U.S. holder of Outdoor Channel common stock that receives only cash in the Outdoor Channel merger would recognize any gain or loss realized. The aggregate tax basis of any IMOH common stock received by a U.S. holder will be equal to the aggregate tax basis of the Outdoor Channel common stock surrendered by such holder, increased by the amount of any gain recognized and decreased by the amount of any cash received, and the holding period of any IMOH common stock received by a U.S. holder will include the holding period of the Outdoor Channel common stock surrendered by such U.S. holder.

Tax matters are very complicated. Accordingly, we encourage you to consult your own tax advisor for a full understanding of the tax consequences of the mergers to you, including the applicability and effect of federal, state, local and foreign income and other tax laws. For more information, see the section entitled “Material U.S. Federal Income Tax Consequences.”

 

Q: When do you expect the transaction to be consummated?

 

A: We anticipate that the merger and other transactions contemplated by the merger agreement will be completed by the end of the first quarter of Outdoor Channel’s fiscal year 2013 if the requisite stockholder votes are obtained, assuming the other conditions to consummation of the mergers are satisfied or waived. However, it is possible that the transaction will not be consummated during that timeframe. For more information, see “The Merger Agreement (Proposal No. 1)—Conditions to the Mergers.”

 

Q: Am I entitled to appraisal rights?

 

A: To the extent required under Delaware law, Outdoor Channel stockholders will be entitled to appraisal rights under the General Corporation Law of the State of Delaware in connection with the Outdoor Channel merger. Our current understanding of Delaware law is that appraisal rights will be available for all dissenting shares of Outdoor Channel common stock only if any stockholder would be required under the merger agreement to receive cash merger consideration (other than cash in lieu of fractional shares). See the section “Dissenters’ Appraisal Rights.”

 

Q: Who may vote at the special meeting?

 

A: Only Outdoor Channel stockholders of record at the close of business on January 25, 2013 will be entitled to vote at the special meeting. On the record date, there were 25,916,839 shares of Outdoor Channel common stock outstanding and entitled to vote.

 

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Q: How many votes do Outdoor Channel stockholders have?

 

A: Each holder of Outdoor Channel common stock will be entitled to one vote for each share held on all matters to be voted upon at the special meeting. The holders of record of Outdoor Channel common stock will vote on all matters to be voted upon at the special meeting.

As of the record date, directors and executive officers of Outdoor Channel as a group beneficially owned and were entitled to vote approximately 11,010,318 shares of Outdoor Channel common stock, representing approximately 42.5% of the votes entitled to be cast at the special meeting. All of the directors and executive officers of Outdoor Channel who are entitled to vote at the special meeting have agreed to vote their shares of Outdoor Channel common stock in favor of all of the proposals to be presented at the special meeting.

As of the record date, the Massie Parties beneficially owned and were entitled to vote approximately 36% of the Outdoor Channel common stock entitled to vote at the special meeting. In connection with the merger agreement, on November 15, 2012, IMOH entered into a support agreement (the “Support Agreement”) with the Massie Parties, the members of the Outdoor Channel Board and the executive officers of Outdoor Channel (collectively, the “Supporting Parties”). Under the Support Agreement, the Supporting Parties agree to vote their shares of Outdoor Channel common stock (i) in favor of the adoption of the merger agreement; (ii) in favor of any proposal to adjourn or postpone any meeting of the Outdoor Channel stockholders if there are not sufficient votes for approval of the matters described in the preceding clause (i); and (iii) except with the written consent of IMOH, against (x) any Alternative Proposal (as defined in the merger agreement) or (y) any other action or proposal involving Outdoor Channel that would reasonably be expected to prevent or materially impede, interfere with or delay the Outdoor Channel merger. For additional information, see the sections entitled “The Proposed Transaction—Background of the Proposed Transaction,” “The Proposed Transaction—Interests of Certain Persons in the Mergers” and “Principal Stockholders.”

 

Q: What stockholder approvals are required for Outdoor Channel?

 

A: Proposal No. 1: The affirmative vote of the holders of a majority of the outstanding shares of Outdoor Channel common stock entitled to vote are required to adopt the merger agreement.

Proposal No. 2: If a quorum is present, the affirmative vote of the holders of a majority of the shares of Outdoor Channel common stock present in person or represented by proxy and entitled to vote is required to approve, on an advisory (non-binding) basis, the “golden parachute” compensation payable or that could become payable to the named executive officers of Outdoor Channel in connection with the mergers pursuant to pre-existing arrangements.

Proposal No. 3: If a quorum is present, the affirmative vote of the holders of a majority of Outdoor Channel common stock present in person or represented by proxy and entitled to vote on the matter is required to approve an adjournment of the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the special meeting to vote in favor of adopting the merger agreement.

All other actions considered at the meeting may be taken upon the affirmative vote of the holders of a majority of the votes present in person or represented by proxy at the meeting and entitled to vote on the matter.

Unless otherwise indicated, the discussions relating to the procedures for voting stock are applicable to holders of Outdoor Channel common stock, present in person or represented by proxy and entitled to vote at the special meeting.

 

Q: What constitutes a quorum?

 

A:

A quorum of at least a majority of the voting power of all outstanding shares of common stock of Outdoor Channel present in person or represented by proxy and entitled to vote at the special meeting is necessary to hold a valid special meeting. On the record date, there were an aggregate of 25,916,839 shares of Outdoor

 

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  Channel common stock outstanding. Thus, 12,958,420 shares of Outdoor Channel common stock must be present in person or represented by proxy at the special meeting to have a quorum. The inspector of elections will determine whether or not a quorum is present.

Your shares will be counted towards the quorum only if you are present in person at the special meeting or submit a valid proxy in accordance with the procedures set forth in “How do I vote?” below. Abstentions will also be counted towards the quorum requirement, but broker non-votes will not be counted towards the quorum requirement. If there is no quorum, a majority of the shares present in person or represented by proxy at the special meeting may vote to adjourn the special meeting to another date.

 

Q: What if I return a proxy card but do not make specific choices?

 

A: If Outdoor Channel receives a signed and dated proxy card and the proxy card does not specify how your shares are to be voted, your shares will be voted “For” the adoption of the merger agreement, “For” approval on an advisory (non-binding) basis of the “golden parachute” compensation payable or that could become payable to the name executive officers in connection with the mergers and “For” the approval of the proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes to adopt the merger agreement. If any other matter is properly presented at the special meeting, your proxy (i.e., one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

 

Q: What effect do abstentions and broker non-votes have on the outcome of the proposals?

 

A: An abstention has the same effect as a vote “against” each of the proposals.

A “broker non-vote” occurs when a broker or bank cannot vote for a proposal because the broker or bank did not receive instructions from the beneficial owner on how to vote and does not have discretionary authority to vote on the beneficial owner’s behalf in the absence of instructions. Broker non-votes are not counted as present for the purpose of determining the existence of a quorum and also have the same effect as a vote “against” the proposal to adopt the merger agreement. Broker non-votes will have no effect on the non-binding advisory vote on the proposal to approve “golden parachute” compensation or the proposal to adjourn the meeting to permit further solicitation of proxies.

 

Q: How does Outdoor Channel’s board of directors recommend that I vote?

 

A: Outdoor Channel’s board of directors unanimously recommends that Outdoor Channel stockholders vote:

FOR Proposal No. 1 to adopt the merger agreement,

FOR Proposal No. 2 to approve on an advisory (and non-binding) basis the “golden parachute” compensation payable or that could become payable to Outdoor Channel’s named executive officers in connection with the mergers, and

FOR Proposal No. 3 to approve a proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes to adopt the merger agreement.

 

Q: When and where is the special meeting?

 

A: The special meeting will take place on March 13, 2013 at 9:00 a.m. Pacific Time at Outdoor Channel’s broadcast facility located at 43455 Business Park Drive in Temecula, California.

 

Q: Why is my vote important?

 

A: If you do not submit your proxy or vote in person at the special meeting, it will be more difficult for Outdoor Channel to obtain the necessary quorum to hold the special meeting. In addition, the adoption of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Outdoor Channel common stock entitled to vote. As a result, your failure to vote will have the same effect as a vote “against” the merger and the adoption of the merger agreement.

 

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Q: Why am I being asked to cast an advisory (non-binding) vote to approve the “golden parachute” compensation payable or that could become payable to Outdoor Channel’s named executive officers in connection with the mergers pursuant to pre-existing severance arrangements?

 

A: The SEC, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protections Act of 2010, adopted rules that require Outdoor Channel to seek an advisory (non-binding) vote with respect to certain payments that will or may be made to Outdoor Channel’s named executive officers in connection with the mergers.

 

Q: What will happen if Outdoor Channel’s stockholders do not approve the advisory vote on “golden parachute” compensation?

 

A: Approval of the “golden parachute” compensation payable or that could become payable under pre-existing severance arrangements that Outdoor Channel’s named executive officers may receive in connection with the mergers is not a condition to the completion of the mergers. The vote with respect to “golden parachute” compensation is an advisory vote and will not be binding on Outdoor Channel or IMOH regardless of whether the merger agreement is approved. Therefore, regardless of whether stockholders approve the “golden parachute” compensation, if the mergers are approved by the stockholders and completed, the “golden parachute” compensation will still be paid to Outdoor Channel’s named executive officers to the extent payable in accordance with the terms of such pre-existing compensation arrangements.

 

Q: What do I need to do now?

 

A: After you carefully read this proxy statement/prospectus, review, complete, and sign the proxy card or voting instruction card contained in your proxy materials. Please mail the executed proxy or voting instruction card in the enclosed return envelope as soon as possible, so that your shares may be represented at the special meeting. If you hold shares as the stockholder of record, your vote must be received no later than 1:00 a.m. Pacific Time on March 13, 2013. If you hold shares as the beneficial owner, please follow the voting instructions provided by your broker, trustee or other nominee. In order to assure that your shares are voted, please submit your proxy as instructed on your proxy or voting instruction card even if you currently plan to attend the special meeting in person.

 

Q: How do I vote?

 

A: You may vote “For,” “Against” or “Abstain” from voting on any proposal. Votes will be counted by the inspector of elections appointed for the special meeting. The procedures for voting are as follows:

Submitting a Proxy Prior to the Special Meeting

Whether or not you plan to attend the special meeting, we urge you to submit a proxy prior to the special meeting to ensure that your shares are voted. If you hold shares as the stockholder of record, your vote must be received no later than 1:00 a.m. Pacific Time on March 13, 2013. If you hold shares as the beneficial owner, please follow the voting instructions provided by your broker, trustee or other nominee.

Giving your proxy means that you authorize us to vote your shares at the special meeting in the manner you direct. If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by Outdoor Channel’s board of directors as described above.

If any other matter is presented, your proxy will vote in accordance with his or her best judgment. At the time this proxy statement/prospectus went to press, we knew of no matters which needed to be acted on at the special meeting, other than those discussed in this proxy statement/prospectus.

Voting During the Special Meeting

 

   

If you hold shares directly in your name, you may vote during the special meeting in person prior to the close of voting.

 

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If your shares are held in “street name” through a bank, broker or other nominee, in order to vote during the special meeting you must request and obtain a new, valid proxy card from such nominee prior to the meeting (please contact them for further information). Once you have obtained and properly completed this new proxy card, you may vote in person prior to the close of voting.

 

Q: Do I hold my shares of record or in street name?

 

A. If on the record date, your shares were registered directly in your name with Outdoor Channel’s transfer agent, Computershare Trust Co., then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. If on the record date your shares were held in an account at a brokerage firm, bank, dealer or similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the special meeting.

As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the special meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.

 

Q: If my Outdoor Channel shares are held in street name by my broker, will my broker vote my Outdoor Channel shares for me?

 

A: Brokers cannot vote your Outdoor Channel shares on Proposal No. 1 to adopt the merger agreement, Proposal No. 2 to approve on an advisory (non-binding) basis the “golden parachute” compensation payable or that could become payable to Outdoor Channel’s named executive officers in connection with the mergers or No. 3 to approve a proposal to adjourn the meeting. Therefore, it is important that you follow the directions provided by your broker about how to instruct your broker to vote your shares. If you do not provide instructions to your broker about how to vote your shares on these proposals, your shares will be treated as “broker non-votes” with respect to these proposals. See the section in this Q & A entitled “What effect do absentions and broker non-votes have on the outcome of the proposals” for a discussion of the effects of broker non-votes with respect to each of the proposals.

 

Q: How are votes counted?

 

A: The inspector of elections for the special meeting will tabulate the votes.

 

Q: How can I find out the voting results?

 

A: Preliminary and final voting results will be publicly announced as promptly as practicable. Preliminary voting results may be announced at the special meeting.

 

Q: May I change my vote after I have submitted my proxy?

 

A: Yes. You may revoke your proxy at any time before the close of voting at the special meeting. You may revoke your proxy in any of the following ways:

Prior to the special meeting, you may:

 

   

submit another properly completed proxy card with a later date by following the return instructions on the proxy card;

 

   

submit another proxy by telephone or over the Internet after you have already provided an earlier proxy (please refer to “How do I vote?” above for instructions on how to do so); or

 

   

send a written notice that you are revoking your proxy to our Secretary or Assistant Secretary at our principal offices at 43455 Business Park Drive, Temecula, CA 92590.

 

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During the special meeting, you may vote in person prior to the close of voting. Simply attending the special meeting will not, by itself, revoke your proxy.

If you have instructed a broker, bank or other nominee to vote your shares, you must follow directions from such nominee to change those instructions.

 

Q: Who is paying for this proxy solicitation?

 

A: Outdoor Channel will pay for the entire cost of soliciting proxies. In addition to the Outdoor Channel proxy materials, Outdoor Channel’s directors, officers, other employees and any other solicitors that Outdoor Channel may retain may also solicit proxies personally, by telephone or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. Outdoor Channel will provide copies of its solicitation materials to banks, brokerage houses, fiduciaries and custodians that hold beneficially owned shares of Outdoor Channel common stock for distribution to such beneficial owners.

 

Q: What does it mean if I receive more than one proxy card instructing me to vote?

 

A: If you receive more than one proxy card or more than one email instructing you to vote, this means your shares are registered in more than one name or are registered in different accounts. Please complete, date, sign and return each proxy card, and respond to each email, to ensure that all of your shares are voted.

 

Q: What does it mean if multiple members of my household are stockholders but we only received one set of proxy materials?

 

A: If you hold shares in “street name,” in accordance with a notice sent to certain brokers, banks or other nominees, we are sending only one proxy statement/prospectus to an address unless we received contrary instructions from any stockholder at that address. This practice, known as “householding,” is designed to reduce Outdoor Channel’s printing and postage costs. If you hold shares in your name rather than in street name and you would like to receive only one proxy statement/prospectus for your household, please contact Outdoor Channel’s transfer agent, Computershare Trust Co. at (800) 736-3001.

However, if any stockholder residing in your household wishes to receive a separate proxy statement/prospectus for future special meetings, they may call Outdoor Channel’s Investor Relations department at (951) 699-6991 or write to Investor Relations at 43455 Business Park Drive, Temecula, CA 92590. For more information, see “The Special Meeting and Proxy Solicitation—Outdoor Channel Householding Information.”

 

Q: Whom can I contact with any additional questions?

 

A: If you have questions about the special meeting or would like additional copies of this proxy statement/prospectus, you should contact:

Georgeson Inc.

199 Water Street, 26th Floor

New York, New York 10038

(888) 293-6812 (toll free)

(212) 440-9800 (banks and brokers)

 

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SUMMARY

This summary highlights some of the information contained elsewhere in this proxy statement/prospectus. It is not complete and may not contain all of the information that you may want to consider. We urge you to read carefully this entire proxy statement/prospectus, including “Risk Factors” beginning on page 34, and the other documents we refer you to for a more complete understanding of the proposed transaction and subsequent combination. See “Where You Can Find More Information.” Certain items in this summary include a page reference directing you to a more complete description of that item. Unless otherwise indicated in this proxy statement/prospectus or the context otherwise requires, throughout this proxy statement/prospectus we generally refer to Outdoor Channel Holdings, Inc. and, where applicable, its consolidated subsidiaries as “Outdoor Channel,” InterMedia Outdoors Holdings, LLC and, where applicable, its consolidated subsidiaries as “IMOTSC,” InterMedia Outdoor Holdings, Inc., a newly formed holding company, as “IMOH,” Outdoor Merger Corp., an indirect wholly owned subsidiary of IMOH, as “Outdoor Channel Sub,” Outdoor Merger Sub, LLC, an indirect wholly owned subsidiary of IMOH, as “InterMedia Sub,” Thomas H. Massie, Perry T. Massie, and their affiliated entities, Musk Ox Investments, LP, The Wilma M. Massie Trust dated June 3, 1994, The Wilma M. Massie Irrevocable Trust dated April 27, 1994, Massie Family Trust dated May 23, 2007, Perry T. Massie & Sandra Lynn Massie Trust dated October 14, 1997, The Perry and Sandy Massie Foundation and The Thomas and Cindy Massie Foundation as the “Massie Parties” and the Agreement and Plan of Merger, dated as of November 15, 2012, by and among Outdoor Channel, IMOTSC, IMOH, Outdoor Channel Sub and InterMedia Sub, as amended, as the “merger agreement.”

The Companies (see page 51)

Outdoor Channel Holdings, Inc.

43455 Business Park Drive

Temecula, CA 92590

Telephone: (951) 699-6991

Outdoor Channel, a Delaware corporation, is an entertainment and media company with operations in the following three segments:

THE OUTDOOR CHANNEL: The Outdoor Channel, Inc. segment is comprised of The Outdoor Channel, Inc., a Nevada corporation and a wholly owned indirect subsidiary of Outdoor Channel. It operates Outdoor Channel®, a national television network devoted to traditional outdoor related lifestyle programming and outdoorchannel.com.

PRODUCTION SERVICES: Outdoor Channel’s Production Services segment is comprised of Winnercomm, Inc., a Delaware corporation. Winnercomm’s businesses relate principally to the production, development and marketing of sports and outdoor related programming and production activities and to website development, management and hosting services.

AERIAL CAMERAS: Outdoor Channel’s Aerial Cameras segment is comprised of CableCam, LLC and SkyCam, LLC, both Delaware limited liability companies. The Aerial Cameras business relates principally to the providing of suspended aerial camera services to media networks for inclusion in those networks’ production of sporting events.

For the year ended December 31, 2011, contributions to Outdoor Channel’s consolidated revenues from its segments were as follows: TOC 79%, Production Services 9% and Aerial Cameras 12%.

Outdoor Channel was originally incorporated in Alaska in 1984 and operated a gold prospecting business for some time. In 1993 it formed the Outdoor Channel, Inc. (“TOC”), initially as a wholly owned subsidiary, to begin airing its programming. In order to raise capital, TOC sold equity which resulted in it becoming only a

 

 

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majority owned subsidiary. On September 8, 2004, Outdoor Channel acquired all of the outstanding shares of The Outdoor Channel, Inc. that it did not previously own. Effective September 15, 2004, Outdoor Channel reincorporated from Alaska into Delaware. In 2007, Outdoor Channel sold its gold prospecting business. Outdoor Channel Holdings, Inc. wholly owns OC Corporation, a California Corporation, which in turn wholly owns TOC. Outdoor Channel Holdings is also the sole member of 43455 BPD, LLC, the entity that owns the building that houses Outdoor Channel’s broadcast facility and executive offices. TOC operates Outdoor Channel®, a national television network devoted to traditional outdoor activities such as hunting, fishing and shooting sports, as well as off-road motor sports and other outdoor related lifestyle programming.

On January 12, 2009, Outdoor Channel entered into and completed an asset purchase agreement with Winnercomm, Inc., an Oklahoma corporation and wholly owned subsidiary of Winnercomm Holdings, Inc., a Delaware corporation, Cablecam, LLC, an Oklahoma limited liability company, and Skycam, LLC, an Oklahoma limited liability company, pursuant to which Outdoor Channel purchased certain assets and assumed certain liabilities of the sellers and formed Winnercomm, CableCam and SkyCam. Outdoor Channel Holdings wholly owns Winnercomm which in turn wholly owns CableCam and SkyCam.

InterMedia Outdoors Holdings, LLC

c/o InterMedia Partners, L.P.

405 Lexington Avenue, 48th Floor

New York, NY 10174

Telephone: (212) 503-2862

InterMedia Outdoors Holdings, LLC, a Delaware limited liability company, is a multimedia company that serves the information and entertainment needs of outdoors enthusiasts in the United States. IMOTSC’s content reaches its targeted audience across a variety of complementary television, digital, print, radio, social and event properties. IMOTSC operates in the following two segments:

 

   

NETWORK AND DIGITAL MEDIA: IMOTSC’s Network and Digital Media segment is comprised of a national television network, a television production business and several digital media properties.

 

   

The Sportsman Channel® is a national television network which features hunting, shooting and fishing themed programming for the American sportsman.

 

   

The television production business produces hunting, shooting and fishing themed programming for The Sportsman Channel as well as other outdoor related programming for third parties on a “work for hire” basis.

 

   

The digital media business manages a network of 18 individually branded websites dedicated to hunting, shooting and fishing content.

 

   

PUBLISHING: IMOTSC’s Publishing segment is comprised of a magazine publishing business that produces 15 market-leading enthusiast titles in the hunting, shooting and fishing categories, over 30 special interest magazine editions annually, a consumer events business and a merchandise business.

For the nine months ended September 30, 2012, contributions to IMOTSC’s consolidated revenues from the Network and Digital Media segment and Publishing segment were 36% and 64%, respectively.

InterMedia Outdoor Holdings, Inc.

c/o InterMedia Partners, L.P.

405 Lexington Avenue, 48th Floor

New York, NY 10174

Telephone: (212) 503-2862

 

 

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IMOH is a Delaware corporation and a newly formed holding company with no assets or liabilities. IMOH was formed solely to effect the proposed transaction and has not conducted any business, other than in connection with the merger agreement and related ancillary agreements to which IMOH is a party. Pursuant to the merger agreement, Outdoor Channel and IMOTSC will survive as wholly owned subsidiaries of IMOH. IMOH intends to list its common stock for trading on The NASDAQ Global Market (“NASDAQ”) and it is anticipated that its symbol will be “OUTD.”

Outdoor Merger Corp.

c/o InterMedia Partners, L.P.

405 Lexington Avenue, 48th Floor

New York, NY 10174

Telephone: (212) 503-2862

Outdoor Channel Sub is a newly formed Delaware corporation and an indirect wholly owned subsidiary of IMOH, which was formed solely to effect the proposed merger transaction and has not conducted and will not conduct any business during any period of its existence. Pursuant to the merger agreement, Outdoor Channel Sub will merge with and into Outdoor Channel with Outdoor Channel continuing as the surviving corporation and a wholly owned subsidiary of IMOH.

Outdoor Merger Sub, LLC

c/o InterMedia Partners, L.P.

405 Lexington Avenue, 48th Floor

New York, NY 10174

Telephone: (212) 503-2850

InterMedia Sub is a newly formed Delaware limited liability company and an indirect wholly owned subsidiary of IMOH formed solely to effect the proposed merger transaction and has not conducted and will not conduct any business during any period of its existence. Pursuant to the merger agreement, InterMedia Sub will merge with and into IMOTSC with IMOTSC continuing as the surviving limited liability company and a wholly owned subsidiary of IMOH.

The Merger Agreement (Proposal No. 1) (see page 110)

The merger agreement is attached as Annex A-1 to this proxy statement/prospectus and is incorporated by reference herein in its entirety. Outdoor Channel encourages its stockholders to read the merger agreement carefully and in its entirety, as the merger agreement is the principal legal document governing the mergers.

The Proposed Transaction (see page 66)

On November 15, 2012, Outdoor Channel entered into the merger agreement with IMOTSC, IMOH, Outdoor Channel Sub and InterMedia Sub. Under the merger agreement, (i) Outdoor Channel Sub will merge with and into Outdoor Channel, with Outdoor Channel as the surviving corporation (the “Outdoor Channel merger”), and (ii) InterMedia Sub will merge with and into IMOTSC, with IMOTSC as the surviving limited liability company (the “IMOTSC merger,” which together with the Outdoor Channel merger are referred to herein as the “mergers”). Outdoor Channel Sub and InterMedia Sub are both indirect wholly owned subsidiaries of IMOH. As a result of the mergers, Outdoor Channel and IMOTSC will become subsidiaries of IMOH, which is expected to be listed for trading on NASDAQ. Outdoor Channel’s board of directors (the “Outdoor Channel Board”) unanimously approved the merger agreement.

Consideration with Respect to Outdoor Channel Stock (see page 111)

Upon the consummation of the mergers, each outstanding share of Outdoor Channel common stock will be automatically converted into and will represent the right to receive the following consideration, pursuant to an election made by each stockholder, subject to proration in certain circumstances as described below (and subject

 

 

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to certain adjustments for fractional shares and the like as set forth in the merger agreement): (x) $8.00 in cash, without interest (the “Cash Consideration”), with respect to each share of Outdoor Channel common stock (the “Outdoor Channel common stock”) for which an election to receive cash has been made (each such share, a “Cash Election Share”); (y) one share of IMOH common stock (“IMOH common stock”) which is equal to 1:1 (the “OUTD Exchange Ratio”) (together with cash to be paid in lieu of any fractional shares of IMOH in accordance with the merger agreement, the “Stock Consideration”) with respect to each share of Outdoor Channel common stock for which an election to receive stock has been made (each such share, a “Stock Electing Share”); or (z) with respect to each share of Outdoor Channel common stock for which an election to receive mixed stock and cash has been made (each such share, a “Mixed Election Share”) or for each share of Outdoor Channel common stock for which no election has been made (each such share, a “No Election Share”), a combination of (A) $4.46 in cash, without interest (such amount, the “Mixed Consideration Cash”) and (B) that portion of a share of IMOH common stock equal to 0.443 (together with cash to be paid in lieu of any fractional shares of IMOH in accordance with the merger agreement, the “Mixed Consideration Stock”) (the Mixed Consideration Cash, together with the Mixed Consideration Stock, the “Mixed Consideration”). Cash will be paid in accordance with the merger agreement in lieu of any fractional shares of IMOH which a stockholder might otherwise have received pursuant to the mergers, regardless of the election made and after giving effect to proration, if any.

Upon the consummation of the mergers, members of IMOTSC (the “InterMedia Unit Holders”) will be entitled to receive 23,854,227 shares of IMOH common stock in the aggregate in exchange for their equity interests of IMOTSC, subject to various adjustments set forth in the merger agreement. Shares of IMOH common stock shall be allocated among the InterMedia Unit Holders in accordance with the merger agreement and the IMOTSC limited liability company agreement.

Immediately after the mergers, the stockholders of Outdoor Channel are expected to own approximately 32.4% of IMOH, including the Massie Parties, who are anticipated to own no greater than 11.7% of IMOH, and the InterMedia Unit Holders are expected to own approximately 67.6% of IMOH. Substantially all of the shares held by the InterMedia Unit Holders are held by or on behalf of InterMedia Partners VII, L.P. (“InterMedia Partners”). Pursuant to the Support Agreement (as defined below), the Massie Parties are required to make elections to receive either the Cash Consideration or the Mixed Consideration (or alternatively, an election to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock), and the Massie Parties have indicated that they will elect to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock. No other member of Outdoor Channel management has indicated to Outdoor Channel or IMOTSC the form of consideration he or she intends to elect in the Outdoor Channel merger. In addition, IMOH will finance the acquisition through a new $140 million term loan facility. Following the consummation of the mergers, IMOH will also have access to a new $10 million revolving credit facility.

Proration Procedures

The proration procedures are designed to ensure that the shares of Outdoor Channel common stock to be converted in the Outdoor Channel merger are converted into an aggregate of $115,000,000 in cash (the “Available Cash Amount”) and approximately 32.4% of the IMOH common stock outstanding immediately after the consummation of the mergers. If the elections of all of the Outdoor Channel common stockholders result in an oversubscription or undersubscription of the Cash Election Shares, the Available Cash Amount will not be adjusted; it will remain fixed. For example, if the number of Cash Election Shares plus cash paid in connection with Mixed Consideration exceeds the Available Cash Amount then each stockholder making a cash election will receive common stock of IMOH and a prorated amount of cash. If the number of Cash Election Shares plus cash paid in connection with Mixed Consideration does not exceed the Available Cash Amount, then stockholders electing Stock Consideration will receive a portion of their merger consideration in cash. Stockholders electing Mixed Consideration will not be subject to proration.

 

 

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IMOH will appoint an exchange agent reasonably acceptable to Outdoor Channel (the “Exchange Agent”) and the Exchange Agent will allocate the Available Cash Amount and IMOH common stock to be paid to the Outdoor Channel common stockholders pursuant to the proration procedures described below. The amount of cash consideration and the number of shares of IMOH common stock to be received by holders making a cash or stock election will be dependent upon the elections of other Outdoor Channel common stockholders. Accordingly, there is no assurance that an Outdoor Channel common stockholder that has made a cash or stock election in respect of shares of its Outdoor Channel common stock will receive the form or combination of consideration it elected.

Cash Election. The merger agreement provides that all Cash Election Shares will be converted into the right to receive the Cash Consideration, subject to proration, determined as follows:

If the sum of (a) the product of the aggregate number of Cash Election Shares and the Cash Consideration (such product, the “Elected Cash Consideration”) and (b) the aggregate Mixed Consideration Cash exceeds the Available Cash Amount then

 

  (i) all Stock Election Shares of each holder of shares of Outdoor Channel common stock will be converted into a right to receive the Stock Consideration;

 

  (ii) all Mixed Election Shares and all No Election Shares of each holder of shares of Outdoor Channel common stock will be converted into the right to receive the Mixed Consideration; and

 

  (iii) the Cash Election Shares of each holder of shares of Outdoor Channel common stock will be converted into a right to receive:

 

   

the Cash Consideration equal to the product obtained by multiplying (a) the number of such holder’s Cash Election Shares by (b) a fraction, the numerator of which is (1) the Available Cash Amount minus (2) the aggregate Mixed Consideration Cash and the denominator of which is the Elected Cash Consideration; and

 

   

the remaining portion of such holder’s Cash Election Shares will be converted into the right to receive the Stock Consideration.

Stock Election. The merger agreement provides that all Stock Election Shares will be converted into the right to receive the Stock Consideration, subject to proration, determined as follows:

If the sum of (a) Elected Cash Consideration and (b) the aggregate Mixed Consideration Cash is less than the Available Cash Amount (such difference, the “Shortfall Number”) then

 

  (i) all Cash Election Shares of each holder of shares of Outdoor Channel common stock will be converted into the right to receive the Cash Consideration;

 

  (ii) all Mixed Election Shares and all No Election Shares of each holder of shares of Outdoor Channel common stock will be converted into the right to receive the Mixed Consideration; and

 

  (iii) the Stock Election Shares of each holder of shares of Outdoor Channel common stock will be converted into a right to receive:

 

   

the Cash Consideration, with such portion being equal to the product obtained by multiplying (a) the number of such holder’s Stock Election Shares by (b) a fraction, the numerator of which is the Shortfall Number and the denominator of which is the product obtained by multiplying the aggregate number of Stock Election Shares by $8.00; and

 

   

the remaining portion of such holder’s Stock Election Shares will be converted into the right to receive the Stock Consideration.

 

 

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Mixed Cash/Stock Election. The merger agreement provides that all Mixed Election Shares and all No Election Shares will be converted into the right to receive the Mixed Consideration. Mixed Election Shares and No Election Shares are not subject to the proration procedures. Accordingly, an Outdoor Channel common stockholder that has made a valid election for mixed stock and cash will automatically receive Mixed Consideration Cash ($4.46 per share in cash without interest) and the Mixed Consideration Stock (0.443 of a share of IMOH common stock) for each share of Outdoor Channel common stock. Outdoor Channel stockholders not making an election will be deemed to have elected to receive the Mixed Consideration.

In the event a holder of shares of Outdoor Channel common stock makes an election to receive cash for 55.74% of such holder’s aggregate outstanding shares (counted to the nearest whole share) and makes an election to receive stock for 44.26% of such holder’s aggregate outstanding shares (rounded to the nearest whole share), and indicates its intent on its election form to receive the equivalent of Mixed Consideration for all of such holder’s shares, then such holder’s shares will not be subject to proration. In addition, as discussed above, none of the Mixed Election Shares will be subject to proration.

For purposes of illustration, if a holder of 1,000 shares of Outdoor Channel common stock makes:

 

   

a cash election for all of such holder’s shares and all other holders of Outdoor Channel common stock make a stock election for all of their shares, then such holder will receive a total of $8,000 in cash;

 

   

a cash election for all of such holder’s shares and all other holders of Outdoor Channel common stock also make a cash election for all of their shares or make a mixed cash/stock election, then all holders of Outdoor Channel common stock who have made a cash election will receive a prorated amount of cash for a portion of their shares and IMOH common stock for the remaining portion of their shares;

 

   

a stock election for all of such holder’s shares and all other holders of Outdoor Channel common stock make a cash election for all of their shares, then such holder will receive a total of 1,000 shares of IMOH common stock;

 

   

a stock election for all of such holder’s shares and all other holders of Outdoor Channel common stock also make a stock election for all of their shares or make a mixed cash/stock election, then all holders of Outdoor Channel common stock who have made a stock election will receive a prorated amount of cash for a portion of their shares and IMOH stock for the remaining portion of their shares;

 

   

a mixed cash/stock election for all of such holder’s shares, then such holder will receive a total of $4,460 in cash and 443 shares of IMOH common stock (i.e., such holder’s shares will not be subject to proration);

 

   

no election with respect to all of such holder’s shares, then such holder will receive a total of $4,460 in cash and 443 shares of IMOH common stock (i.e., such holder’s shares will not be subject to proration); or

 

   

an election to receive cash for 55.74% of such holder’s shares and stock for 44.26% of such holder’s shares, then such holder will receive a total of $4,460 in cash and 443 shares of IMOH common stock (i.e., such holder’s shares will not be subject to proration).

Please refer to the section entitled “The Merger Agreement (Proposal No. 1)—Merger Consideration” to find detailed information regarding the election to be made by the Outdoor Channel stockholders and the proration procedures. See also “Risk Factors—Holders of Outdoor Channel common stock who make cash or stock elections may not receive all merger consideration in the form so elected.”

Outdoor Channel Stockholder Election Procedures (see page 115)

Prior to the effective time of the mergers, IMOH will appoint the Exchange Agent for the purpose of exchanging certificates of Outdoor Channel common stock for the applicable merger consideration.

 

 

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Concurrently with the mailing of this proxy statement/prospectus, an election form will be mailed to each record holder of Outdoor Channel common stock as of the record date for the special meeting of Outdoor Channel’s stockholders. The election forms will permit the holder to specify (i) the number of shares for which such holder elects to receive the Cash Consideration, (ii) the number of shares for which such holder elects to receive the Stock Consideration, and/or (iii) the number of shares for which such holder elects to receive the Mixed Consideration. The election must be made prior to the election deadline. The election deadline will be 5:00 p.m., New York city time, on March 4, 2013.

The actual allocation of cash and stock is subject, in each case, to the proration procedures set forth in the merger agreement. For more information regarding these proration procedures, see the section “The Merger Agreement (Proposal No. 1)—Merger Consideration.” See also “Risk Factors—Holders of Outdoor Channel common stock who make cash or stock elections may not receive all of their merger consideration in the form they elected.”

To make a valid election, each Outdoor Channel common stockholder must submit a properly completed election form so that it is actually received by the Exchange Agent at or prior to the election deadline. An election form will be properly completed only if accompanied by any additional documents specified by the procedures set forth in the election form.

If an Outdoor Channel common stockholder does not submit the election form and other required materials, the election form and other required materials are not received by the Exchange Agent by the election deadline, the election form and other required materials are improperly completed and/or are not signed, such stockholder will be deemed not to have made an election. Outdoor Channel common stockholders not making an election will be deemed to have elected to receive the Mixed Consideration.

Concurrently with the mailing of this proxy statement/prospectus, IMOH or the Exchange Agent will send to all holders of Outdoor Channel common stock a transmittal letter and instructions for the surrender of shares of Outdoor Channel common stock for the applicable merger consideration. The letter of transmittal will specify that the delivery of the certificates will be effected, and risk of loss and title will pass, only upon proper delivery of the certificates which represent such stockholders’ shares of Outdoor Channel common stock covered by the election form (or customary affidavits and indemnification regarding the loss or destruction of such certificates or the guaranteed delivery of such certificates) or, in case of book-entry shares, any additional documents specified by the procedures set forth in the transmittal letter. Delivery will be effected, and risk of loss and title to shares of Outdoor Channel common stock will pass, only upon transfer of certificates of Outdoor Channel common stock to the Exchange Agent in the manner set forth in the transmittal letter and instructions.

Directors and Executive Officers of IMOH After the Proposed Transaction (see page 166)

Immediately following the mergers, the board of directors of IMOH will be divided into three classes and will be comprised of nine individuals. Initially, five directors will be designated by IMOTSC: Peter Kern, Alan Sokol, Jerome Letter, Jonathan S. Adelstein and Bridget Baker; three directors will be designated by Outdoor Channel (with each serving in a different class from one another): Perry T. Massie, David Merritt and T. Bahnson Stanley; and one director will be the President and Chief Executive Officer of IMOH: Thomas E. Hornish.

Immediately following the mergers, IMOH’s management team will consist of Peter Kern as Chairman of the Board, Thomas E. Hornish as the President and Chief Executive Officer, Thomas D. Allen as the Chief Financial Officer and Chief Operating Officer, Gavin Harvey as President—Television Networks, Jeffrey Paro as President—Publishing, Integrated Media and Branded Content and Catherine C. Lee as Executive Vice President, General Counsel and Corporate Secretary. Mr. Hornish has served as Outdoor Channel’s President and

 

 

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Chief Executive Officer and as a member of its Board of Directors since February 2012 and previously served as Outdoor Channel’s General Counsel from December 2004 until January 2012 and Chief Operating Officer from 2007 until January 2012. Mr. Allen has served as Outdoor Channel’s Executive Vice President and Chief Financial Officer since July 2010 and as its Chief Operating Officer since February 2012. Mr. Harvey has served as The Sportsman Channel, Inc.’s Chief Executive Officer since July 2010. Mr. Paro has served as InterMedia Outdoors, Inc.’s Chief Executive Officer since January 2007. Ms. Lee has served as Outdoor Channel’s Executive Vice President, General Counsel and Corporate Secretary since February 2012.

Financing the Mergers (see page 102)

IMOH has obtained commitments for $150 million in financing from CIT Finance, LLC (“CIT”) to be provided through a combination of a new $140 million term loan and a new $10 million revolving credit facility. Proceeds from the financing will be used to facilitate the mergers and specifically to: (i) pay cash merger consideration, (ii) refinance certain existing indebtedness of IMOTSC and its subsidiaries, (iii) fund ongoing working capital requirements, (iv) pay related transaction fees and expenses and (v) for general corporate purposes.

Recommendation of the Outdoor Channel Board of Directors (see page 80)

The Outdoor Channel Board unanimously believes the merger agreement and the proposed transaction are advisable to and in the best interests of Outdoor Channel’s stockholders and recommends that you vote FOR the proposal to adopt the merger agreement. The Outdoor Channel Board also recommends that you vote FOR approval, on an advisory (non-binding) basis, of the “golden parachute” compensation payable or that could become payable to the Outdoor Channel named executive officers in connection with the mergers. The Outdoor Channel Board further recommends that you vote FOR the proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies on the proposal to adopt the merger agreement. When you consider the Outdoor Channel Board’s recommendation, you should be aware that Outdoor Channel’s directors may have interests in the transaction that may be different from, or in addition to, your interests. These interests are described in “The Proposed Transaction—Interests of Certain Persons in the Mergers.”

Outdoor Channel Reasons for the Outdoor Channel Merger (see page 76)

In evaluating the proposed transaction, the Outdoor Channel Board consulted with Outdoor Channel’s management and legal and financial advisors and, in making its recommendation, the Outdoor Channel Board considered a number of factors, including those factors described under “The Proposed Transaction—Background of the Proposed Transaction—Recommendation of the Outdoor Channel Board of Directors; Outdoor Channel Reasons for the Outdoor Channel Merger.”

Opinion of Outdoor Channel’s Financial Advisor (see page 83)

In connection with the mergers, Outdoor Channel’s financial advisor, Lazard Frères & Co. LLC, delivered an opinion, dated November 15, 2012, to Outdoor Channel’s Board as to the fairness, from a financial point of view and as such date, of the consideration to be paid in the Outdoor Channel merger to holders of Outdoor Channel common stock (other than holders who are entitled to and properly demand an appraisal of their shares of Outdoor Channel common stock). The full text of Lazard’s written opinion is attached to this proxy statement/prospectus as Annex B and sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken by Lazard in connection with its opinion. Lazard’s engagement and its opinion were for the benefit of Outdoor Channel’s Board (in its capacity as such) and Lazard’s opinion was rendered to Outdoor Channel’s Board in connection with its evaluation of the Outdoor Channel merger consideration from a financial point of view and did not

 

 

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address any other aspects of the mergers. Lazard’s opinion did not address the relative merits of the mergers as compared to any other transaction or business strategy in which Outdoor Channel might engage or the merits of the underlying decision by Outdoor Channel to engage in the mergers. Lazard’s opinion was not intended to and does not constitute a recommendation to any stockholder as to any election to be made in respect of the Outdoor Channel merger consideration or how any stockholder should vote or act with respect to the mergers or any related matter.

Risks Relating to the Proposed Transaction (page 34)

You should understand that the following important factors, in addition to those discussed in “Risk Factors” below and elsewhere in this proxy statement/prospectus, and in the documents which are incorporated by reference in this proxy statement/prospectus, could affect the future results of IMOTSC and Outdoor Channel, and of IMOH after the consummation of the proposed transaction, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements:

 

   

the failure of Outdoor Channel stockholders to adopt the merger agreement;

 

   

the risk that the businesses will not be integrated successfully;

 

   

the risk that synergies will not be realized;

 

   

the risk that required consents will not be obtained;

 

   

the risk that IMOH following this transaction will not realize its financing strategy;

 

   

litigation with respect to either company or the mergers; and

 

   

disruption from the mergers making it more difficult to maintain certain strategic relationships.

Outdoor Channel Stockholder Vote Required (see page 91)

Adoption of the merger agreement requires an affirmative vote of the holders of a majority of the outstanding shares of Outdoor Channel common stock entitled to vote. Approval of the proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies if adoption of the merger agreement is not obtained at the special meeting, requires the affirmative vote of the holders of a majority of the shares represented at the special meeting and entitled to vote on the matter.

Treatment of Outdoor Channel Equity Awards (see page 91)

Prior to the effective time of the mergers, the Outdoor Channel Board will adopt such resolutions or take such other actions as may be required to effect the following:

(1) adjust the terms of all options to purchase Outdoor Channel common stock (the “Outdoor Channel Stock Options”) outstanding immediately prior to the effective time of the mergers, whether vested or unvested, as necessary to provide that, at the effective time of the mergers, each Outdoor Channel Stock Option outstanding immediately prior to the effective time of the mergers shall be assumed and converted into an option to acquire shares of IMOH common stock, on the same terms and conditions as were applicable under such Outdoor Channel Stock Option, including vesting (taking into account any acceleration of vesting that may occur as a result of the mergers) (each, as so adjusted, an “Outdoor Channel Assumed Stock Option”), except that (A) each such Outdoor Channel Assumed Stock Option shall represent the right to acquire the same whole number of shares of IMOH common stock (rounded down to the next whole share) (B) the option price per share of IMOH common stock under each Outdoor Channel Assumed Stock Option shall be equal to the option price per share of Outdoor Channel common stock subject to the related Outdoor Channel Stock Option in effect immediately prior to the effective time of the mergers; and

 

 

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(2) provide that each equity award (other than an Outdoor Channel Stock Option) entitling the holder thereof to acquire shares of Outdoor Channel common stock (an “Outdoor Channel Equity Award”) shall be converted into an equity award entitling the holder thereof to receive shares of IMOH common stock (an “Outdoor Channel Assumed Equity Award”), on the same terms and conditions as were applicable to such Outdoor Channel Equity Award, including vesting (taking into account any acceleration of vesting that may occur as a result of the mergers) except that each Outdoor Channel Assumed Equity Award shall represent the right to acquire the whole number of shares of IMOH common stock (rounded down to the next whole share).

The above assumes that the Exchange Ratio remains fixed at 1:1 and is not adjusted by a stock split or similar event prior to consummation of the merger. We will notify holders of Outdoor Channel common stock in the event the OUTD Exchange Ratio is adjusted.

Interests of Certain Persons in the Mergers (see page 91)

When Outdoor Channel stockholders consider the Outdoor Channel Board’s recommendation that they vote in favor of the adoption of the merger agreement, they should be aware that Outdoor Channel executive officers and directors may have interests in the mergers that may be different from, or in addition to, their interests. These interests may create potential conflicts of interest. Outdoor Channel’s Board was aware that these interests existed when it approved the merger agreement. These interests include:

 

   

accelerated vesting of equity awards held by Outdoor Channel’s directors and certain of its executive officers in connection with the mergers;

 

   

pre-existing severance arrangements covering its executive officers; and

 

   

indemnification of Outdoor Channel’s directors and executive officers by IMOH following the mergers.

Additionally, certain executives of Outdoor Channel, specifically, Thomas E. Hornish, Thomas D. Allen and Catherine C. Lee have entered into an Assumption, Acknowledgment and Amendment Agreement with Outdoor Channel and IMOH which provide, contingent on the consummation of the mergers, that IMOH will assume the individual’s employment agreement and IMOH will grant such individuals new equity awards covering shares of IMOH common stock.

In connection with the IMOTSC merger, the 3,807,423 unvested Class E common units will accelerate and such units will be entitled to receive 57,597 shares of IMOH common stock in exchange for the cancellation of the Class E common units. Additionally, certain executives of IMOTSC, specifically, Gavin Harvey and Jeffrey Paro, have entered into an amendment to their respective employment agreements which provide, contingent on the consummation of the mergers, that IMOH will become a party to the employment agreements and that IMOH will grant such individuals new equity awards covering shares of IMOH common stock. Further information can be found in “The Proposed Transaction—Interests of Certain Persons in the Mergers” below.

Conditions to the Consummation of the Mergers (see page 123)

Consummation of the mergers is subject to certain conditions, including, among others, adoption of the merger agreement by holders of a majority of the shares of the Outdoor Channel stock entitled to vote, customary regulatory approvals, no material adverse change in Outdoor Channel or IMOTSC and other customary closing conditions. All regulatory approvals necessary to consummate the mergers have been received.

Termination of the Merger Agreement (see page 128)

The merger agreement may be terminated as follows:

 

   

by the mutual written consent of IMOTSC and Outdoor Channel;

 

   

by IMOTSC if there is a change in recommendation of the Outdoor Channel Board;

 

 

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by Outdoor Channel if the Outdoor Channel Board decides to accept a Superior Proposal as described below;

 

   

by Outdoor Channel if all conditions set forth in the merger agreement have been satisfied and the debt financing has not or cannot be funded; or

 

   

by either IMOTSC or Outdoor Channel if:

 

   

the effective time of the mergers does not occur on or before May 15, 2013;

 

   

the proposed transaction is enjoined or otherwise prohibited by law;

 

   

if Outdoor Channel’s stockholders do not adopt the merger agreement by the requisite vote; or

 

   

the non-terminating party breaches or violates any of its representations, warranties, covenants or agreements set forth in the merger agreement.

The Outdoor Channel Board may withdraw or change its recommendation to the Outdoor Channel stockholders with respect to the Outdoor Channel merger if the Outdoor Channel Board determines that to do otherwise would be inconsistent with its fiduciary duties because of the existence of an Intervening Event or a Superior Proposal (each as defined in the merger agreement). In addition, subject to certain procedural requirements (including the ability of IMOTSC to revise its offer) and payment of the termination fee discussed below, Outdoor Channel may terminate the merger agreement and enter into an agreement with a third party that makes a Superior Proposal.

Termination Fees (see page 130)

Following the termination of the merger agreement under specified circumstances generally related to a change in the recommendation by the Outdoor Channel Board or a termination in connection with a Superior Proposal, Outdoor Channel may be required to pay IMOTSC a termination fee of $6.5 million. In connection with the termination of the merger agreement due to the failure to obtain the debt financing, IMOTSC may be required to pay Outdoor Channel a reverse termination fee of $9 million. Such termination fees will be the parties’ sole remedy (if payable), except in the case of a willful and material breach, in which case the aggregate amount of damages of either party may not exceed $25 million.

Regulatory Approvals Required for the Proposed Transaction (see page 104)

Consummation of the mergers is subject to prior receipt of those approvals and consents required to be obtained from applicable governmental and regulatory authorities, including under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “HSR Act”), and the regulations governing the transfer of control of Outdoor Channel’s Federal Communications Commission (the “FCC”) license. Outdoor Channel, IMOTSC and IMOH have agreed to cooperate and use all reasonable best efforts to obtain, or cause their applicable affiliates to obtain, all permits, consents, approvals and authorizations from any governmental or regulatory authority necessary to consummate the mergers as promptly as practicable.

Outdoor Channel and IMOTSC filed (or caused to be filed) the requisite notifications under the HSR Act on December 21, 2012 and the applicable waiting period expired on January 22, 2013, which satisfies the HSR Act approval requirement.

Furthermore, the merger agreement requires Outdoor Channel and IMOTSC to cooperate to prepare and promptly file such application(s) as may be commercially reasonable and necessary for submission to the FCC in order to obtain the FCC’s approval of the transfer of control of the Outdoor Channel’s FCC license. However, there can be no assurance that the FCC will issue a ruling allowing the transfer of control of Outdoor Channel’s FCC license in a timely manner or at all.

 

 

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Except for the competition and communications law approvals described above, Outdoor Channel, IMOTSC and IMOH are not aware of any other governmental approvals that are required for the mergers to become effective other than filings with NASDAQ regarding the listing of IMOH’s shares and filings with the SEC regarding this proxy statement/prospectus. Outdoor Channel, IMOTSC and IMOH intend to seek any other approvals required to consummate the mergers. There can be no assurance, however, that any such approvals will be obtained.

Litigation Related to the Proposed Transaction (see page 104)

On January 2, 2013, a putative class action, entitled Hueneke v. Massie et al. (the “Complaint”), was filed against Outdoor Channel, the members of its Board of Directors, IMOTSC, IMOH, Outdoor Channel Sub and InterMedia Sub in the Superior Court of Riverside County, State of California. The Complaint purports to be brought on behalf of all the Outdoor Channel stockholders (excluding the defendants and their affiliates). The Complaint alleges that the merger consideration is inadequate, that the merger agreement includes onerous and preclusive deal protection devices that ensure that no competing offers will emerge for Outdoor Channel, that the disclosures to Outdoor Channel stockholders regarding the deal are inadequate, and that—as a result of the foregoing—the members of the Outdoor Channel Board of Directors breached their fiduciary obligations to the Outdoor Channel stockholders in approving the merger agreement. The Complaint further alleges that the other named defendants aided and abetted the purported breach of those fiduciary duties. The Complaint seeks various forms of relief, including injunctive relief that would, if granted, prevent the completion of the mergers and an award of attorneys’ fees and expenses. All defendants intend to vigorously defend against this action.

 

Dissenters’ Appraisal Rights (see page 199)

If and to the extent required under Delaware Law, Outdoor Channel stockholders will be entitled to appraisal rights under the General Corporation Law of the State of Delaware (“DGCL”) in connection with the mergers. IMOH’s and Outdoor Channel’s current understanding of Delaware law is that appraisal rights will be available for all dissenting shares of Outdoor Channel common stock only if any stockholder would be required under the merger agreement to receive cash merger consideration (other than cash in lieu of fractional shares). See the section “Dissenters’ Appraisal Rights.”

Under Delaware law, holders of Outdoor Channel common stock may be entitled to dissenters’ rights of appraisal in connection with the merger, provided that such holder meets all of the conditions set forth in Section 262 of the Delaware General Corporation Law. In particular, under Delaware law, appraisal rights are only available if, among other things, stockholders are required to accept cash for their shares (other than cash in lieu of fractional shares). Therefore, in the event that any stockholder would be required under the merger agreement to receive cash merger consideration (other than cash in lieu of fractional shares), a stockholder may have the right, if such stockholder does not vote in favor of the merger agreement, to obtain payment in cash for the “fair value” of those shares as determined by the Delaware Chancery Court. It is possible that the fair value as determined by the Delaware Chancery Court may be more or less than, or the same as, the merger consideration. Stockholders should note that investment banking opinions as to the fairness from a financial point of view of the consideration payable in a sale transaction, such as the mergers, are not opinions as to, and do not in any manner address, fair value under the DGCL. Outdoor Channel, IMOTSC and IMOH reserve the right to take the position that appraisal may only be sought with respect to shares described in the second sentence of this paragraph.

To exercise appraisal rights, a stockholder of Outdoor Channel must follow the strict procedures prescribed by Section 262 of the Delaware General Corporation Law. For additional information, please see the section titled “The Merger—Dissenters’ Appraisal Rights” beginning on page 199. In addition, the full text of Section 262 of the Delaware General Corporation Law is included as Annex C to this proxy statement/prospectus. We urge you to read this carefully.

 

 

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Accounting Treatment (see page 105)

IMOTSC will be considered the accounting acquiror of the proposed merger transactions with IMOH and Outdoor Channel under ASC Topic 805—Business Combinations based on the following analysis:

In legal form IMOH will be acquiring Outdoor Channel and IMOTSC. However, after the mergers the current equity holders of IMOTSC, who we refer to elsewhere as the InterMedia Unit Holders, will retain approximately 67.6% of the voting common stock of IMOH and the stockholders of Outdoor Channel will retain approximately 32.4% of the voting common stock of IMOH.

IMOTSC exceeds Outdoor Channel in both assets and revenues. IMOTSC had consolidated assets as of December 31, 2011 of $189 million and consolidated total net revenues for fiscal year 2011 of $93 million. Outdoor Channel had consolidated assets as of December 31, 2011 of $149 million and consolidated total net revenues for fiscal year 2011 of $72 million.

The newly formed board of directors for IMOH will have nine directors, of which five will be appointed by IMOTSC. See further discussion at “Board of Directors, Board Committees and Executive Officers of IMOH” of this proxy statement/prospectus.

Due to the common control and the continuation of ownership by InterMedia Partners, the acquisition of IMOTSC by IMOH will be accounted for as a reorganization of entities under common control. Accordingly, in future reporting periods, the consolidated financial statements of IMOH and IMOTSC for all periods will be presented as if the acquisition occurred at the beginning of the earliest period presented and include the accounts of those entities involved on a historical cost basis, in a manner similar to a pooling of interests.

As a result of the foregoing analysis, for accounting and financial statement purposes, the transaction will be treated as an acquisition of Outdoor Channel by IMOTSC pursuant to U.S. generally accepted accounting principles. Accordingly, while IMOH is the legal acquiror and the registrant in the mergers, IMOTSC is deemed to be the accounting acquiror in the proposed transaction based on the analysis above. The acquisition of Outdoor Channel will be accounted for as a business combination in accordance with accounting standards generally accepted in the United States of America. Accordingly, the purchase consideration will be allocated to the assets and liabilities acquired (including identifiable intangible assets and goodwill, if any) and the results of operations of Outdoor Channel will be included in the future financial statements of IMOH from the date of acquisition.

Material U.S. Federal Income Tax Consequences (see page 203)

The consummation of the Outdoor Channel merger is conditioned on the receipt by Outdoor Channel of an opinion of Wilson Sonsini Goodrich & Rosati, P.C., counsel to Outdoor Channel, to the effect that for U.S. federal income tax purposes the mergers, taken together, will constitute an exchange described in Section 351 of the Code, and the consummation of the IMOTSC merger is conditioned on the receipt by IMOTSC of a similar opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel to IMOTSC, in each case dated the closing date of the mergers. As a result, a U.S. holder of Outdoor Channel common stock that, pursuant to the Outdoor Channel merger, exchanges the Outdoor Channel common stock for IMOH common stock will not recognize gain or loss upon such exchange. A U.S. holder of Outdoor Channel common stock that exchanges such stock for a combination of IMOH common stock and cash would recognize gain (but not loss) to the extent of the lesser of the amount of gain realized or the amount of cash received. A U.S. holder of Outdoor Channel common stock that receives only cash in the Outdoor Channel merger would recognize any gain or loss realized. The aggregate tax basis of any IMOH common stock received by a U.S. holder will be equal to the aggregate tax basis of the Outdoor Channel common stock surrendered by such holder, increased by the amount of any gain recognized and decreased by the amount of any cash received, and the holding period of any IMOH common stock received by a U.S. holder will include the holding period of the Outdoor Channel common stock surrendered by such U.S. holder.

 

 

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Material Support and Ancillary Agreements in Connection with the Proposed Transaction (see page 105)

Support Agreement

In connection with the merger agreement, on November 15, 2012, IMOH entered into a support agreement (the “Support Agreement”) with the Massie Parties, the members of the Outdoor Channel Board and the executive officers of Outdoor Channel (collectively, the “Supporting Parties”). Under the Support Agreement, the Supporting Parties agree to vote their shares of Outdoor Channel common stock (i) in favor of the adoption of the merger agreement; (ii) in favor of any proposal to adjourn or postpone any meeting of the Outdoor Channel stockholders if there are not sufficient votes for approval of the matters described in the preceding clause (i); and (iii) except with the written consent of IMOH, against (x) any Alternative Proposal (as defined in the merger agreement) with respect to Outdoor Channel that would impede the merger or (y) any other action or proposal involving Outdoor Channel that would reasonably be expected to prevent or materially impede, interfere with or delay the Outdoor Channel merger. Pursuant to the Support Agreement, the Massie Parties are required to make elections to receive either the Cash Consideration or the Mixed Consideration (or alternatively, an election to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock), and the Massie Parties have indicated that they will elect to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock.

Registration Rights Agreement

In connection with the merger agreement, InterMedia Partners and the Massie Parties (collectively, the “Investors”) and IMOH entered into a registration rights agreement, dated as of November 15, 2012 (the “Registration Rights Agreement”), pursuant to which, after the consummation of the mergers, the Investors will, among other things and subject to the terms and conditions set forth therein, have certain demand and so-called “piggy back” registration rights with respect to their shares of IMOH common stock.

Lock-Up Agreement

In connection with the merger agreement, on November 15, 2012, IMOH entered into a lock-up agreement (the “Lock-Up Agreement”) with the Massie Parties and Thomas E. Hornish (collectively, the “OUTD Parties”) and InterMedia Partners (together with the OUTD Parties, the “Lock-Up Investors”). Under the Lock-Up Agreement, the Lock-Up Investors and their permitted transferees may not transfer all or any portion of their shares of IMOH common stock during the period commencing on the consummation of the mergers and ending, for the OUTD Parties, after six months and, for InterMedia Partners, after twelve months. Such limitations on transfer do not apply to transfers to members of the holder’s immediate family or to trusts or other entities for the benefit of such family members, transfers pursuant to a testamentary document or law of descent and transfers to an affiliate of the holder if such holder is an entity. Such limitations on transfer also do not apply to transfers to IMOH and transfers between Lock-Up Investors and their affiliates. The board of directors of IMOH may waive these limitations on transfers from time to time in writing.

Comparison of IMOH and Outdoor Channel Stockholder Rights (see page 193)

The rights of Outdoor Channel stockholders are currently governed by the DGCL and Outdoor Channel’s certificate of incorporation and bylaws. Upon the consummation of the mergers, Outdoor Channel stockholders and InterMedia Unit Holders that receive IMOH common stock pursuant to the mergers will become stockholders of IMOH, and their rights will be governed by the DGCL and IMOH’s restated certificate of incorporation and amended and restated bylaws.

 

 

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OUTDOOR CHANNEL SELECTED HISTORICAL FINANCIAL INFORMATION

The following table sets forth selected historical consolidated financial information of Outdoor Channel for the periods presented. The selected financial information, as of December 31, 2011, 2010, 2009, 2008 and 2007 and for each of the five fiscal years then ended, has been derived from Outdoor Channel’s audited consolidated financial statements. The selected financial information for the nine months ended September 30, 2012 and 2011 has been derived from Outdoor Channel’s unaudited condensed consolidated financial statements. The selected financial information includes, in the opinion of Outdoor Channel’s management, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of operations and financial position of Outdoor Channel for the periods and dates presented.

The financial information indicated may not be indicative of future performance. This financial information and other data should be read in conjunction with the respective audited and unaudited consolidated financial statements of Outdoor Channel, including the notes thereto, and the section “Outdoor Channel Management’s Discussion and Analysis of Financial Condition and Results of Operations of Outdoor Channel Holdings, Inc.” incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information.” This information should also be read in conjunction with the unaudited pro forma condensed combined financial statements.

 

     Nine Months Ended
September 30,
     Year Ended December 31,  
     2012      2011      2011      2010      2009     2008      2007  
(In thousands, except per share amounts)                                                

Statement of Operations Data:

                   

Revenues:

                   

Advertising

   $ 27,854       $ 25,630       $ 36,918       $ 37,000       $ 34,325      $ 36,562       $ 29,149   

Subscriber fees

     15,843         14,760         20,155         17,953         18,848        17,495         17,297   

Production services

     8,232         7,874         14,782         28,389         33,679        —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total Revenues

     51,929         48,264         71,855         83,342         86,852        54,057         46,446   

Income (loss) from operations

     1,151         756         6,754         4,586         1,910        4,839         (3,441

Income (loss) before income taxes

     1,211         771         6,772         4,617         1,983        6,360         (161

Income tax provision

     568         381         4,927         3,373         2,268        3,988         1,718   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income (loss) from continuing operations

     643         390         1,845         1,244         (285     2,372         (1,879

Income from discontinuing operations, net of tax

     —           —           —           —           —          —           1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income (loss)

     643         390         1,845         1,244         (285     2,372         (1,878

Net income (loss) attributable to noncontrolling interest

     —           —           —           —           —          —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Net income (loss) attributable to controlling interest

   $ 643       $ 390       $ 1,845       $ 1,244       $ (285   $ 2,372       $ (1,878
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Earnings (loss) from continuing operations per common share:

                   

Basic

   $ 0.03       $ 0.02       $ 0.07       $ 0.05       $ (0.01   $ 0.09       $ (0.07
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

   $ 0.03       $ 0.02       $ 0.07       $ 0.05       $ (0.01   $ 0.09       $ (0.07
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Weighted average number of common shares outstanding:

                   

Basic

     25,106         24,791         24,821         24,513         24,452        25,369         26,027   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

     25,707         25,609         25,633         25,634         24,452        26,086         26,027   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

 

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     As of September 30,      As of December 31,  
     2012      2011      2011      2010      2009      2008      2007  
(In thousands)                                                 

Balance Sheet Data:

                    

Cash and cash equivalents:

   $ 38,778       $ 28,129       $ 19,498       $ 32,578       $ 20,848       $ 60,257       $ 25,260   

Investments in auction-rate and available-for-sale securities:

                    

Current

     19,964         33,047         40,049         26,995         38,090         —           46,155   

Non-current

     4,980         5,020         4,940         5,075         5,775         6,456         —     

Goodwill

     43,160         43,160         43,160         43,160         43,160         43,160         43,160   

Other assets

     45,780         41,905         41,539         45,844         48,905         33,081         37,126   

Total assets

     152,662         151,261         149,186         153,652         156,778         142,954         151,701   

Total liabilities

     17,090         13,833         15,861         18,110         18,480         6,545         5,124   

Stockholders’ equity

     135,572         137,428         133,325         135,542         138,298         136,409         146,577   

 

 

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IMOTSC SELECTED HISTORICAL FINANCIAL INFORMATION

The following table sets forth selected historical consolidated financial information of IMOTSC for the periods presented. The selected financial information, as of December 31, 2011, 2010, 2009, 2008 and 2007 and for each of the five fiscal years then ended, has been derived from IMOTSC’s consolidated financial statements. The selected financial information for the nine months ended September 30, 2012 and 2011 has been derived from IMOTSC’s unaudited condensed consolidated financial statements. The selected financial information includes, in the opinion of IMOTSC’s management, all adjustments, consisting of normal recurring adjustments, necessary to state fairly the results of operations and financial position of IMOTSC for the periods and dates presented.

The financial information indicated may not be indicative of future performance. This financial information and other data should be read in conjunction with the respective audited and unaudited consolidated financial statements of IMOTSC, including the notes thereto, and “IMOTSC Management’s Discussion and Analysis of Financial Condition and Results of Operations of InterMedia Outdoors Holdings, LLC” included in this proxy statement/prospectus. See “The Companies—InterMedia Outdoors Holdings, LLC.” This information should also be read in conjunction with the unaudited pro forma condensed combined financial statements.

 

    Nine Months Ended
September 30,
    Year Ended December 31,  
($ in thousands, except for per share amounts)   2012     2011     2011     2010     2009     2008     2007  

Statement of operations data:

             

Revenues:

             

Network and Digital Media

  $ 27,625      $ 18,865      $ 28,362      $ 19,589      $ 17,352      $ 17,144      $ 11,613   

Publishing

    48,836        48,259        64,471        67,427        68,955        81,462        80,981   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    76,461        67,124        92,833        87,016        86,307        98,606        92,594   

Income (loss) from operations

    13,927        9,107        14,333        4,622        (14,228     (8,225     (5,591

Income (loss) before income taxes

    10,340        5,558        9,440        (1,172     (21,150     (20,619     (18,900

Income tax provision (benefit)

    (19,136     1,926        2,542        2,516        (425     2,393        3,216   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

    29,476        3,632        6,898        (3,688     (20,725     (23,012     (22,116

Income from discontinued operations, net of tax

    —          (1     (1     (5     (154     (730     6   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ 29,476      $ 3,631      $ 6,897      $ (3,693   $ (20,879   $ (23,742   $ (22,110
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) from continuing operations per member unit:

             

Basic

  $ 0.15      $ 0.02      $ 0.04      $ (0.02   $ (0.12   $ (0.15   $ (0.22
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $ 0.14      $ 0.02      $ 0.03      $ (0.02   $ (0.12   $ (0.15   $ (0.22
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of member units outstanding

             

Basic

    193,799        193,799        193,799        187,583        176,726        155,046        101,126   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

    213,791        213,791        213,791        187,583        176,726        155,046        101,126   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data:

             

Cash and cash equivalents:

  $ 3,738      $ 1,991      $ 4,466      $ 3,026      $ 2,482      $ 806      $ 1,563   

Goodwill

    84,675        84,675        84,675        84,675        84,675        86,980        76,835   

Other assets

    106,153        100,927        99,768        100,671        106,624        127,813        142,249   

Total assets

    194,566        187,593        188,909        188,372        193,781        215,599        220,647   

Total liabilities

    120,065        145,904        143,913        151,224        160,404        167,980        166,873   

Total members’ interest

    74,501        41,689        44,996        37,148        33,377        47,619        53,774   

 

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined financial information as of September 30, 2012 and for the year ended December 31, 2011 and for the nine month period ended September 30, 2012, give effect to the acquisition of Outdoor Channel and IMOTSC by IMOH. The summary unaudited pro forma condensed combined financial information shown below reflect historical financial information and have been prepared on the basis that the merger transaction is accounted for under ASC Topic 805—Business Combinations. For accounting purposes IMOTSC has been treated as the acquiror in the proposed merger transaction. See “Accounting Treatment” in this proxy statement/prospectus for more information on the accounting treatment afforded the merger transaction.

Due to the common control and the continuation of ownership by InterMedia Partners, the acquisition of IMOTSC by IMOH will be accounted for as a reorganization of entities under common control. Accordingly, in future reporting periods, the consolidated financial statements of IMOH and IMOTSC for all periods will be presented as if the acquisition occurred at the beginning of the earliest period presented and include the accounts of those entities involved on a historical cost basis, in a manner similar to a pooling of interests.

The acquisition of Outdoor Channel will be accounted for as a business combination in accordance with accounting standards generally accepted in the United States of America. Accordingly, the purchase consideration will be allocated to the assets and liabilities acquired (including identifiable intangible assets and goodwill, if any) and the results of operations of Outdoor Channel will be included in the future financial statements of IMOH from the date of acquisition.

The following summary unaudited pro forma condensed combined statement of financial position at September 30, 2012 is presented on a basis to reflect the merger related transactions as if they had occurred on September 30, 2012. The following summary unaudited pro forma condensed combined statements of operations are presented on a basis to reflect the merger related transactions as if they had occurred on the first day of the earliest period presented. See Unaudited Pro Forma Condensed Combined Financial Data for additional information. Pro forma adjustments are made in order to reflect the potential effect of the transaction on the unaudited pro forma condensed combined statement of operations.

The summary unaudited pro forma condensed combined financial information should be read in conjunction with the unaudited pro forma condensed combined financial information. See section “Unaudited Pro Forma Condensed Combined Financial Data” below. The summary unaudited pro forma condensed combined financial information should also be read together with the respective historical audited and unaudited consolidated financial statements and financial statement notes of IMOTSC and Outdoor Channel contained in this proxy statement/prospectus or incorporated by reference herein. The unaudited pro forma condensed combined financial information is presented for comparative purposes only and does not necessarily indicate what the future operating results or financial position of IMOH will be following consummation of the mergers.

IMOTSC’s and Outdoor Channel’s historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the merger transactions; (2) factually supportable; and (3) with respect to the unaudited pro forma statement of operations, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial statements do not reflect any revenue enhancements, cost savings from operating efficiencies, synergies or other restructurings, or the costs and related liabilities that would be incurred to achieve such revenue enhancements, cost savings from operating efficiencies, synergies or restructurings, which could result from the merger.

 

 

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Unaudited Pro Forma Condensed Combined Financial Information

($ in millions, except share and per share numbers)

 

     Nine Months Ended
September 30,
2012
    Year Ended
December 31,
2011
 

Income Statement

    

Revenues

   $ 128.4      $ 164.7   

Cost of revenues

     55.5        72.7   

Operating expenses

     59.9        75.4   

Interest expense

     7.5        10.0   

Other income

     (0.1     (0.1
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     5.6        6.7   

Income tax expense

     2.2        3.6   
  

 

 

   

 

 

 

Income from continuing operations

   $ 3.4      $ 3.0   
  

 

 

   

 

 

 

Earnings from continuing operations per share:

    

Basic

   $ 0.10      $ 0.09   

Diluted

   $ 0.09      $ 0.08   

Number of shares:

    

Basic (1)

     35,217,087        35,217,087   

Diluted

     35,557,201        35,557,201   

Balance Sheet

    

Total assets

   $ 384.3     

Total liabilities

   $ 227.1     

Total shareholders’ equity

   $ 157.2     

Net book value per share outstanding

   $ 4.46     

 

(1) As proposed by this transaction, IMOH will issue 11,362,860 shares of common stock to Outdoor Channel stockholders under the OUTD Exchange Ratio (which is 1:1). Such amount was computed based on the shares reported outstanding by Outdoor Channel at September 30, 2012 (25,950,532 shares), less: (i) restricted stock awards (RSA’s) that have not vested (340,114 shares), plus (ii) restricted stock units (RSU’s) that are not outstanding in shares but will vest at closing (127,442 shares), and less (iii) the number of shares that will be settled under the cash election (14,375,000 shares). Members of IMOTSC will be entitled to receive 23,854,227 shares of IMOH common stock in the aggregate in exchange for their member interests of IMOTSC. As a result, IMOH will have 35,217,087 shares outstanding at close. Fully diluted pro forma earnings per share reflects an additional 340,114 shares for the impact of the unvested RSA’s of Outdoor Channel at September 30, 2012, which awards will be assumed by IMOH.

 

 

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RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

In the following discussion and analysis of results of operations and financial condition, certain financial measures may be considered “non-GAAP financial measures” under Securities and Exchange Commission rules. These rules require supplemental explanation and reconciliation, which is provided in this Registration Statement on Form S-4.

IMOTSC and Outdoor Channel believe presenting EBITDA and Adjusted EBITDA is useful to investors because it describes operating performance and helps investors gauge the ability to generate cash flow, excluding some charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. IMOTSC and Outdoor Channel use these non-GAAP measures as important indicators of past performance and in planning and forecasting performance in future periods. The non-GAAP financial information presented may not be comparable to similarly-titled financial measures used by other companies, and investors should not consider non-GAAP financial measures in isolation from, or in substitution for, financial information presented in compliance with GAAP.

In addition to financial information presented in accordance with U.S. GAAP, management uses certain “non-GAAP financial measures” within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. IMOTSC and Outdoor Channel monitor non-GAAP financial measures because they describe operating performance and help management and investors gauge ability to generate cash flow, excluding some charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Namely, IMOTSC and Outdoor Channel exclude from Adjusted EBITDA interest income and expense, income tax, depreciation expense, amortization of intangibles, fair value adjustment to deferred revenue and deferred expense, impairment of intangible assets, restructuring costs, acquisition and integration costs, gain and loss on sale of assets, discontinued operations and stock-based compensation, because IMOTSC and Outdoor Channel believe that excluding such items helps management and investors better understand operating activities.

The following table presents Outdoor Channel’s Adjusted EBITDA measure for the periods indicated (in thousands):

 

    
 
Nine Months-Ended
September 30,
  
  
    Year Ended December 31,   
     2012     2011     2011     2010     2009     2008     2007  
(In thousands)                                           

Reconciliation of GAAP net income (loss) to adjusted EBITDA

              

Net income (loss)

   $ 643      $ 390      $ 1,845      $ 1,244      $ (285   $ 2,372      $ (1,878

Add (deduct)

              

Interest and other income, net

     (60     (15     (18     (31     (73     (1,521     (3,280

Provision for income taxes

     568        381        4,927        3,373        2,268        3,988        1,718   

Depreciation and amortization

     2,137        2,139        2,874        3,383        3,997        2,447        2,665   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 3,288      $ 2,895      $ 9,628      $ 7,969      $ 5,907      $ 7,286      $ (775

Loss on sale of assets, net

     17        31        151        133        74        36        —    

Acquisition and integration costs

     655       —         —         —         680       —         —    

Discontinued operations, net of taxes

     —         —         —         —         —         —         (1

Stock-based compensation

     2,577        2,351        3,153        3,244        4,100        3,605        10,260   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 6,537      $ 5,277      $ 12,932      $ 11,346      $ 10,761      $ 10,927      $ 9,484   

 

 

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The following table presents IMOTSC’s Adjusted EBITDA measure for the periods indicated (in thousands):

 

    Nine Months-Ended
September 30
    Year Ended December 31,  
    2012     2011     2011     2010     2009     2008     2007  
($ in thousands)                                          

Reconciliation of GAAP net income (loss) to adjusted EBITDA

             

Net income (loss)

  $ 29,476      $ 3,631      $ 6,897      ($ 3,693   ($ 20,879   ($ 23,742   ($ 22,110

Add (deduct)

             

Interest expense

    3,583        3,545        4,884        5,342        6,919        12,424        12,575   

Provision (benefit) for income taxes

    (19,136     1,926        2,542        2,516        (425     2,393        3,216   

Depreciation and amortization

    2,037        2,753        3,376        8,125        14,431        14,712        18,198   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

  $ 15,960      $ 11,855      $ 17,699      $ 12,290      $ 46      $ 5,787      $ 11,879   

Other (income) expense, net

    4        4        9        452        3        (30     734   

Impairment of intangible assets

    —          —          —          —          9,644        4,281        —     

Restructuring costs

    147        28        150        331        542        167        —     

Acquisition and integration costs

    599        —          —          —          —          —          —     

Loss (gain) on sale of assets, net

    (62     (42     (48     (16     (137     (18     9   

Discontinued operations, net of taxes

    —          1        1        5        154        730        (6

Stock-based compensation

    24        155        197        860        78        16        28   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 16,672      $ 12,001      $ 18,008      $ 13,922      $ 10,330      $ 10,933      $ 12,644   

 

 

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

The following selected unaudited pro forma per share information for the nine month period ended September 30, 2012 and for the year ended December 31, 2011 reflects the mergers and related transactions as if they had occurred on January 1, 2011. The unaudited pro forma combined net asset value per common share or per unit outstanding reflects the mergers and related transactions as if they had occurred on September 30, 2012.

Such unaudited pro forma combined per share information is based on the historical financial statements of IMOTSC and Outdoor Channel and on available information and certain assumptions and adjustments as discussed in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” of this proxy statement/prospectus. This unaudited pro forma combined per share information is provided for illustrative purposes only and is not necessarily indicative of what the operating results or financial position of IMOTSC and Outdoor Channel would have been had the mergers and related transactions been completed at the beginning of the periods or on the dates indicated, nor are they necessarily indicative of any future operating results or financial position. The following should be read in connection with the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” and other information included in or incorporated by reference into this proxy statement/prospectus.

InterMedia Outdoors Holdings, LLC (IMOTSC)

 

     Nine Months Ended
September 30,

2012
     Year Ended
December  31,
2011
 

Historical Per Member Unit Data:

     

Basic net income (loss) per unit

   $ 0.15       $ 0.04   

Diluted net income (loss) per unit

   $ 0.14       $ 0.03   

Book value per unit as of the period end

   $ 0.38       $ 0.23   

Cash dividends declared per unit

   $ 0.00       $ 0.00   

Outdoor Channel Holdings, Inc. (Outdoor Channel)

     Nine Months Ended
September 30,

2012
     Year Ended
December  31,
2011
 

Historical Per Common Share Data:

     

Basic net income (loss) per share

   $ 0.03       $ 0.07   

Diluted net income (loss) per share

   $ 0.03       $ 0.07   

Book value per share as of the period end

   $ 5.22       $ 5.24   

Cash dividends declared per share(1)

   $ 0.00       $ 0.25   

InterMedia Outdoor Holdings, Inc. (IMOH)

     Pro Forma  
     Nine Months Ended
September 30,

2012
     Year Ended
December  31,
2011
 

Pro Forma Per Common Share Data:

     

Basic net income (loss) per share(2)

   $ 0.10       $ 0.09   

Diluted net income (loss) per share

   $ 0.09       $ 0.08   

Book value per share as of the period end

   $ 4.46      

Cash dividends declared per share(1)

   $ 0.00       $ 0.00   

 

(1) On December 13, 2011, the Outdoor Channel Board declared a special $0.25 per share dividend to holders of record as of the close of the business day on December 24, 2011. The 2011 dividend, which amounted to $6.2 million, was paid on December 30, 2011. Furthermore, in connection with the transactions contemplated by the merger agreement, the Outdoor Channel Board declared a special cash dividend of $0.25 per share to all holders of record of shares of Outdoor Channel common stock as of the close of the business day on November 27, 2012. The special dividend will be payable on or about December 7, 2012. Any determination to pay dividends following the payment of the special dividend will be at the discretion of Outdoor Channel’s Board and will depend upon its results of operation, financial condition and other factors as the Board, in its discretion, deems relevant. Furthermore, at the time of any potential payment of a cash dividend Outdoor Channel may subject to contractual restrictions on, or prohibitions against, the payment of dividends.

 

(2) As proposed by this transaction, IMOH will issue 11,362,860 shares of common stock to Outdoor Channel shareholders under the OUTD Exchange Ratio (which is 1:1). Such amount was computed based on the shares reported outstanding by Outdoor Channel at September 30, 2012 (25,950,532 shares), less: (i) restricted stock awards (RSA’s) that have not vested and for which shares will not be issued (340,114 shares), plus (ii) restricted stock units (RSU’s) that are not outstanding in shares but will vest at closing (127,442 shares), and less (iii) the number of shares that will be settled under the cash election (14,375,000 shares). Members of IMOTSC will be entitled to receive 23,854,227 shares of IMOH common stock in the aggregate in exchange for their member interests of IMOTSC. As a result, IMOH will have 35,217,087 shares outstanding at close. Fully diluted pro forma earnings per share reflects an additional 340,114 shares for the impact of the unvested RSA’s of Outdoor Channel at September 30, 2012, which awards will be assumed by IMOH.

 

 

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RISK FACTORS

In addition to the other information included and incorporated by reference in this proxy statement/prospectus, including the matters addressed in the “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risks before deciding how to cast your vote. In addition, you should read and consider the risks associated with the businesses of IMOH, Outdoor Channel and IMOTSC. You should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference in this proxy statement/prospectus, including other risks and uncertainties, including risk factors, contained in Outdoor Channel’s filings with the Securities and Exchange Commission. Please see “Where You Can Find More Information.”

The business and operations of IMOH, Outdoor Channel and IMOTSC are subject to a number of risks and uncertainties, and the following list should not be considered to be a definitive list of all factors that may affect such business, financial conditions and future operating results. Additional risks and uncertainties not presently known to IMOH, Outdoor Channel and IMOTSC or that are not currently believed to be important also may adversely affect the transaction and IMOH following the mergers. Any forward-looking statements made by IMOH, Outdoor Channel or IMOTSC are made with the intention of obtaining the benefits of the “safe harbor” provisions of the Securities Litigation Reform Act and a number of factors, including, but not limited to, those discussed below, could cause actual results and experiences to differ materially from the anticipated results or expectations expressed in any forward-looking statements.

Risks Related to the Mergers and to an Investment in IMOH

The combination of Outdoor Channel and IMOTSC’s operations may not result in the anticipated financial and strategic benefits.

The mergers involve the strategic combination of Outdoor Channel and IMOTSC, two media companies that address a single target market of outdoor enthusiasts, principally through their respective television broadcast networks and, in the case of IMOTSC, through print and digital media. Although the merger is intended to increase combined revenues and to enhance the relative positions of the individual companies when negotiating with video service providers and advertisers, there can be no assurances that these strategic benefits will be realized. In particular, Outdoor Channel and The Sportsman Channel, which is owned by IMOTSC, offer similar content and address the same demographic subscriber market. A large number of cable, satellite, and other digital video providers already carry both Outdoor Channel and The Sportsman Channel. As a result, the combined company’s ability to realize increased revenues from an increased overall subscriber base may be limited. In those instances where a provider does not currently carry both channels, it may be unwilling or reluctant to add an additional channel with similar content. In order to retain existing providers and expand the combined subscriber base, IMOH may need to differentiate the two networks. IMOH may be unable to differentiate the networks’ individual offerings in a way that increases the revenues of the combined company. In addition, the combined subscriber base of the two networks could decline if video service operators conclude that similarities between the networks, including common ownership and management, weigh against carrying both Outdoor Channel and The Sportsman Channel. Similarly, advertisers may not perceive sufficient differences in the networks to expand advertising budgets in the outdoor target market, even if the combined company expands its available subscriber base by increasing the number of operators carrying one or both of the networks.

Integration of Outdoor Channel and IMOTSC may result in unanticipated costs, and results of operations after the mergers may differ materially from the pro forma information presented in this proxy statement/prospectus.

Results after the mergers may be materially different from those shown in the pro forma information that only show a combination of historical results for Outdoor Channel and IMOTSC. Among other factors that could adversely affect the combined companies’ business, integration may be difficult, unpredictable, and subject to delay because of possible company culture conflicts and different opinions on technical decisions. The

 

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companies must integrate or, in some cases, replace, numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll and regulatory compliance, many of which are dissimilar. The merger, integration, restructuring and transaction costs related to the mergers could be higher than currently estimated depending on how difficult it will be to integrate Outdoor Channel and IMOTSC.

The debt of IMOTSC and Outdoor Channel incurred in connection with the mergers may limit IMOH’s financial and operating flexibility.

IMOH is refinancing a portion of IMOTSC’s existing indebtedness, paying the $115,000,000 cash merger consideration and paying transaction expenses in connection with the merger, Outdoor Borrower, LLC (the “Borrower”), a subsidiary of IMOTSC, expects to incur, directly or indirectly, in part through a $140 million term loan facility. IMOH will also have access to a $10 million revolving credit facility (the “New Facilities”). The loan facilities will be guaranteed by Outdoor Guarantor, LLC, the direct holding company of the Borrower, and all present and future direct and indirect domestic subsidiaries of Outdoor Guarantor, LLC, together with any of its foreign subsidiaries to the extent the guaranty does not cause tax liabilities (collectively, “Guarantors”).

The New Facilities are expected to contain financial covenants relating to maximum leverage and minimum fixed charge coverage. Other covenants contained in the New Facilities are expected to restrict, among other things, asset transfers and dispositions, mergers, consolidations and acquisitions, dividends, stock repurchases and redemptions, other restricted payments, indebtedness and preferred stock, loans and investments, bank accounts, liens, sale and leaseback transactions, hedging arrangements, ownership of subsidiaries, and affiliate transactions. IMOTSC anticipates that the New Facilities will contain customary events of default. These covenants will, among other things, limit the ability of the respective restricted entities to fund future working capital and capital expenditures, engage in future acquisitions or development activities, or otherwise realize the value of their assets and opportunities fully because of the need to dedicate a portion of cash flow from operations to payments on debt. In addition, such covenants could limit the flexibility of the respective restricted entities in planning for, or reacting to, changes in the industries in which they operate. The New Facilities will be due and payable in full on the maturity date, which will be the date 5 years from the closing date of the mergers.

Significant costs are expected to be incurred in connection with the consummation of the mergers and integration of Outdoor Channel and IMOTSC into a single business, including legal, accounting, financial advisory and other costs.

If the mergers are consummated, Outdoor Channel and IMOTSC expect to incur significant costs in connection with integrating their operations, products and personnel. These costs may include costs for:

 

   

redeployment, relocation or severance;

 

   

integration of information systems; and

 

   

reorganization or closures of facilities.

In addition, Outdoor Channel and IMOTSC expect to incur a number of non-recurring costs associated with combining the operations of the two companies, which cannot be estimated accurately at this time. Outdoor Channel and IMOTSC will also incur transaction fees and other costs related to the mergers, anticipated to be approximately $9.5 million (excluding debt issuance costs). This amount is a preliminary estimate and subject to change. Additional unanticipated costs may be incurred in the integration of the businesses of Outdoor Channel and IMOTSC. Although Outdoor Channel and IMOTSC expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and transaction-related costs over time, this net benefit may not be achieved in the near term, or at all. There can be no assurance that Outdoor Channel and IMOTSC will be successful in these integration efforts.

 

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Following the mergers, IMOH will be a “Controlled Company”; the InterMedia Unit Holders will exercise significant influence over IMOH and their interests in IMOH’s business may be different from the interests of Outdoor Channel stockholders.

Upon the consummation of the mergers and related transactions, the InterMedia Unit Holders will beneficially own approximately 67.6% of the outstanding common stock of IMOH and will qualify as a “controlled company” under the rules of NASDAQ. The InterMedia Unit Holders will generally have the ability to influence the outcome of any corporate action of IMOH which requires stockholder approval, including, but not limited to, the election of directors, approval of merger transactions involving IMOH and the sale of all or substantially all of IMOH’s assets.

This influence and actual control may have the effect of discouraging offers to acquire IMOH because any such consummation would likely require the consent of the InterMedia Unit Holders. The InterMedia Unit Holders may also delay or prevent a change in control of IMOH. In addition, the significant concentration of stock ownership may adversely affect the value of IMOH common stock due to a resulting lack of liquidity of IMOH common stock or a perception among investors that conflicts of interest may exist or arise.

If the InterMedia Unit Holders sell substantial amounts of IMOH common stock in the public market, or investors perceive that these sales could occur, the market price of IMOH common stock could be adversely affected.

The interests of the InterMedia Unit Holders, which have investments in other companies, may from time to time diverge from the interests of other IMOH stockholders, particularly with regard to new investment opportunities. The InterMedia Unit Holders are not restricted from investing in other businesses involving or related to programming and publishing. The InterMedia Unit Holders may also engage in other businesses that compete or may in the future compete with IMOH.

In connection with the execution of the merger agreement, IMOH entered into the Registration Rights Agreement with InterMedia Partners, which collectively owns or controls approximately 93.447% of InterMedia Units as of the date of the merger agreement. The Massie Parties are also parties to the Registration Rights Agreement. If requested properly under the terms of the Registration Rights Agreement, these stockholders have the right to require IMOH to register the offer and sale of all or some of such shares under the Securities Act in certain circumstances and also have the right to include those shares in a registration initiated by IMOH. If IMOH is required to include the shares of common stock held by these stockholders pursuant to these registration rights in a registration initiated by IMOH, sales made by such stockholders may adversely affect the price of IMOH common stock and IMOH’s ability to raise needed capital. In addition, if these stockholders exercise their demand registration rights and cause a large number of shares to be sold in the public market or demand that IMOH include their shares for registration on a shelf registration statement, such sales or shelf registration may have an adverse effect on the market price of IMOH common stock.

Also in connection with the execution of the merger agreement, IMOH entered into the Lock-Up Agreement with the OUTD Parties and InterMedia Partners. Under the Lock-Up Agreement, the Lock-Up Investors and their permitted transferees may not transfer all or any portion of their shares of IMOH common stock during the period commencing on the consummation of the mergers and ending, for the OUTD Parties, after six months and, for InterMedia Partners, after twelve months. Such limitations on transfer do not apply to transfers to members of the holder’s immediate family or to trusts or other entities for the benefit of such family members, transfers pursuant to a testamentary document or law of descent and transfers to an affiliate of the holder if such holder is an entity. Such limitations on transfer also do not apply to transfers to IMOH and transfers between Lock-Up Investors and their affiliates. The board of directors of IMOH may waive these limitations on transfers from time to time in writing.

As a “controlled company” IMOH is exempt from compliance with certain NASDAQ corporate governance requirements. For example, IMOH may not have a majority of independent directors comprise its board of directors. In addition, while IMOH will have an audit committee of its board of directors, it will not have an independent compensation or nominating and governance committee. See “Board of Directors, Board

 

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Committees and Executive Officers of IMOH—Committees of the Board of Directors of IMOH.” As a result, stockholders of IMOH will not have the same protections afforded to stockholders that are subject to all of NASDAQ’s corporate governance requirements.

Integrating Outdoor Channel and IMOTSC may divert management’s attention away from their operations.

Successful integration of Outdoor Channel’s and IMOTSC’s operations, products and personnel may place a significant burden on the management and internal resources of Outdoor Channel and IMOTSC. The diversion of management attention and any difficulties encountered in the transition and integration process could harm the businesses, financial conditions and operating results of Outdoor Channel, IMOTSC and the combined company, as the case may be.

As a result of the mergers, Outdoor Channel and IMOTSC may not be able to retain key personnel or recruit additional qualified personnel, which could materially affect the companies’ respective businesses and require Outdoor Channel and IMOTSC to incur substantial costs to recruit replacements for lost personnel.

Each of Outdoor Channel and IMOTSC is highly dependent on the continuing efforts of its senior management team and other key personnel. As a result of the mergers, current and prospective Outdoor Channel and IMOTSC employees could experience uncertainty about their future roles. This uncertainty may adversely affect the ability of Outdoor Channel, IMOTSC or IMOH, as the case may be, to attract and retain key management, sales, marketing and technical personnel. Any failure to attract and retain key personnel could have a material adverse effect on the business of Outdoor Channel, IMOTSC or IMOH after consummation of the mergers. In addition, neither Outdoor Channel nor IMOTSC currently maintain “key person” insurance covering any member of their management teams.

Holders of Outdoor Channel common stock who make cash or stock elections may not receive all their merger consideration in the form they elected.

The aggregate amount of cash to be paid to Outdoor Channel common stockholders pursuant to the mergers is fixed. The total cash amount that will be paid as merger consideration is $115,000,000. If the elections of all the Outdoor Channel common stockholders result in an oversubscription or an undersubscription of this amount in cash, the aggregate amount of cash available will not be adjusted. Rather, the Exchange Agent will allocate the $115,000,000 cash amount and shares of IMOH common stock among electing holders in accordance with the proration procedures described in “The Merger Agreement (Proposal No. 1)—Merger Consideration” and “The Merger Agreement (Proposal No. 1)—Outdoor Channel Stockholder Election Procedures.” If you are electing to receive all cash for your shares of Outdoor Channel common stock or if you are electing to receive all shares of IMOH common stock for your shares of Outdoor Channel common stock, you may not receive merger consideration in accordance with your election. What you receive will depend upon the elections made by all holders of Outdoor Channel common stock in the merger. You may receive less cash or fewer shares for your shares of Outdoor Channel common stock than you otherwise elected to receive. If you receive less cash than you elected, you will receive a greater number of shares of IMOH common stock. If you receive fewer shares than you elected, you will receive a greater amount of cash. For example, if the number of Cash Election Shares plus cash paid in connection with Mixed Consideration exceeds the Available Cash Amount then each stockholder making a cash election will receive shares of IMOH and a prorated amount of cash. If the number of Cash Election Shares plus cash paid in connection with Mixed Consideration does not exceed the Available Cash Amount, then stockholders electing Stock Consideration will receive a portion of their merger consideration in cash. Stockholders electing Mixed Consideration will not be subject to proration. Holders making no election will be deemed to have elected Mixed Consideration.

In the event a holder of shares of Outdoor Channel common stock makes an election to receive cash for 55.74% of such holder’s aggregate outstanding shares (rounded to the nearest whole share) and makes an election

 

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to receive stock for 44.26% of such holder’s aggregate outstanding shares (rounded to the nearest whole share), and indicates its intent on its election form to receive the equivalent of Mixed Consideration for all of such holder’s shares, then such holder’s shares will not be subject to proration.

For more information regarding these proration procedures, see the section “The Merger Agreement (Proposal No. 1)—Merger Consideration.”

Outdoor Channel and IMOTSC may not be able to obtain the regulatory approvals required to consummate the mergers unless they agree to material restrictions or conditions.

Consummation of the mergers is subject to prior receipt of certain approvals and consents required to be obtained from applicable governmental and regulatory authorities, including under the HSR Act and the regulations governing the transfer of control of Outdoor Channel’s FCC license. Outdoor Channel, IMOTSC and IMOH have agreed to cooperate and use all reasonable best efforts to obtain, or cause their applicable affiliates to obtain, all permits, consents, approvals and authorizations from any governmental or regulatory authority necessary to consummate the mergers as promptly as practicable. Complying with requests from such governmental agencies, including requests for additional information and documents, could delay consummation of the transaction. In connection with granting these consents and authorizations, governmental authorities may require divestitures of IMOTSC or Outdoor Channel assets or seek to impose conditions on IMOH’s operations after consummation of the mergers. Such divestitures or conditions may jeopardize or delay consummation of the mergers or may reduce the anticipated benefits of the transaction. Under the terms of the merger agreement, although Outdoor Channel and IMOTSC are required to use reasonable best efforts to obtain all necessary governmental approvals, they are not required to agree to any divestitures in connection with such efforts or take any actions which would bind them even if the consummation of the mergers was not to occur.

On December 21, 2012, Outdoor Channel and IMOTSC filed (or caused to be filed) the requisite notifications under the HSR Act in connection with the mergers. The applicable waiting period expired on January 22, 2013, which satisfies the HSR Act approval requirement.

If IMOH fails to maintain effective internal control over financial reporting in the future, the accuracy and timing of its financial reporting may be impaired, which could adversely affect its business and stock price.

The Sarbanes-Oxley Act requires, among other things, that IMOH maintain effective internal control over financial reporting and disclosure controls and procedures. Neither IMOH nor IMOTSC has previously been subject to the Sarbanes-Oxley Act. With respect to its fiscal year ending December 31, 2013, IMOH must perform system and process evaluation and testing of IMOH’s internal control over financial reporting to allow management to report on the effectiveness of IMOH’s internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. IMOH’s testing, or the subsequent testing by its independent registered public accounting firm, may reveal deficiencies in internal control over financial reporting that are deemed to be material weaknesses. Compliance with Section 404 will require that IMOH incur substantial accounting expense and expend significant management time on compliance-related issues. Management expects that integration of IMOTSC and Outdoor Channel will require substantial management time and attention during 2013, and the additional need to focus on compliance with Section 404 of Sarbanes-Oxley may strain management and finance resources and otherwise present additional administrative and operational challenges as IMOH management seeks to integrate the two businesses.

If IMOH is not able to comply with the requirements of Section 404 in a timely manner, or if it fails to remedy any material weakness and maintain effective internal control over our financial reporting in the future, its financial statements may be inaccurate, its ability to report its financial results on a timely and accurate basis may be adversely affected, its access to the capital markets may be restricted, the trading price of its common stock may decline, and it may be subject to sanctions or investigations by regulatory authorities, including the SEC or NASDAQ. It may also be required to restate our financial statements from prior periods.

 

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Officers and directors of Outdoor Channel may have certain interests in the Outdoor Channel merger that may be different from, or in addition to, interests of other Outdoor Channel stockholders.

Outdoor Channel officers and directors may have certain interests in the Outdoor Channel merger that may be different from, or in addition to, interests of other Outdoor Channel stockholders. Outdoor Channel stockholders should be aware of these interests when considering the Outdoor Channel Board recommendation to adopt the merger agreement. See “The Proposed Transaction—Interests of Certain Persons in the Mergers” for additional information.

The trading price of shares of IMOH common stock after the consummation of the mergers may be affected by factors different from those affecting the price of shares of Outdoor Channel common stock before the mergers.

Upon the consummation of the mergers, holders of Outdoor Channel common stock will be entitled to become holders of IMOH common stock. The results of operations of IMOH, as well as the trading price of IMOH common stock, after the mergers may be affected by factors different from those currently affecting Outdoor Channel’s results of operations and the trading price of Outdoor Channel common stock. For a discussion of the businesses of Outdoor Channel and IMOTSC and of certain factors to consider in connection with those businesses, see “The Companies—Information About Outdoor Channel Holdings, Inc.” and “The Companies—Information About InterMedia Outdoors Holdings, LLC.” See also the risk factors relating to Outdoor Channel incorporated by reference in this proxy statement/prospectus. See “Where You Can Find More Information.” See also “Risks Related to IMOTSC and its Business” beginning on page 40 of this proxy statement/prospectus.

There has been no prior public market for IMOH common stock.

Before this offering, no public market existed for the IMOH common stock. It is anticipated that the IMOH common stock will be listed for trading on the NASDAQ. However, an active public market for the IMOH common stock may not develop or be sustained after the consummation of the mergers, which could affect the ability to sell, or depress the market price of, the IMOH common stock. We cannot predict the extent to which a trading market will develop or how liquid that market might become.

The stock price of IMOH common stock may be volatile.

The stock price of IMOH common stock may be volatile and subject to wide fluctuations. In addition, the trading volume of IMOH common stock may fluctuate and cause significant price variations to occur. Some of the factors that could cause fluctuations in the stock price or trading volume of the IMOH common stock include:

 

   

market and economic conditions, including market conditions in the entertainment and publishing industries;

 

   

actual or expected variations in quarterly operating results;

 

   

differences between actual operating results and those expected by investors and analysts;

 

   

changes in recommendations by securities analysts;

 

   

operations and stock performance of competitors;

 

   

accounting charges, including charges relating to the impairment of goodwill;

 

   

significant acquisitions or strategic alliances by IMOH or by competitors;

 

   

sales of the IMOH common stock, including sales by IMOH’s directors and officers or significant investors;

 

   

recruitment or departure of key personnel;

 

   

loss of key advertisers; and

 

   

changes in reserves for professional liability claims.

 

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We cannot assure you that the price of IMOH common stock will not fluctuate or decline significantly in the future. In addition, the stock market in general can experience considerable price and volume fluctuations that may be unrelated to IMOH’s performance.

Other Risks Currently Faced by IMOTSC and Outdoor Channel that IMOH Will Face After Consummation of the Mergers

IMOTSC and Outdoor Channel are, and will continue to be, and IMOH after consummation of the mergers will be, subject to the risks described in (i) “Risks Related to IMOTSC’s Network and Digital Media Segment,” (ii) “ Risks Related to IMOTSC’s Publishing Segment,” (iii) “Risks Related to IMOTSC’s Business Generally,” and (iv) Outdoor Channel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed with the SEC on March 9, 2012 and all Quarterly Reports on Form 10-Q filed thereafter, all of which are filed with the SEC and incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 206 for the location of information incorporated by reference in this proxy statement/prospectus.

Risks Related to IMOTSC and its Business

Risks Related to IMOTSC’s Network and Digital Media Segment

Service providers could discontinue or refrain from carrying IMOTSC’s content, or decide to not renew IMOTSC’s distribution agreements, which could substantially reduce the number of viewers and harm business and IMOTSC’s operating results.

Consolidation among cable and satellite operators has given the largest operators considerable leverage in their relationships with programmers, including IMOTSC. The success of IMOTSC is dependent, in part, on IMOTSC’s ability to enter into new carriage agreements and maintain or renew existing agreements or arrangements with, and carriage by, satellite systems, telephone companies, referred to herein as telcos, and cable multiple system operators, referred to herein as “MSO”s, affiliated regional or individual cable systems. Although IMOTSC currently has arrangements or agreements with, and is being carried by, many of the largest MSOs, satellite and telco service providers, having such relationship or agreement with an MSO does not always ensure that an MSO’s affiliated regional or individual cable systems will carry or continue to carry IMOTSC’s content or that the satellite or telco service provider will carry IMOTSC’s content. Under IMOTSC’s current contracts and arrangements, IMOTSC typically offers the service providers the right to broadcast IMOTSC’s content to their subscribers, but not all such contracts or arrangements require that IMOTSC’s content be offered to all subscribers of, or any specific tiers of, or to a specific minimum number of subscribers of a service provider. Because many of IMOTSC’s carriage arrangements do not specify on which service levels IMOTSC’s content is carried, such as basic versus digital basic, expanded digital or specialty tiers, or in which geographic markets IMOTSC’s content will be offered, in many cases IMOTSC has no assurance that IMOTSC’s content will be carried and available to viewers of any particular service provider. In addition, under the terms of some of IMOTSC’s agreements, the service providers could decide to discontinue carrying IMOTSC’s content. A failure to secure a renewal of IMOTSC’s agreements or a renewal on less favorable terms may result in a loss of a substantial number of subscribers, which in turn would reduce IMOTSC’s subscriber fees and advertising revenue and may have a material adverse effect on IMOTSC’s results of operations and financial position.

If IMOTSC’s content is placed in unpopular program packages by its service providers, or if service fees are increased for its subscribers, the number of viewers of the content may decline which could harm IMOTSC’s business and operating results.

IMOTSC does not control the channels with which its content is packaged by providers. The placement by a service provider of IMOTSC’s content in unpopular program packages could reduce or impair the growth of the number of IMOTSC’s viewers and subscriber fees paid by service providers to IMOTSC. In addition, IMOTSC does not set the prices charged by the service providers to their subscribers when its content is packaged with other television channels or offered by itself. The prices for the channel packages in which IMOTSC’s content is bundled, or the price for IMOTSC’s content by itself, may be set too high to appeal to individuals who might otherwise be interested in its network. Further, if IMOTSC’s content is bundled by service providers with

 

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networks that do not appeal to IMOTSC’s viewers or is moved to packages with fewer subscribers, IMOTSC’s content may lose viewers. These factors may reduce the number of subscribers and/or viewers of the content, which in turn would reduce IMOTSC’s subscriber fees and advertising revenue.

If IMOTSC’s viewership declines for any reason, or IMOTSC fails to develop and distribute popular programs, its advertising and subscriber fee revenues could decrease.

IMOTSC’s viewership is a critical factor affecting both (i) the volume and pricing of advertising revenue that it receives, and (ii) the extent of distribution and subscriber fees it receives under agreements with its distributors. IMOTSC’s advertising revenues are largely dependent on its ability to consistently create and acquire programming that meet the changing preferences of viewers in general and viewers in its target demographic category. Its success is measured by its Nielsen ratings, which estimates the number of viewers of IMOTSC’s content, and in turn drives demand and pricing of IMOTSC’s advertising. IMOTSC does not control the methodology used by Nielsen for these estimates, and estimates regarding IMOTSC’s subscriber base made by Nielsen is theirs alone and does not represent opinions, forecasts or predictions of IMOTSC or its management. In addition, if Nielsen modifies its methodology or changes the statistical sample it uses for these estimates, such as the demographic characteristics of the households, the size of IMOTSC’s subscriber base and its ratings could be negatively affected by this change, resulting in a decrease in IMOTSC’s advertising revenue.

IMOTSC’s viewership and ratings are also affected by the quality and acceptance of competing programs and other content offered by other networks, the availability of alternative forms of entertainment and leisure time activities, including, general economic conditions, piracy, digital and on-demand distribution and growing competition for consumer discretionary spending. Any decline in IMOTSC’s ratings and viewership could cause advertising revenue to decline and adversely impact IMOTSC’s business and operating results.

Expenses relating to programming and production costs are generally increasing and a number of factors can cause cost overruns and delays, and IMOTSC’s operating results may be adversely impacted if it is not able to successfully recover the costs of developing, acquiring and producing new programming.

The average cost of programming has increased for the pay TV industry and production companies, and such increases are likely to continue. IMOTSC plans to build its programming library through the acquisition of long-term broadcasting rights from third-party producers, in-house production and outright acquisition of programming, and this may lead to increases in its programming costs. The development, production and editing of television programming requires a significant amount of capital and there are substantial financial risks inherent in developing and producing television programs. Actual programming and production costs may exceed their budgets. Factors such as labor disputes, death or disability of key spokespersons or program hosts, damage to master tapes and recordings or adverse weather conditions may cause cost overruns and delay or prevent completion of a project. If IMOTSC is not able to successfully recover the costs of developing or acquiring programming through increased revenues, whether the programming is produced by IMOTSC or acquired from third-party producers, IMOTSC’s business and operating results will be harmed.

IMOTSC may not be able to grow its subscriber base of its content at a sufficient rate to offset planned increased costs, decreased revenue or at all, and as a result IMOTSC’s revenues and profitability may not increase and could decrease.

A major component of IMOTSC’s financial growth strategy is based on increasing the number of subscribers to its content. The growth of IMOTSC’s subscriber base depends upon many factors, such as the success of its marketing efforts in driving consumer demand for its content; overall growth in cable, satellite and telco subscribers; the popularity of its programming; its ability to negotiate new carriage agreements, or amendments to, or renewals of, current carriage agreements, and maintenance of existing distribution; plus other factors that are beyond its control. There can be no assurance that IMOTSC will be able to maintain or increase the subscriber base of its content on cable, satellite and telco systems or that its current carriage will not decrease as a result of a number of factors or that IMOTSC will be able to maintain its current subscriber fee rates. In particular, negotiations for new carriage agreements, or amendments to, or renewals of, current carriage

 

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agreements, are lengthy and complex, and IMOTSC is not able to predict with any accuracy when such increases in its subscriber base may occur, if at all, or if it can maintain its current subscriber fee rates. If IMOTSC is unable to grow its subscriber base or it reduces its subscriber fee rates, IMOTSC’s subscriber and advertising revenues may not increase and could decrease. In addition, as IMOTSC plans and prepares for such projected growth in its subscriber base, IMOTSC plans to increase its expenses accordingly. If IMOTSC is not able to increase its revenue to offset these increased expenses, and if its subscriber fee revenue decreases, IMOTSC’s profitability could decrease.

IMOTSC may not be able to secure sufficient or additional advertising revenue, and as a result, its profitability may be negatively impacted.

IMOTSC’s ability to secure additional advertising accounts relating to its operations depends upon the size of its audience, the popularity of its programming and the demographics of its viewers, as well as strategies taken by its competitors, strategies taken by advertisers and the relative bargaining power of advertisers. Competition for advertising accounts and related advertising expenditures is intense. IMOTSC faces competition for such advertising expenditures from a variety of sources, including other networks and other media. IMOTSC cannot provide assurance that its sponsors will pay advertising rates for commercial air time at levels sufficient for it to make a profit or that it will be able to attract new advertising sponsors or increase advertising revenues. If IMOTSC is unable to attract advertising accounts in sufficient quantities, its revenues and profitability may be harmed.

In addition, in some projects relating to IMOTSC’s television production company and its relationships with television channels other than IMOTSC content, IMOTSC may agree to absorb the production costs of a program and retain the rights to sell the advertising in, or sponsorships relating to, such programming. If IMOTSC is not able to sell sufficient advertising or sponsorships relating to such programs, it may lose money in such project, and its operating results may be significantly harmed.

If, in IMOTSC’s attempt to increase its number of subscribers, it structures favorable terms or incentives with one service provider in a way that would require IMOTSC to offer the same terms or incentives to all other service providers, IMOTSC’s operating results may be harmed.

Many of IMOTSC’s existing agreements with service providers contain “most-favored nation” clauses. These clauses typically provide that if IMOTSC enters into an agreement with another service provider on more favorable terms, these terms must be offered to the existing service provider, subject to some exceptions and conditions. Future agreements with service providers may also contain similar “most-favored nation” clauses. If, in IMOTSC’s attempt to increase its number of subscribers, IMOTSC reduces its subscriber fees or provides launch support fees or other incentives to effectively offer more favorable terms to any service provider, these clauses may require IMOTSC to offer similar incentives to other service providers or reduce the effective subscriber fee rates that it receives from other service providers, and this could negatively affect IMOTSC’s operating results.

The television market in which IMOTSC operates is highly competitive, and IMOTSC may not be able to compete effectively, particularly against competitors with greater financial resources, brand recognition, marketplace presence and relationships with service providers.

The Sportsman Channel competes with other television channels for the distribution of its programming, development and acquisition of content, audience viewership and advertising sales. The Sportsman Channel competes with other television channels to be included in the offerings of each video service provider and for placement in the packaged offerings having the most subscribers. The Sportsman Channel’s ability to secure distribution is dependent upon the production, acquisition and packaging of programming, audience viewership, the marketing and advertising support and incentives provided to distributors, and the prices charged for carriage. The Sportsman Channel’s contractual agreements with distributors are renewed or renegotiated from time to time in the ordinary course of business.

The Sportsman Channel competes for distribution and for viewership with other channels offering similar programming in the areas of hunting, shooting, fishing and outdoors topics, such competitors include NBC

 

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Sports, Military Channel, Outdoor Channel, Pursuit Channel and regional sports networks. The Sportsman Channel also competes for distribution and audience viewers with other television networks targeted at males between the ages of 18 and 54. The Sportsman Channel believes such competitors include A&E, ESPN, ESPN2, History Channel, National Geographic Channel, Spike TV and others. It is possible that these or other competitors, many of which have substantially greater financial and operational resources than The Sportsman Channel, could revise their programming to offer more outdoor programming related to hunting, shooting, fishing and other outdoors topics which are of interest to The Sportsman Channel’s viewers.

With respect to the sale of advertising, The Sportsman Channel also competes for advertising revenue with general-interest television and other forms of media, including magazines, newspapers, radio, websites and other digital media.

Certain technological advances, including the increased deployment of fiber optic cable, are expected to allow cable and telecommunication video service providers to continue to expand both their channel and broadband distribution capacities and to increase transmission speeds. In addition, the ability to deliver content via new methods and devices is expected to increase substantially. The impact of such added capacities is hard to predict, but the development of new channels of content distribution could dilute The Sportsman Channel’s market share and lead to increased competition for viewers by facilitating the emergence of additional channels and mobile and internet platforms through which viewers could view programming that is similar to that offered by The Sportsman Channel.

In addition, IMOTSC’s magazine business also competes for advertising revenue with general-interest consumer and sports magazines and other forms of media, including newspapers, radio, television, websites and other digital media.

If these or other competitors, many of which have substantially greater financial and operational resources than us, significantly expand their operations or their market penetration, IMOTSC’s business could be harmed. If any of these competitors were able to invent improved technology, or IMOTSC is not able to prevent them from obtaining and using its proprietary technology and trade secrets, IMOTSC’s business and operating results, as well as its future growth prospects, could be negatively affected. There can be no assurance that IMOTSC will be able to compete successfully in the future against existing or new competitors, or that increasing competition will not have a material adverse effect on its business, financial condition or results of operations.

Changes in consumer behavior resulting from new technologies and distribution platforms may impact the performance of IMOTSC’s businesses.

IMOTSC’s business is focused on television, and IMOTSC faces emerging competition from other providers of digital media, some of which have greater financial, marketing and other resources than IMOTSC does. In particular, programming offered over the Internet has become more prevalent as the speed and quality of broadband networks have improved. Providers such as Hulu, Netflix, Apple TV, Amazon and Google TV are aggressively working to establish themselves as alternative providers of video services. These services and the growing availability of online content, coupled with an expanding market for connected devices and internet-connected televisions, may impact IMOTSC’s traditional distribution methods for its services and content. Additionally, devices that allow users to view television programs on a time-shifted basis and technologies that enable users to fast-forward or skip programming have caused changes in consumer behavior that may affect the attractiveness of IMOTSC’s offerings to advertisers and could therefore adversely affect its revenues. If IMOTSC cannot ensure that its distribution methods and content are responsive to its target audiences, IMOTSC’s business could be adversely affected.

Continued consolidation among service providers may harm IMOTSC’s business.

Service providers continue to consolidate, making IMOTSC increasingly dependent on fewer operators. If these operators fail to carry IMOTSC’s content, use their increased distribution and bargaining power to negotiate less favorable terms of carriage or to obtain additional volume discounts, IMOTSC’s business and operating results would suffer.

 

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Increased competition and demand in price for the carriage of local broadcast networks may limit IMOTSC’s ability to add subscribers.

Many of the local broadcast networks that had previously been transmitted free, over-the-air, to the viewers, or provided to the pay television service providers for little to no cost, have recently been demanding substantial increased pricing for the retransmission of their signals by the pay television service providers. If the service providers continue to be required to pay more for the retransmission of such local broadcast networks, this may limit the ability of such service providers to carry other channels such as the IMOTSC’s content, thus limiting IMOTSC’s ability to add subscribers and possibly even causing a decrease in the number of its subscribers.

Technologies in the pay television industry are constantly changing, and IMOTSC’s failure to acquire or maintain state-of-the-art technology or adapt its business model may harm its business and competitive advantage.

Technology in the video, telecommunications and data services industry is changing rapidly. Many technologies and technological standards are in development and have the potential to significantly transform the ways in which programming is created and transmitted. IMOTSC cannot accurately predict the effects that implementing new technologies will have on its programming and broadcasting operations. IMOTSC may be required to incur substantial capital expenditures to implement new technologies, or, if it fails to do so, may face significant new challenges due to technological advances adopted by competitors, which in turn could result in harming IMOTSC’s business and operating results.

The cable, satellite and telco-delivered television industry is subject to substantial governmental regulation for which compliance may increase IMOTSC’s costs, hinder its growth and possibly expose it to penalties for failure to comply.

The multichannel video programming distribution industry is subject to extensive legislation and regulation at the federal and local levels, and, in some instances, at the state level, and many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Operating in a regulated industry increases IMOTSC’s cost of doing business as a video programmer, and such regulation may also hinder IMOTSC’s ability to increase and/or maintain its distribution and advertising revenues. The regulation of programming services is subject to the political process and continues to be under evaluation and subject to change. Material changes in the law and regulatory requirements are difficult to anticipate and IMOTSC’s business may be harmed by future legislation, new regulation, deregulation and/or court decisions interpreting such laws and regulations.

The following are examples of the types of currently active legislative, regulatory and judicial inquiries and proceedings that may impact IMOTSC’s business. The FCC may adopt rules which would require cable and satellite providers to make available programming channels on an a la carte basis or as part of packages of “family friendly” programming channels. Further, the FCC is likely to evaluate the types of technologies that will be considered “multichannel video programming systems” under federal regulation and the rules that will be applied to distribution of television programming via such technologies. In addition, there have been recent congressional hearings and FCC activity regarding the state of rules relating to carriage of broadcast television stations, including whether the current “retransmission consent” framework for station carriage should continue, which could also cause changes in the distribution landscape. Finally, there are several active court proceedings involving the scope of rights to record network programming and the functionalities that allow viewers to skip advertising while viewing such recorded content. IMOTSC cannot predict the outcome of any of these inquiries or proceedings or how their outcome would impact IMOTSC’s ability to have IMOTSC’s content carried on multichannel programming distribution systems and the value of IMOTSC’s advertising inventory.

Cable, satellite and telco television programming signals have been stolen or could be stolen in the future, which reduces IMOTSC’s potential revenue from subscriber fees and advertising.

The delivery of subscription programming requires the use of conditional access technology to limit access to programming to only those who subscribe to programming and are authorized to view it. Conditional access

 

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systems use, among other things, encryption technology to protect the transmitted signal from unauthorized access. It is illegal to create, sell or otherwise distribute software or devices to circumvent conditional access technologies. However, theft of programming has been widely reported, and the access or “smart” cards used in service providers’ conditional access systems have been compromised and could be further compromised in the future. When conditional access systems are compromised, IMOTSC does not receive the potential subscriber fee revenues from the service providers. Further, measures that could be taken by service providers to limit such theft are not under IMOTSC’s control. Piracy of IMOTSC’s copyrighted materials could reduce its revenue from subscriber fees and advertising and negatively affect its business and operating results.

Risks Related to IMOTSC’s Publishing Segment

Advertising represents the largest source of IMOTSC’s Publishing revenue.

Advertising revenue is susceptible to fluctuations in economic cycles. Demand for advertising is highly dependent upon the strength of the U.S. economy. During an economic downturn, demand for advertising may decrease. The growth in alternative forms of media, for example the Internet, has increased the competition for advertising dollars, which could in turn reduce expenditures for magazine advertising or suppress advertising rates. A further reduction in demand for advertising could result from a decline in the circulation/rate base of IMOTSC’s magazines, a decline in popularity of IMOTSC’s editorial content or perceptions about IMOTSC’s brands and a change in the demographic makeup of the populations to which IMOTSC’s magazines are targeted.

Circulation revenues represent a significant portion of IMOTSC’s Publishing revenues.

Magazine circulation is a significant source of IMOTSC’s Publishing revenue. Preserving circulation is critical for maintaining advertising sales. Magazines face increasing competition from alternative forms of media and entertainment. As a result, magazine circulation through subscriptions and newsstand sales could decline. As publishers compete for subscribers, subscription prices could decrease and marketing expenditures may increase. Any of these events could adversely affect IMOTSC’s profitability.

IMOTSC may be adversely affected by a continued weakening of newsstand sales.

The magazine industry has seen a weakening of newsstand sales during the past few years. A continuation of this decline would adversely affect IMOTSC’s financial condition and results of operations by further reducing its circulation and advertising revenue and causing IMOTSC to either incur higher circulation expenses to maintain its rate bases, or to reduce its rate bases, which would in turn negatively impact IMOTSC’s revenue.

Increases in postage and paper and other operating costs could negatively affect IMOTSC’s results.

Paper and postage represent significant components of IMOTSC’s total cost to produce, distribute, and market its products. IMOTSC uses the United States Postal Service (USPS) for distribution of substantially all of its magazines and many of its marketing materials. Although IMOTSC works with others in the industry and through trade organizations to encourage the USPS to implement efficiencies that will limit rate increases, IMOTSC cannot predict the magnitude of future price changes in postage.

Paper is the principal raw material used in IMOTSC’s business for printed products and promotional materials. Paper is a commodity and its price is subject to significant volatility. The price of paper may fluctuate significantly in the future, and changes in the market supply of or demand for paper could affect delivery times and prices.

IMOTSC’s single copy revenues consist of copies sold primarily to wholesalers and the loss of any wholesale distribution agreement could materially adversely affect IMOTSC’s business and results of operations.

As of September 2012, single copy revenues (from sales made outside of a long-term subscription) consisted of copies distributed to retailers primarily by three major wholesalers. IMOTSC has multi-year service

 

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arrangements with these wholesalers, which provide incentives to maintain certain levels of service. When these arrangements expire, IMOTSC may not be able to renew them with the wholesalers on favorable terms, extend the terms of these arrangements or extend their relationship with IMOTSC at all. IMOTSC’s operating results could be materially affected by disruption of the distribution of its magazines through the wholesalers.

IMOTSC’s business involves risks of liability claims for publication and content, which could result in significant liability.

As a publisher and a distributor of print publications and content, IMOTSC may face potential liability for defamation, negligence, copyright, patent or trademark infringement, use or failure to protect personal information about IMOTSC’s users collected through subscriptions and other claims based on the nature and content of the materials published or distributed.

IMOTSC’s insurance may not cover these types of claims, and it may or may not apply to a particular claim or be adequate to reimburse IMOTSC for all liability that may be imposed. Any liability IMOTSC incurs that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on IMOTSC’s business, operating results and financial condition.

The publishing market in which IMOTSC operates is highly competitive, and IMOTSC may not be able to compete effectively, particularly against competitors with greater financial resources, brand recognition, marketplace presence and relationships with service providers.

As a producer of programming, IMOTSC competes with other producers of outdoor television including Careco TV, Realtree Productions and Warm Springs Productions. IMOTSC also competes with other general television producers including television network studios and production groups, as well as independent producers to win contracts to produce programming.

With respect to IMOTSC’s digital media business, capturing advertising sales for digital properties is highly competitive. Competition for digital advertising is based on the number of unique users each site attracts per month, the demographic profile of that audience and the number of pages they view across the digital network of websites. The websites and digital applications compete with other websites and digital media and other forms of media, including, magazines, newspapers, radio and television.

The publishing industry is highly competitive. IMOTSC competes for readers and advertisers in the general publishing marketplace, which is fragmented. IMOTSC’s competitors include several much larger international companies that operate in many markets and have broad product offerings in publishing. IMOTSC also competes for advertising and circulation revenue principally with publishers of other hunting, shooting and fishing magazines and Internet websites with similar editorial content to IMOTSC’s magazines. IMOTSC’s publications generally compete on the basis of editorial quality, quantity and quality of circulation, the strength of complementary products serving the same niche and advertising rates. IMOTSC’s major publishing business competitors include American Rifleman, Field & Stream, North American Fisherman, North American Hunter, Outdoor Life, Saltwater Sportsman and others.

Risks Related to IMOTSC’s Business Generally

If IMOTSC does not successfully respond to rapid changes in technology, services and standards, it may not remain competitive.

Technology in the video, telecommunications, radio, and data services used in the entertainment and Internet industries is changing rapidly. Advances in technologies or alternative methods of product delivery or storage or certain changes in consumer behavior driven by these or other technologies and methods of delivery and storage could have a negative effect on IMOTSC’s businesses. Examples of such advances in technologies include video-on-demand, satellite radio, video games, DVD players and other personal video and audio systems

 

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(e.g., iPods), electronic book and media devices, smart phones and wireless devices, text messaging and downloading from the Internet. For example, devices that allow users to view or listen to television or radio programs on a time-delayed basis and technologies which enable users to fast-forward or skip advertisements, such as DVRs (e.g., TiVo) and portable digital devices, may cause changes in consumer behavior that could affect the attractiveness of IMOTSC’s offerings to advertisers, and could, therefore, adversely affect its revenues. In addition, further increases in the use of portable digital devices which allow users to view or listen to content of their own choosing, in their own time, while avoiding traditional commercial advertisements, could adversely affect IMOTSC’s advertising revenues.

New product launches or acquired products may reduce IMOTSC’s earnings or generate losses.

IMOTSC’s future success will depend in part on its ability to continue offering new products and services that successfully gain market acceptance by addressing the needs of its current and future customers. IMOTSC’s efforts to introduce new or integrate acquired products may not be successful or profitable. The process of internally researching and developing, launching, gaining acceptance and establishing profitability for a new product or service, or assimilating and marketing an acquired product, is both risky and costly. New products generally incur initial operating losses. Costs related to the development of new products and services are generally expensed as incurred and, accordingly, IMOTSC’s profitability from year to year may be adversely affected by the number and timing of new product launches.

The loss of key personnel could disrupt and adversely affect IMOTSC’s business.

IMOTSC’s business depends upon the continued efforts, abilities and expertise of its corporate and divisional executive teams. There can be no assurance that these individuals will remain with IMOTSC.

IMOTSC depends, to a large extent, on the abilities and participation of its current executive and management teams. IMOTSC cannot provide assurance that the services of the members of these teams will continue to be available to it, or that IMOTSC will be able to find a suitable replacement for them. The loss of the services of members of these teams, for any reason, may have a material adverse effect on IMOTSC’s business and prospects.

Protection of electronically stored data is costly and if IMOTSC’s data is compromised in spite of this protection, IMOTSC may incur additional costs, lost opportunities and damage to its reputation.

IMOTSC maintains information in digital form necessary to conduct its business, including confidential and proprietary information regarding its advertisers, customers, distributors, employees and viewers as well as personal information. Data maintained in digital form is subject to the risk of intrusion, tampering and theft. IMOTSC develops and maintains systems to prevent this from occurring, but the development and maintenance of these systems is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Moreover, despite IMOTSC’s efforts, the possibility of intrusion, tampering and theft cannot be eliminated entirely, and risks associated with each of these remain. In addition, IMOTSC provides confidential, proprietary and personal information to third parties when it is necessary to pursue business objectives. While IMOTSC obtains assurances that these third parties will protect this information and, where appropriate, monitors the protections employed by these third parties, there is a risk the confidentiality of data held by third parties may be compromised. If IMOTSC’s data systems are compromised, IMOTSC’s ability to conduct its business may be impaired, it may lose profitable opportunities or the value of those opportunities may be diminished and, as described above, IMOTSC may lose revenue as a result of unlicensed use of its intellectual property. Further, a penetration of IMOTSC’s network security or other misappropriation or misuse of personal consumer or employee information could subject IMOTSC to business, litigation and reputation risk, which could have a negative effect on its business, financial condition and results of operations.

 

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Changes in governmental regulation, interpretation or legislative reform could increase IMOTSC’s costs of doing business and adversely affect its profitability.

Laws and regulations, including in the areas of advertising, consumer affairs, data protection, finance, marketing, privacy, publishing and taxation requirements, are subject to change and differing interpretations. Changes in the political climate or in existing laws or regulations, or their interpretations, or the enactment of new laws or the issuance of new regulations or changes in enforcement priorities or activity could adversely affect IMOTSC’s business by, among other things:

 

   

increasing IMOTSC’s administrative, compliance, and other costs;

 

   

forcing IMOTSC to undergo a corporate restructuring;

 

   

limiting IMOTSC’s ability to engage in inter-company transactions with its affiliates and subsidiaries;

 

   

increasing IMOTSC’s tax obligations, including unfavorable outcomes from audits performed by various tax authorities;

 

   

affecting IMOTSC’s ability to continue to serve its customers and to attract new customers;

 

   

affecting cash management practices and repatriation efforts;

 

   

forcing IMOTSC to alter or restructure its relationships with vendors and contractors;

 

   

increasing compliance efforts or costs;

 

   

limiting IMOTSC’s use of or access to personal information;

 

   

restricting IMOTSC’s ability to market its products; and

 

   

requiring IMOTSC to implement additional or different programs and systems.

Compliance with regulations is costly and time-consuming, and IMOTSC may encounter difficulties, delays or significant expenses in connection with its compliance, and IMOTSC may be exposed to significant penalties, liabilities, reputational harm and loss of business in the event that it fails to comply. While it is not possible to predict when or whether fundamental policy or interpretive changes would occur, these or other changes could fundamentally change the dynamics of IMOTSC’s industry or the costs associated with its operations. Changes in public policy or enforcement priorities could materially affect IMOTSC’s profitability, its ability to retain or grow business, or in the event of extreme circumstances, its financial condition. There can be no assurance that legislative or regulatory change or interpretive differences will not have a material adverse effect on IMOTSC’s business.

If IMOTSC’s goodwill or intangibles become impaired, IMOTSC will be required to recognize a non-cash charge which could have a significant effect on its reported net earnings.

A significant portion of IMOTSC’s assets consists of goodwill and intangibles. IMOTSC tests goodwill for impairment on October 31 of each year, and on an interim date if factors or indicators become apparent that would require an interim test. A significant downward revision in the present value of estimated future cash flows for a reporting unit could result in an impairment of goodwill and a noncash charge would be required. Such a charge could have a significant effect on IMOTSC’s reported net earnings.

IMOTSC may face intellectual property infringement claims that could be time-consuming, costly to defend and result in IMOTSC’s loss of significant rights.

Other parties may assert intellectual property infringement claims against us, and IMOTSC’s products may infringe the intellectual property rights of third parties. From time to time, IMOTSC receives letters alleging infringement of intellectual property rights of others. Intellectual property litigation can be expensive and time-consuming and could divert management’s attention from IMOTSC’s business. If there is a successful claim of

 

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infringement against IMOTSC, IMOTSC may be required to pay substantial damages to the party claiming infringement or enter into royalty or license agreements that may not be available on acceptable or desirable terms, if at all. IMOTSC’s failure to license the proprietary rights on a timely basis would harm its business.

Disruption or failures of IMOTSC’s information technology systems could have a material adverse effect on its business.

IMOTSC’s information technology systems are susceptible to security breaches, operational data loss, general disruptions in functionality, and may not be compatible with new technology. IMOTSC depends on its information technology systems for the effectiveness of its operations and to interface with its customers, as well as to maintain financial records and accuracy. Disruption or failures of IMOTSC’s information technology systems could impair its ability to effectively and timely provide its services and products and maintain its financial records, which could damage its reputation and have a material adverse effect on its business.

IMOTSC may be unable to realize the benefits of its net operating loss carryforwards (“NOLs”), and, as a result, lose its future tax savings, which could have a negative impact on its liquidity and financial position.

NOLs may be utilized to offset federal and state taxable income in future years and reduce income taxes otherwise payable on such taxable income, subject to certain adjustments. The Internal Revenue Service (“IRS”) or state taxing authorities could challenge the amount of IMOTSC’s NOLs, which could result in increases in IMOH’s future income tax liabilities. IMOTSC’s NOLs could provide a benefit to it, if fully utilized, of significant future tax savings. However, if IMOTSC does not have sufficient taxable income in future years to use the tax benefits before they expire, IMOTSC will lose the benefit of these NOLs permanently. IMOTSC’s inability to utilize available NOLs could require IMOTSC to pay substantial additional federal and state taxes and interest, which may adversely affect its liquidity and financial position.

Future legislation may result in IMOTSC’s inability to realize the tax benefits of its NOLs.

It is possible that legislation or regulations will be adopted in the future that would limit IMOTSC’s ability to use the tax benefits associated with its aggregate federal NOLs.

IMOTSC’s use of NOL carryforwards could be limited by ownership changes.

Section 382 of the Code and similar provisions under state law impose limitations on the utilization of NOLs by a corporation following various types of ownership changes, generally those resulting in more than a 50 percentage point change in ownership of the corporation by certain shareholders within a three year period. The rules generally operate by focusing on changes in ownership among shareholders considered by the rules as owning directly or indirectly 5% or more of the stock of the corporation (“5% shareholders”). An owner shift for purposes of these rules includes an exchange under Section 351 of the Code that affects the percentage of stock owned by a 5% shareholder. The mergers will result in an owner shift of the corporate subsidiaries of IMOTSC, but because the InterMedia Unit Holders will receive more than 50% of the common stock of IMOH immediately after the mergers, the mergers will not result in an ownership change of IMOTSC’s corporate subsidiaries within the meaning of Section 382 of the Code. However, IMOTSC cannot be certain that future owner shifts of IMOH, taken together with those occurring as a result of the mergers, will not result in an ownership change in IMOTSC’s corporate subsidiaries within the applicable three year period for purposes of Section 382 of the Code or similar provisions under state law. If IMOTSC or its corporate subsidiaries undergo an ownership change for these purposes, IMOH’s ability to use IMOTSC’s NOLs existing at the time of the ownership change against post-change taxable income would be limited or denied in full, in which case IMOH may be required to pay substantial additional federal and state taxes and interest. Such tax and interest liabilities may adversely affect IMOH’s liquidity and financial position.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

IMOH, Outdoor Channel and IMOTSC have made forward-looking statements in this document, and in documents that are incorporated by reference in this document, that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of each company’s management. Generally, forward-looking statements include information concerning possible or assumed future actions, events or results of operations of IMOH, Outdoor Channel and IMOTSC. Forward-looking statements specifically include, without limitation, the information in this document regarding: projections; efficiencies/cost avoidance; cost savings; income and margins; earnings per share; growth; economies of scale; combined operations; the economy; future economic performance; conditions to, and the timetable for, completing the transaction; future acquisitions and dispositions; litigation; potential and contingent liabilities; management’s plans; business portfolios; taxes; and merger and integration-related expenses.

Forward-looking statements may be preceded by, followed by or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. Outdoor Channel claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and IMOH and IMOTSC claim the protection of Rule 175 of the Securities Act of 1933, and Rule 3b-6 of the Securities Exchange Act of 1934, for all forward-looking statements.

Forward-looking statements are not guarantees of performance. You should understand that the following important factors, in addition to those discussed in “Risk Factors” above and elsewhere in this document, and in the documents which are incorporated by reference in this document, could affect the future results of Outdoor Channel and IMOTSC, and of IMOH after the consummation of the mergers, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements:

 

   

failure of Outdoor Channel stockholders to adopt the merger agreement;

 

   

the risk that required consents will not be obtained and the merger is be terminated;

 

   

the risk that the businesses will not be integrated successfully;

 

   

the risk that synergies will not be realized;

 

   

the risk that IMOH following this transaction will not realize on its financing strategy;

 

   

litigation in respect of either company or the mergers;

 

   

disruption from the mergers making it more difficult to maintain certain strategic relationships;

 

   

the risk that following the mergers service providers could refrain from carrying Outdoor Channel or The Sportsman Channel or that the viewership of these channels could decline;

 

   

the risk that the businesses may fail to secure sufficient or additional advertising revenue; and

 

   

risks related to increased competition and changing consumer technologies in the industries in which the combined business will operate.

Outdoor Channel, IMOTSC and IMOH also caution the reader that undue reliance should not be placed on any forward-looking statements, which speak only as of the date of this document. None of Outdoor Channel, IMOTSC or IMOH undertakes any duty or responsibility to update any of these forward-looking statements to reflect events or circumstances after the date of this document or to reflect actual outcomes.

Additional factors that may affect future results and conditions are described in Outdoor Channel’s filings with the SEC, which are available at the SEC’s website at www.sec.gov or at Outdoor Channel’s website at www.outdoorchannel.com.

 

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THE COMPANIES

Information About InterMedia Outdoor Holdings, Inc.

InterMedia Outdoor Holdings, Inc.

c/o InterMedia Partners, L.P.

405 Lexington Avenue, 48th Floor

New York, NY 10174

Telephone: (212) 503-2862

IMOH is a Delaware corporation and a newly formed holding company. IMOH was formed solely to effect the mergers and has not conducted any business, other than in connection with the merger agreement and related ancillary agreements to which IMOH is a party. Pursuant to the merger agreement, Outdoor Channel and IMOTSC will survive as wholly owned subsidiaries of IMOH. Upon completion of the merger, Outdoor Channel will be delisted. IMOH intends to list its common stock for trading on NASDAQ and it is anticipated that its symbol will be “OUTD.”

IMOH has obtained commitments for $150 million in financing from CIT to be provided through a combination of a new $140 million term loan and a new $10 million revolving credit facility. Proceeds from the financing will be used to facilitate the mergers and specifically to: (i) pay cash merger consideration, (ii) refinance certain existing indebtedness of IMOTSC and its subsidiaries, (iii) fund ongoing working capital requirements, (iv) pay related transaction fees and expenses and (v) for general corporate purposes.

Consummation of the mergers, which is currently anticipated to occur by the end of the first quarter of Outdoor Channel’s fiscal year 2013, is subject to certain conditions, including, among others, closing of the new financing, adoption of the merger agreement by Outdoor Channel’s stockholders, receipt of required regulatory approvals, and other customary closing conditions.

Set forth below is an organizational chart indicating the proposed corporate structure of the combined companies under IMOH.

Anticipated Post-Closing Structure

 

LOGO

 

 

(1) Guarantor under new term loan facility and new revolving credit facility.
(2) Direct and indirect domestic subsidiaries, together with foreign subsidiaries to the extent the guaranty does not cause tax liability, are guarantors under the new term loan facility and new revolving credit facility.

 

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Immediately following the mergers, IMOH’s management team will consist of Peter Kern as Chairman of the Board, Thomas E. Hornish as the President and Chief Executive Officer, Thomas D. Allen as the Chief Financial Officer and Chief Operating Officer, Gavin Harvey as President—Television Networks, Jeffrey Paro as President—Publishing, Integrated Media and Branded Content and Catherine C. Lee as Executive Vice President, General Counsel and Corporate Secretary. Mr. Hornish has served as Outdoor Channel’s President and Chief Executive Officer and as a member of its Board of Directors since February 2012 and previously served as Outdoor Channel’s General Counsel from December 2004 until January 2012 and Chief Operating Officer from 2007 until January 2012. Mr. Allen has served as Outdoor Channel’s Executive Vice President and Chief Financial Officer since July 2010 and as its Chief Operating Officer since February 2012. Mr. Harvey has served as The Sportsman Channel, Inc.’s Chief Executive Officer since July 2010. Mr. Paro has served as InterMedia Outdoors, Inc.’s Chief Executive Officer since January 2007. Ms. Lee has served as Outdoor Channel’s Executive Vice President, General Counsel and Corporate Secretary since February 2012.

Information About Outdoor Channel Holdings, Inc.

Outdoor Channel Holdings, Inc.

43455 Business Park Drive

Temecula, CA 92590

Telephone: (951) 699-6991

Outdoor Channel Holdings, Inc., a Delaware corporation, is an entertainment and media company with operations in the following three segments:

THE OUTDOOR CHANNEL: The Outdoor Channel, Inc., segment is comprised of The Outdoor Channel, Inc., a Nevada corporation and a wholly owned indirect subsidiary of Outdoor Channel. It operates Outdoor Channel®, a national television network devoted to traditional outdoor related lifestyle programming and outdoorchannel.com.

PRODUCTION SERVICES: Outdoor Channel’s Production Services segment is comprised of Winnercomm, Inc., a Delaware corporation. Winnercomm’s businesses relate principally to the production, development and marketing of sports and outdoor related programming and production activities and to website development, management and hosting services.

AERIAL CAMERAS: Outdoor Channel’s Aerial Cameras segment is comprised of CableCam, LLC and SkyCam, LLC, both Delaware limited liability companies. The Aerial Cameras business relates principally to the providing of suspended aerial camera services to media networks for inclusion in those networks’ production of sporting events.

For the year ended December 31, 2011, contributions to Outdoor Channel’s consolidated revenues from its segments were as follows: TOC 79%, Production Services 9% and Aerial Cameras 12%.

Outdoor Channel was originally incorporated in Alaska in 1984 and operated a gold prospecting business for some time. In 1993 it formed the Outdoor Channel, Inc. (“TOC”), initially as a wholly owned subsidiary, to begin airing its programming. In order to raise capital, TOC sold equity which resulted in it becoming only a majority owned subsidiary. On September 8, 2004, Outdoor Channel acquired all of the outstanding shares of The Outdoor Channel, Inc. that it did not previously own. Effective September 15, 2004, Outdoor Channel reincorporated from Alaska into Delaware. In 2007, Outdoor Channel sold its gold prospecting business. Outdoor Channel Holdings, Inc. wholly owns OC Corporation, a California Corporation, which in turn wholly owns TOC. Outdoor Channel Holdings is also the sole member of 43455 BPD, LLC, the entity that owns the building that houses Outdoor Channel’s broadcast facility. TOC operates Outdoor Channel®, a national television network devoted to traditional outdoor activities such as hunting, fishing and shooting sports, as well as off-road motor sports and other outdoor related lifestyle programming.

 

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On January 12, 2009, Outdoor Channel entered into and completed an asset purchase agreement with Winnercomm, Inc., an Oklahoma corporation and wholly owned subsidiary of Winnercomm Holdings, Inc., a Delaware corporation, Cablecam, LLC, an Oklahoma limited liability company, and Skycam, LLC, an Oklahoma limited liability company, pursuant to which Outdoor Channel purchased certain assets and assumed certain liabilities of the sellers and formed Winnercomm, CableCam and SkyCam. Outdoor Channel Holdings wholly owns Winnercomm which in turn wholly owns CableCam and SkyCam.

Outdoor Channel may “incorporate by reference” certain information into this proxy statement/prospectus. This means that Outdoor Channel can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this document, except for any information superseded by information in this document. See “Where You Can Find More Information” beginning on page 206 for more information on the information incorporated by reference in this document.

IMOTSC has supplied all information contained in this proxy statement/prospectus relating to IMOTSC, IMOH has supplied all information contained in this proxy statement/prospectus relating to IMOH and Outdoor Channel has supplied all information contained or incorporated by reference in this proxy statement/prospectus relating to Outdoor Channel.

This proxy statement/prospectus incorporates important business and financial information about Outdoor Channel from documents that are not included in or delivered with this document. You may have already been sent some of the documents incorporated by reference, but you can obtain any of them through the SEC’s website at http://www.sec.gov or from Outdoor Channel, excluding all exhibits (unless an exhibit has been specifically incorporated herein by reference), by requesting them in writing or by telephone from Outdoor Channel at the following addresses or telephone numbers:

Georgeson Inc.

199 Water Street, 26th Floor

New York, New York 10038

(888) 293-6812 (toll free)

(212) 440-9800 (banks and brokers)

or

Outdoor Channel Holdings, Inc.

43455 Business Park Drive

Temecula, CA 92590

Telephone: (951) 699-6991

You can also get more information by visiting Outdoor Channel’s website at www.outdoorchannel.com. Website materials are not part of this proxy statement/prospectus.

You will not be charged for any of these documents that you request. If you would like to request documents from Outdoor Channel, please do so by February 20, 2013 to receive them before the special stockholders’ meeting. If you request any incorporated documents, Outdoor Channel will strive to mail them to you by first-class mail, or other equally prompt means, within one business day of receipt of your request.

See “Where You Can Find More Information” on page 206.

Information About InterMedia Outdoors Holdings, LLC

InterMedia Outdoors Holdings, LLC

c/o InterMedia Partners, L.P.

405 Lexington Avenue, 48th Floor

New York, NY 10174

Telephone: (212) 503-2862

 

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OVERVIEW OF INTERMEDIA OUTDOORS HOLDINGS, LLC’S BUSINESS

InterMedia Outdoors Holdings, LLC, a Delaware limited liability company, is a multimedia company that serves the information and entertainment needs of outdoors enthusiasts in the United States. IMOTSC’s content reaches its targeted audience across a variety of complementary television, digital, print, radio, social and event properties. IMOTSC operates in the following two segments:

 

   

NETWORK AND DIGITAL MEDIA: IMOTSC’s Network and Digital Media segment is comprised of a national television network, a television production business and several digital media properties.

 

   

The Sportsman Channel® is a national television network which features hunting, shooting and fishing themed programming for the American sportsman.

 

   

The television production business produces hunting, shooting and fishing themed programming for The Sportsman Channel, as well as other outdoor related programming for third parties on a “work for hire” basis.

 

   

The digital media business manages a network of 18 individually branded websites dedicated to hunting, shooting and fishing content.

 

   

PUBLISHING: IMOTSC’s Publishing segment is comprised of a magazine publishing business that produces 15 market-leading enthusiast titles in the hunting, shooting and fishing categories, a consumer events business and a merchandise business.

For the nine months ended September 30, 2012, contributions to IMOTSC’s consolidated revenues from the Network and Digital Media segment and Publishing segment were 36% and 64%, respectively.

NETWORK AND DIGITAL MEDIA SEGMENT (31%, 23% and 20% of IMOTSC’s consolidated revenues in 2011, 2010 and 2009, respectively).

TELEVISION NETWORK

The Sportsman Channel® is a national television network which features hunting, shooting and fishing themed programming. The Sportsman Channel’s target audience is comprised of the approximately 80 million sportsmen and outdoor enthusiasts throughout the United States, as measured by the aggregation of studies from The Outdoor Foundation and the National Shooting Sports Foundation. As of September 30, 2012, The Sportsman Channel had agreements with the major cable, satellite and telecommunications companies offering video service in the United States, including AT&T U-verse, Cablevision, Charter, Comcast, Cox, DIRECTV, DISH Network, Time Warner and Verizon FIOS. According to estimates by Nielsen, The Sportsman Channel was available to approximately 31.4 million households in January 2013.

The Sportsman Channel Sources of Revenue

The two predominant sources of revenue for The Sportsman Channel are advertising revenue and subscriber fee revenue.

Advertising Revenue. Advertising revenue is generated from the sale of advertising time on The Sportsman Channel television network, including advertisements aired during a program and from fees paid by third-party producers that purchase advertising time in connection with the airing of their programs on The Sportsman Channel. The price The Sportsman Channel is able to charge for advertising time is dependent on market conditions, perceived desirability of its viewers and, for national advertisers, the number of people viewing the channel’s programming (ratings) as estimated by Nielsen.

The Sportsman Channel also generates advertising revenue from infomercials, in which the program is itself an advertisement for a third party product or service, that typically run for 30 minutes during the overnight hours.

 

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The Sportsman Channel’s advertising revenue tends to reflect seasonal patterns of its endemic advertisers’ advertising demand, which is generally greatest during the third and fourth quarter of each year, driven primarily by the hunting season. An “endemic advertiser” refers to an advertiser whose products or services directly address our audience, such as a boating manufacturer advertising on a fishing program.

Subscriber Fee Revenue. Subscriber revenue is generated from cable, satellite and telecommunications service providers who pay monthly subscriber fees to The Sportsman Channel for the right to broadcast its channel. The Sportsman Channel’s service provider contracts are typically long term, and may contain an annual increase in the monthly subscriber fees The Sportsman Channel charges. The Sportsman Channel’s contracts also may provide for certain volume discounts for increased distribution by any one service provider.

The Sportsman Channel Programming

The Sportsman Channel acquires its programming in one of four ways: First, it enters into arrangements with third-party producers, wherein a third-party production company, retailer or manufacturer, produces a show at its expense and buys a predetermined number of minutes of advertising within each airing of the show on The Sportsman Channel. Second, The Sportsman Channel acquires shows from a third-party production company on a “work for hire” basis whereby such programming is produced to The Sportsman Channel’s specifications. Third, IMOTSC produces programs in-house. Fourth, The Sportsman Channel licenses a show from a producer for a fee or for a predetermined amount of advertising inventory provided to such licensor on a barter basis. Ownership of such licensed shows is retained by the licensor. The majority of The Sportsman Channel’s programming supplied under its third-party producer contracts allows for exclusive U.S. rights during the term of the licensing agreement.

Sportsman Channel Competition

The Sportsman Channel competes with other television channels for the distribution of its programming, development and acquisition of content, audience viewership and advertising sales. The Sportsman Channel competes with other television channels to be included in the offerings of each video service provider and for placement in the packaged offerings having the most subscribers. The Sportsman Channel’s ability to secure distribution is dependent upon the production, acquisition and packaging of programming, audience viewership, the marketing and advertising support and incentives provided to distributors, and the prices charged for carriage. The Sportsman Channel’s contractual agreements with distributors are renewed or renegotiated from time to time in the ordinary course of business.

The Sportsman Channel competes for distribution and for viewership with other channels offering similar programming in the areas of hunting, shooting, fishing and outdoors topics. Competitors include NBC Sports, Outdoor Channel, Pursuit Channel, Military Channel, and regional sports networks. The Sportsman Channel also competes for distribution and audience viewers with other television networks targeted at males between the ages of 18 and 54. The Sportsman Channel believes such competitors include A&E, ESPN, ESPN2, History Channel, National Geographic Channel, Spike TV and others.

With respect to the sale of advertising, The Sportsman Channel also competes for advertising revenue with general-interest television and other forms of media, including magazines, newspapers, satellite and broadcast radio, websites and other digital media.

Certain technological advances, including the increased deployment of fiber optic cable, are expected to allow cable and telecommunication video service providers to continue to expand both their channel and broadband distribution capacities and to increase transmission speeds. In addition, the ability to deliver content via new methods and devices is expected to increase substantially. The impact of such added capacities is hard to predict, but the development of new channels of content distribution could lead to increased competition for viewers by facilitating the emergence of additional channels and mobile and internet platforms through which viewers could view programming that is similar to that offered by The Sportsman Channel.

 

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TELEVISION PRODUCTION

The television production business produces original branded hunting, shooting and fishing themed programming including category-leading shows North American Whitetail, Guns & Ammo TV and In-Fisherman TV. Such programming consists of how-to, where-to, species guides, gear, and news-related content. IMOTSC has a content library in excess of 16,000 hours of video content, which may be monetized by selling digitized video clips on websites and tablet computers as part of IMOTSC’s digital media strategy. The business also produces shows on a “work for hire” basis for clients including Beretta, L.L. Bean and W.L. Gore (Gore-Tex). Approximately 220 episodes of programming are produced annually in High Definition and a large percentage of the branded and “work for hire” shows air on The Sportsman Channel.

Television Production Business Revenues

The television production business’s revenues are derived from revenue splits from the sale of sponsorship and advertising and from fees for production services. Revenue at the production business is primarily project-based and is typically collected once projects have been completed and delivered to customers.

Television Production Business Competition

As a producer of programming, IMOTSC competes with other producers of outdoor television including Careco TV, Realtree Productions and Warm Springs Productions. IMOTSC also competes with other general television producers including television network studios and production groups, as well as independent producers to win contracts to produce programming.

DIGITAL MEDIA

The digital media business consists of a network of 18 outdoor enthusiast websites, 10 widely distributed e-Newsletters, and two digital applications.

The digital media business manages a network of 18 individually branded websites dedicated to hunting, shooting and fishing content which receive 2.1 million unique monthly visitors and more than 13 million monthly page views. This network is the largest group of websites dedicated to the hunting, shooting and fishing category. The websites include The Sportsman Channel’s complementary site, thesportsmanchannel.com, shooting websites such as gunsandammo.com, and fishing sites such as bassfan.com which collectively across the network have in excess of 9,000 articles and 400 video segments produced in-house.

The digital media business operates 10 e-Newsletters which provide informative content on hunting, shooting and fishing topics. IMOTSC sends out weekly e-newsletters to over 800,000 recipients from the company’s database.

The digital media business has launched two digital applications for the iPhone, iPad, Android and the web. Guns & Ammo Point of Impact, launched in November, 2010, is a shooting experience game that has generated approximately 2.9 million downloads and Fly Fisherman FlyBench, launched in September 2010, which is an encyclopedic reference application for fly tying.

Digital Media Business Revenues

The digital media business generates advertising revenue from its websites, e-Newsletters and digital applications. The business sells advertising both on a stand-alone basis and as part of advertising packages with The Sportsman Channel and the publishing business.

Digital Media Business Competition

Capturing advertising sales for digital properties is highly competitive. Competition for digital advertising is based on the number of unique users each site attracts per month, the demographic profile of that audience and

 

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the number of pages and videos they view across the digital network of websites. The websites and digital applications compete with other websites and digital media and other forms of media, including, magazines, newspapers, satellite and broadcast radio and television.

PUBLISHING SEGMENT (69%, 77% and 80% of IMOTSC’s consolidated revenues in 2011, 2010 and 2009, respectively).

IMOTSC is a leading publisher of 15 enthusiast magazines in the hunting, shooting and fishing categories including titles such as Guns & Ammo, Petersen’s Hunting and In-Fisherman. The current titles collectively produce in excess of 16,000 editorial pages per year. They have a combined print circulation of approximately 2.3 million and total readership in excess of 24 million people per month, based on data compiled by the Audit Bureau of Circulations and GfK Mediamark Research & Intelligence, respectively.

In 2012, IMOTSC’s magazines had the greatest share of endemic advertising pages in most of their respective markets based on data compiled by Magazine Radar, and its magazines are ranked number one or number two in each of their respective niches in either total advertising pages or circulation, according to both Magazine Radar and the Audit Bureau of Circulations.

IMOTSC’s magazine business is organized into three groups.

Hunting Group. The Hunting Group includes the following brands:

 

   

Gun Dog

 

   

Hunting

 

   

Whitetail

 

   

Wildfowl

 

   

Bowhunter

 

   

Bowhunting

 

   

Game & Fish

Shooting Group. The Shooting Group includes the following brands:

 

   

Guns & Ammo

 

   

Guns & Ammo: Handguns

 

   

Rifle Shooter

 

   

Shooting

 

   

Shotgun News

Fishing Group. The Fishing Group includes the following brands:

 

   

In-Fisherman

 

   

Fly Fisherman

 

   

Florida Sportsman

Special Interest Publications

In addition to its periodic magazines, IMOTSC publishes over 30 special interest magazine editions annually. These special interest publications provide specialized information around a particular topic in one of IMOTSC’s core content areas, allowing IMOTSC to leverage its distribution network and content to generate additional revenue. IMOTSC’s special interest publications are sold at newsstands and include advertising.

 

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Digital Magazine Publishing

In fiscal 2012, IMOTSC entered into agreements with several major distributors of digital magazines, including Amazon, Apple and Barnes & Noble, which allow IMOTSC to offer its customers digital versions of each of its magazines. Revenue from digital reproductions of magazines is reported in the Publishing Segment.

Publishing Business Sources of Revenue

IMOTSC’s principal sources of revenue in its publishing business are from advertising and circulation.

Advertising. Advertising rates and rate structures vary among IMOTSC’s publications and are based on, among other things, the circulation or audience of the particular property, the readership demographics, the frequency and the size and placement of the advertisement in the publication. Publishing advertising revenue is influenced by a number of external factors, including the amount and allocation of marketing expenditures by its advertising clients, the extent to which its customers elect to advertise using print media, and, to some extent, national economic conditions.

Circulation. IMOTSC derives circulation revenue from selling subscriptions (digital and print) and by selling its publications on newsstands. Subscription revenue is largely derived via marketing efforts including: direct mail, insert cards, branded website email blasts, gift subscriptions and renewals. Subscription revenue is also derived by using third party sellers, particularly with digital versions. These sellers include Amazon, Apple, and Barnes & Noble. IMOTSC also sells its titles on the newsstand across a wide range of retailers: from big box stores such as Wal-Mart to specialty stores like Cabela’s, to small businesses such as local bait & tackle shops. Retail newsstand revenue is divided between IMOTSC, a national distributor, various wholesalers, and the retailer.

Magazine Production and Distribution

IMOTSC purchases paper through an independent paper brokerage firm, which in turn negotiates short term arrangements directly with the mills. The price of paper is driven by overall market conditions and is therefore difficult to predict. Changes in paper prices could significantly affect IMOTSC’s magazine business. IMOTSC believes adequate supplies of paper are available to fulfill its planned, as well as future, publishing requirements.

IMOTSC outsources the printing operations for each of its 15 magazines to a national printer. The company periodically reviews this business relationship and manages a comprehensive request for proposal process prior to the end of each respective term.

Subscription magazine copies are distributed primarily through the United States Postal Service. The Governors of the United States Postal Service (USPS) review prices for mailing services annually and adjust postage rates periodically. IMOTSC continually seeks the most economical and effective methods for mail delivery, including cost-saving strategies offered within the postal rate structure. IMOTSC cannot, however, predict future changes in the USPS and postal rates or the impact they will have on its business.

Newsstand magazine copies are transported from third party printers to IMOTSC’s wholesalers who distribute them to retailers for sale to consumers. IMOTSC sells its publications to wholesalers with the full right of return for unsold copies and its wholesalers distribute to retailers with the same right of return. IMOTSC also utilizes the service of national distributors for billing and collections from wholesalers. These magazine newsstand distribution services are provided by third parties through multi-year arrangements.

Publishing Business Competition

The publishing industry is highly competitive. IMOTSC competes for readers and advertisers in the general publishing marketplace, which is fragmented. IMOTSC’s competitors include several much larger international companies that operate in many markets and have broad product offerings in publishing. IMOTSC also competes for advertising and circulation revenue principally with publishers of other hunting, shooting and fishing

 

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magazines and Internet websites with similar editorial content to IMOTSC’s magazines. IMOTSC’s publications generally compete on the basis of editorial quality, quantity and quality of circulation, the strength of complementary products serving the same niche and advertising rates. IMOTSC’s major publishing business competitors include American Rifleman, Field & Stream, North American Fisherman, North American Hunter, Outdoor Life, Saltwater Sportsman and others.

In addition, IMOTSC’s magazine business also competes for advertising revenue with general-interest consumer and sports magazines and other forms of media, including newspapers, satellite and broadcast radio, television, websites and other digital media.

INTELLECTUAL PROPERTY

IMOTSC’s intellectual property assets principally include copyrights in television programming, websites and other content, trademarks in brands, names and logos, domain names and licenses of intellectual property rights of various kinds. The protection of IMOTSC’s brands and content is of primary importance to its success. To protect its intellectual property assets, IMOTSC relies upon a combination of copyright, trademark, unfair competition, trade secret and Internet/domain name statutes and laws and contract provisions. However, there can be no assurance of the degree to which these measures will be successful in any given case.

GOVERNMENT REGULATION

IMOTSC’s operations are subject to and affected by various government regulations, U.S. federal, state and local government authorities. The operations of cable, satellite and telecommunications service providers, or distributors, are subject to the Communications Act of 1934, as amended, and to regulatory supervision by the FCC. The rules, regulations, policies and procedures affecting IMOTSC’s businesses are constantly subject to change. The following descriptions are summary in nature and do not purport to describe all present and proposed laws and regulations affecting IMOTSC’s businesses. Reference should be made to the Communications Act, other legislation, FCC rules and public notices and rulings of the FCC for further information concerning the nature and extent of the FCC’s regulatory authority. FCC laws and regulations are subject to change, and IMOTSC generally cannot predict whether new legislation, court action or regulations, or a change in the extent of application or enforcement of current laws and regulations, would have an adverse impact on its operations.

Local Cable Regulation

Cable television systems that carry IMOTSC’s programming are regulated by municipalities or other local or state government authorities which have the jurisdiction to grant and to assign franchises, and to negotiate generally the terms and conditions of such franchises, including rates for basic service charged to subscribers, except to the extent that such jurisdiction is preempted by federal law. Any such rate regulation could place downward pressure on the potential subscriber fees IMOTSC can earn.

Effect of “Must-Carry” Requirements

The Cable Act of 1992 imposed “must carry” or “retransmission consent” regulations on cable systems, requiring them to carry the signals of local broadcast television stations. Direct broadcast satellite (“DBS”) systems are also subject to their own must carry rules. The FCC adopted an order requiring cable systems to carry the digital signals of local television stations that have must carry status and to carry the same signal in analog format, or to carry the signal in digital format alone, provided that all subscribers have the necessary equipment to view the broadcast content. The FCC’s implementation of these “must-carry” obligations requires cable and DBS operators to give broadcasters preferential access to channel space. This reduces the amount of channel space that is available for carriage of IMOTSC’s network by cable television systems and DBS operators. Congress and the FCC may, in the future, adopt new laws, regulations and policies regarding a wide variety of matters which could affect The Sportsman Channel network. IMOTSC is unable to predict the outcome of future federal legislation, regulation or policies, or the impact of any such laws, regulations or policies on The Sportsman Channel’s operations.

 

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Closed Captioning and Advertising Restrictions

IMOTSC’s network must provide closed-captioning of programming for the hearing impaired, and IMOTSC’s programming and internet websites must comply with certain limits on advertising, including federal and state consumer protection laws that regulate unfair and deceptive practices.

Obscenity Restrictions

Cable operators and other distributors are prohibited from transmitting obscene programming, and IMOTSC’s affiliation agreements generally require it to refrain from including such programming on its network.

Regulation of the Internet

IMOTSC’s businesses operate several internet websites. Internet services are now subject to regulation in the United States relating to the privacy and security of personally identifiable user information and acquisition of personal information from children under 13, including the federal Child Online Protection Act (COPA) and the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM). In addition, a majority of states have enacted laws that impose data security and security breach obligations. Additional federal and state laws and regulations may be adopted with respect to the Internet or other online services, covering such issues as user privacy, child safety, data security, advertising, pricing, content, copyrights and trademarks, access by persons with disabilities, distribution, taxation and characteristics and quality of products and services.

Other Regulations

In addition to the regulations applicable to the cable television and internet industries in general, IMOTSC is also subject to various local, state and federal regulations, including, without limitation, regulations promulgated by federal and state environmental, health and labor agencies.

LEGAL PROCEEDINGS

From time to time, IMOTSC may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm IMOTSC’s business. IMOTSC is not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against IMOTSC, which may materially affect it.

REAL PROPERTY

The following table sets forth IMOTSC’s principal operating facilities:

 

Location

    

Description

  

Area (Square feet)

 

Baxter, Minnesota

     Editorial, Sales      21,318 Owned   

Harrisburg, Pennsylvania

     Administrative, Editorial, Sales      6,769 Leased   

Marietta, Georgia

     Administrative, Editorial, Sales      23,702 Leased   

Missoula, Montana

     TV Production      16,375 Leased   

New Berlin, Wisconsin

     Executive, Administrative, TV Production, TV Sales      11,674 Leased   

New York, New York

     Executive, Administrative, Consumer Marketing      12,007 Leased   

Peoria, Illinois

     Administrative, Editorial, Sales, TV Production      20,182 Leased   

Stuart, Florida

     Editorial, Sales      6,198 Leased   

The Peoria, Illinois facility consists of a 15,782 long-term lease facility plus additional space pursuant to a short term lease.

 

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IMOTSC believes its current facilities are adequate to meet its needs in the foreseeable future. If necessary, IMOTSC may, from time to time, downsize current facilities or lease additional facilities for its activities.

EMPLOYEES

As of September 30, 2012, IMOTSC had approximately 270 full-time employees in the United States.

None of IMOTSC’s employees are covered by a collective bargaining agreement. IMOTSC believes that it has satisfactory working relations with its employees.

 

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THE OUTDOOR CHANNEL SPECIAL MEETING AND PROXY SOLICITATION

The Outdoor Channel Board is using this document to solicit proxies from the holders of Outdoor Channel common stock for use at the special meeting of Outdoor Channel’s stockholders. Outdoor Channel is first mailing this proxy statement/prospectus and accompanying form of proxy to Outdoor Channel stockholders on or about February 12, 2013.

Matters Relating to the Special Meeting

 

Time and Place:

March 13, 2013
  9:00 a.m., Pacific Time
  43455 Business Park Drive
  Temecula, CA 92590

 

Purpose of Special Meeting Is to Vote on the Following Items:

1. To adopt the merger agreement, as described in “The Merger Agreement (Proposal No. 1).”

 

  2. To approve, on an advisory, non-binding basis, the “golden parachute” compensation payable or that could become payable to the named executive officers of Outdoor Channel in connection with the mergers.

 

  3. To approve a proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to adopt the merger agreement.

 

  4. To transact such other business as may properly come before the meeting, and any adjournment or postponement thereof.

 

Record Date:

The record date for shares entitled to vote is January 25, 2013.

 

Outstanding Shares Held on Record Date:

On the record date, there were an aggregate of 25,916,839 shares of common stock outstanding and entitled to vote.

 

Shares Entitled to Vote:

Shares entitled to vote at the special meeting are Outdoor Channel common stock. Each share of Outdoor Channel common stock is entitled to one vote.

 

Quorum Requirement:

A quorum of stockholders (at least a majority of the outstanding shares of Outdoor Channel common stock present in person or represented by proxy at the special meeting) is necessary to hold a valid special meeting. On the record date, there were an aggregate of 25,916,839 shares of Outdoor Channel common stock outstanding. Thus, 12,958,420 shares must be present in person or represented by proxy at the special meeting to have a quorum. The inspector of elections will determine whether or not a quorum is present.

 

  Abstentions count towards the quorum requirement. Broker non-votes will not count towards a quorum. If there is no quorum, a majority of the shares present in person or by proxy at the special meeting may vote to adjourn the special meeting to another date.

 

Shares Beneficially Owned by Outdoor Channel Directors and Executive Officers as of the Record Date:

Outdoor Channel directors and executive officers beneficially owned 11,010,318 shares of Outdoor Channel common stock on the record date, including shares subject to restricted stock awards. These shares represent in total approximately 42.5% of the total voting power of

 

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Outdoor Channel’s voting securities. Outdoor Channel’s directors and executive officers have agreed to vote all of Outdoor Channel common stock beneficially owned by them “for” the adoption of the merger agreement.

Votes Necessary to Adopt the Merger Agreement

 

Item

  

Vote Necessary

Proposal to Adopt the Merger Agreement    Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Outdoor Channel common stock entitled to vote. Abstentions and broker non-votes have the same effect as a vote against adoption of the merger agreement.
Proposal to Approve Advisory Vote on “Golden Parachute” Compensation    If a quorum is present, approval of the non-binding advisory vote to approve “golden parachute” compensation payable or that could become payable to Outdoor Channel’s named executive offices requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote at the special meeting.
Proposal to Adjourn Special Meeting    If a quorum is present, approval of the proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the special meeting and entitled to vote at the special meeting.

Proxies

Submitting Your Proxy. You may vote in person by ballot at the special meeting or by submitting a proxy. Please submit your proxy even if you plan to attend the special meeting. If you attend the special meeting in person, you may cancel any proxy previously given and vote by ballot. Please note, however, that if your shares are held of record by a broker, bank, or other nominee holder, you must obtain a proxy issued in your name from that record holder and present it at the special meeting.

Voting instructions are included on your proxy card or, if you hold your shares in “street name,” on the voting instruction card provided by your bank, broker, custodian or similar nominee holder. If you properly give your proxy and it is received by Outdoor Channel by the applicable deadline, one of the individuals named as your proxy will vote your shares as you have directed. If you hold shares as the stockholder of record, your vote must be received no later than 1:00 a.m. Pacific Time on March 13, 2013. If you hold shares as the beneficial owner, please follow the voting instructions provided by your broker, trustee or other nominee. You may direct your shares to be voted “For” or “Against” the proposals or abstain from voting.

How to Submit a Proxy

 

  By mail:    To submit your proxy by mail, simply complete, date and sign your proxy and return it in the return envelope provided. Postage will be pre-paid if mailed in the United States.   
  By telephone or
internet:
   Stockholders who hold shares in “street name” may be able to vote by telephone or over the internet. Please review the voting instructions provided by your bank, broker, custodian or similar nominee holder.   

 

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If you submit your proxy but do not make specific choices with respect to the proposals, your proxy will follow the Outdoor Channel Board’s recommendations and vote your shares:

 

   

“For” the adoption of the merger agreement;

 

   

“For” the advisory, non-binding approval of the “golden parachute” compensation payable or that could become payable to the named executive officers of Outdoor Channel in connection with the mergers; and

 

   

“For” the proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies on the proposal to adopt the merger agreement.

Changing or Revoking Your Proxy

You can revoke your proxy at any time before the close of voting at the special meeting. You may revoke your proxy in any of the following ways:

 

   

Prior to the special meeting, you may:

 

   

submit another properly completed proxy with a later date by following the return instructions on the proxy card or your voting instruction card; or

 

   

send a written notice that you are revoking your proxy to the Corporate Secretary at Outdoor Channel’s principal offices at 43455 Business Park Drive, Temecula, CA 92590.

 

   

During the special meeting, you may vote in person prior to the close of voting. Simply attending the special meeting will not, by itself, revoke your proxy.

Voting in Person

If you are a stockholder of record and you wish to vote in person at the special meeting, a ballot will be provided at the special meeting. However, if your shares are held in the name of your bank, broker, custodian or similar nominee, you must obtain and present at the special meeting a proxy, executed in your favor, from the holder of record to be able to vote at the meeting.

Proxy Solicitation

Outdoor Channel will pay its own costs of soliciting proxies. In addition to the Outdoor Channel’s proxy materials, Outdoor Channel’s directors, officers, other employees and any other solicitors that Outdoor Channel may retain may also solicit proxies personally, by telephone or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies.

Please do not send in any stock certificates with your proxy cards. Concurrently with the mailing of this proxy statement/prospectus, the exchange agent will mail to Outdoor Channel stockholders transmittal forms with instructions for the surrender of stock certificates for Outdoor Channel common stock by the election deadline.

Outdoor Channel has retained the services of Georgeson Inc. to assist in the solicitation of proxies for an estimated fee not to exceed $10,000, plus reimbursement of out-of-pocket expenses. Outdoor Channel will make arrangements with brokerage houses, custodians, nominees and fiduciaries to forward proxy solicitation materials to beneficial owners of shares held of record by them. Outdoor Channel will also reimburse these brokerage houses, custodians, nominees and fiduciaries for their reasonable expenses incurred in forwarding the proxy materials.

 

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Appraisal Rights

If and to the extent required under Delaware law, Outdoor Channel stockholders will be entitled to appraisal rights under the DGCL in connection with the mergers. IMOH’s and Outdoor Channel’s current understanding of Delaware law is that appraisal rights will be available for all dissenting shares of Outdoor Channel common stock only if any stockholder would be required under the merger agreement to receive cash merger consideration (other than cash in lieu of fractional shares). See the section “Dissenters’ Appraisal Rights.”

Other Business

Outdoor Channel is not currently aware of any other business to be acted upon at the special meeting. If, however, other matters are properly brought before the special meeting, or any adjourned meeting or postponement, your proxies include discretionary authority on the part of the individuals appointed to vote your shares or act on those matters according to their best judgment.

Outdoor Channel Householding Information

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement/prospectus and annual report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A single proxy statement/prospectus will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement/prospectus, please notify your broker, direct your written request to Outdoor Channel Holdings, Inc., Investor Relations, 43455 Business Park Drive, Temecula, CA 92590, or contact Investor Relations at (951) 699-6991. Stockholders who currently receive multiple copies of the proxy statement/prospectus at their address and would like to request “householding” of their communications should contact their broker.

Stockholder Account Maintenance

Outdoor Channel’s transfer agent is Computershare Trust Co. All communications concerning accounts of stockholders of record, including address changes, name changes, inquiries as to requirements to transfer shares of common stock, and similar issues, should be made by calling the transfer agent’s toll-free number, (800) 736-3001. In addition, you can access your account through the transfer agent’s website. To access your account on the Internet, visit www-us.computershare.com/Investor/.

 

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THE PROPOSED TRANSACTION

General Description of the Proposed Transaction

On November 15, 2012, Outdoor Channel entered into the merger agreement with IMOTSC, IMOH, Outdoor Channel Sub and InterMedia Sub. Under the merger agreement, (i) Outdoor Channel Sub will merge with and into Outdoor Channel, with Outdoor Channel as the surviving corporation (which is referred to as the Outdoor Channel merger), and (ii) InterMedia Sub will merge with and into IMOTSC, with IMOTSC as the surviving limited liability company (which is referred to as the IMOTSC merger, which, together with the Outdoor Channel merger, are referred to herein as the mergers). Outdoor Channel Sub and InterMedia Sub are both indirect wholly owned subsidiaries of IMOH. As a result of the mergers, Outdoor Channel and IMOTSC will become subsidiaries of IMOH. IMOH is expected to be listed for trading on NASDAQ under the symbol “OUTD.”

Upon the consummation of the mergers, each outstanding share of Outdoor Channel common stock will be automatically converted into and will represent the right to receive the following consideration, pursuant to an election made by each stockholder, subject to proration in certain circumstances as described below (and subject to certain adjustments for cash to be paid in lieu of any fractional shares and the like as set forth in the merger agreement): (x) $8.00 in cash, without interest, with respect to each share of Outdoor Channel common stock for which an election to receive cash has been made; (y) one share of IMOH common stock with respect to each share of Outdoor Channel common stock for which an election to receive stock has been made; or (z) with respect to each share of Outdoor Channel common stock for which an election to receive mixed stock and cash has been made or for each share of Outdoor Channel common stock for which no election has been made, a combination of (A) $4.46 in cash, without interest and (B) that portion of a share of IMOH common stock equal to 0.443.

The proration procedures are designed to ensure that the shares of Outdoor Channel common stock to be converted in the Outdoor Channel merger are converted into an aggregate of $115,000,000 in cash and approximately 32.4% of the IMOH common stock outstanding immediately after the consummation of the mergers. If the elections of all of the Outdoor Channel common stockholders result in an oversubscription or undersubscription of the Cash Election Shares, the Available Cash Amount will not be adjusted; it will remain fixed. For example, if the number of Cash Election Shares plus cash paid in connection with Mixed Consideration exceeds the Available Cash Amount then each stockholder making a cash election will receive shares of IMOH common stock and a prorated amount of cash. If the number of Cash Election shares plus cash paid in connection with Mixed Consideration does not exceed the Available Cash Amount, then stockholders electing Stock Consideration will receive a portion of their merger consideration in cash. Stockholders electing Mixed Consideration will not be subject to proration.

IMOH will appoint an exchange agent reasonably acceptable to Outdoor Channel and the Exchange Agent will allocate the Available Cash Amount and IMOH common stock to be paid to the Outdoor Channel common stockholders pursuant to the proration procedures described below. The amount of cash consideration and the number of shares of IMOH common stock to be received by holders making a cash or stock election will be dependent upon the elections of other Outdoor Channel common stockholders. Accordingly, there is no assurance that an Outdoor Channel common stockholder that has made a valid cash or stock election in respect of shares of its Outdoor Channel common stock will receive the form or combination of consideration so elected. See “Risk Factors—Holders of Outdoor Channel common stock who made cash or stock elections may not receive all their merger consideration in the form they elected.”

In the event a holder of shares of Outdoor Channel common stock makes an election to receive cash for 55.74% of such holder’s aggregate outstanding shares (counted to the nearest whole share) and makes an election to receive stock for 44.26% of such holder’s aggregate outstanding shares (rounded to the nearest whole share), and indicates its intent on its election form to receive the equivalent of Mixed Consideration for all of such holder’s shares, then such holder’s shares will not be subject to proration.

 

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Please refer to the sections entitled “The Merger Agreement (Proposal No. 1)—Merger Consideration” and “The Merger Agreement (Proposal No. 1)—Outdoor Channel Stockholder Election Procedures” to find detailed information regarding the election to be made by the Outdoor Channel Stockholders and the proration procedures.

Upon the consummation of the mergers, the InterMedia Unit Holders will be entitled to receive 23,854,227 shares of IMOH common stock in the aggregate in exchange for their InterMedia Units, subject to various adjustments set forth in the merger agreement. Shares of IMOH common stock shall be allocated among the InterMedia Unit Holders in accordance with the merger agreement and the IMOTSC limited liability company agreement.

Immediately after the mergers, the stockholders of Outdoor Channel are expected to own approximately 32.4% of IMOH, including the Massie Parties, who are anticipated to own no greater than 11.7% of IMOH, and the InterMedia Unit Holders are expected to own approximately 67.6% of IMOH. Substantially all of the shares held by the InterMedia Unit Holders are held by or on behalf of InterMedia Partners. Pursuant to the Support Agreement, the Massie Parties are required to make elections to receive either the Cash Consideration or the Mixed Consideration (or alternatively, an election to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock), and the Massie Parties have indicated that they will elect to receive cash for 55.74% of their shares of Outdoor Channel common stock and stock for 44.26% of their shares of Outdoor Channel common stock. No other member of Outdoor Channel management has indicated to Outdoor Channel or IMOTSC the form of consideration he or she intends to elect in the Outdoor Channel merger.

Immediately following the mergers, IMOH’s management team will consist of Peter Kern as Chairman of the Board, Thomas E. Hornish as the President and Chief Executive Officer, Thomas D. Allen as the Chief Financial Officer and Chief Operating Officer, Gavin Harvey as President—Television Networks, Jeffrey Paro as President—Publishing, Integrated Media and Branded Content and Catherine C. Lee as Executive Vice President, General Counsel and Corporate Secretary. Mr. Hornish has served as Outdoor Channel’s President and Chief Executive Officer and as a member of its Board of Directors since February 2012 and previously served as Outdoor Channel’s General Counsel from December 2004 until January 2012 and Chief Operating Officer from 2007 until January 2012. Mr. Allen has served as Outdoor Channel’s Executive Vice President and Chief Financial Officer since July 2010 and as its Chief Operating Officer since February 2012. Mr. Harvey has served as The Sportsman Channel, Inc.’s Chief Executive Officer since July 2010. Mr. Paro has served as InterMedia Outdoors, Inc.’s Chief Executive Officer since January 2007. Ms. Lee has served as Outdoor Channel’s Executive Vice President, General Counsel and Corporate Secretary sine February 2012.

The merger agreement is attached as Annex A-1 to this proxy statement/prospectus and is incorporated by reference herein in its entirety. Outdoor Channel encourages its stockholders to read the merger agreement carefully in its entirety, as the merger agreement is the principal legal document governing the mergers.

At the special meeting, holders of Outdoor Channel common stock will be asked to vote upon a proposal to adopt the merger agreement, a proposal, to approve, on an advisory (non-binding) basis the “golden parachute” compensation payable or that could become payable to the named executive officers of Outdoor Channel in connection with the mergers, and a proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the merger agreement.

The Outdoor Channel Board is using this document to solicit proxies from the holders of Outdoor Channel common stock for use at the special meeting. The mergers will not be consummated unless Outdoor Channel’s stockholders adopt the merger agreement.

 

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Background of the Proposed Transaction

The management of Outdoor Channel and the Outdoor Channel Board regularly review the strategic direction of the business of Outdoor Channel in light of, among other things, its results of operations, general market and economic conditions, its competitive position in the industries in which it operates, its strategic objectives and operational matters. As a part of such reviews, management and the Outdoor Channel Board have considered the strategic options of its business, including the continued challenges of operating as a single-channel stand-alone company and the possibility of a sale of the business, acquisitions and other strategic combinations, the advantages and disadvantages of each strategic option and whether such option offers the best avenue to enhance stockholder value.

In 2007, representatives of Outdoor Channel and InterMedia Partners, which is the controlling equity holder of IMOTSC, participated in preliminary discussions to consider the possibility of a business combination involving Outdoor Channel and IMOTSC. Although these initial preliminary discussions did not proceed further at that time, from time to time thereafter representatives of the two companies contacted each other to discuss whether the parties should re-explore a potential business combination, but these infrequent discussions never led to any further discussions until 2011.

In 2010, Outdoor Channel received preliminary expressions of interest from two separate private equity firms. Each private equity firm’s proposal included the purchase of all outstanding Outdoor Channel shares for cash and a significant rollover of the Massie Parties’ shares into equity in the potential purchasers. As a result, after receiving the advice of representatives of Outdoor Channel’s legal counsel, Wilson Sonsini Goodrich & Rosati, Professional Corporation, which we refer to as Wilson Sonsini, the Outdoor Channel Board created a special committee of disinterested directors, which we refer to as the Special Committee, to review and evaluate strategic alternatives, including without limitation, a possible sale of Outdoor Channel. The Outdoor Channel Board determined that the Special Committee was appropriate in light of proposals included in the expressions of interest that provided for the Massie Parties to exchange their shares for new equity of the surviving entity, while other stockholders of Outdoor Channel would receive only cash consideration. As such, the Special Committee was designed to address any actual or potential conflict of interest that could arise in such a transaction. In June 2010, Outdoor Channel engaged Lazard Frères & Co. LLC, which we refer to as Lazard, as its financial advisor. The Special Committee held several meetings and directed Lazard to engage, on behalf of Outdoor Channel, in discussions with the two private equity firms. Although the Special Committee had made no strategic decision to sell Outdoor Channel, they considered it appropriate to engage in discussions concerning a potential cash sale for numerous reasons, including challenges associated with operating a single-channel cable company, the size and scale of Outdoor Channel’s business relative to other industry participants, and the lack of affordable acquisition targets or similar strategic combinations that would be reasonably likely to accelerate growth. Although Outdoor Channel engaged in preliminary discussions with both firms for several months and granted such firms access to confidential materials and due diligence sessions with management of Outdoor Channel, no firm bid or proposal was received regarding a transaction and such discussions were discontinued. The Special Committee held its last meeting in May 2011.

During May and June 2011, the Outdoor Channel Board held a series of board meetings to discuss potential strategic alternatives for the company that could enhance stockholder value, including exploration of a sale of the entire company. The Outdoor Channel Board, with the assistance of Outdoor Channel’s management and legal and financial advisors, reviewed potential internal strategic measures and external strategic transactions and considered the feasibility and potential advantages and disadvantages of such possible measures or transactions. Although the Outdoor Channel Board continued to explore strategies to successfully operate as a stand-alone company, it had concerns about competing in the marketplace and the inherent constraints on future growth if it continued as a single-channel stand-alone operator. Of the number of potential alternatives considered by the Outdoor Channel Board, discussions focused on a sale of the entire business and a proposed leveraged recapitalization as alternatives that could provide significant value to investors. The Outdoor Channel Board also briefly explored an acquisition of another single-channel operator, but no suitable targets were identified. Although a leveraged recapitalization and associated cash dividend could allow its stockholders to obtain some

 

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amount of liquidity and the opportunity to participate in the future prospects of the company, the Outdoor Channel Board determined that such a transaction would not adequately address the challenges of operating as a single-channel stand-alone company. Ultimately, the Outdoor Channel Board determined that a sale of the entire business for cash, which could provide a potential for short-term liquidity for current investors, would likely offer the best avenue to enhance stockholder value. In connection with its review of potential transactions, the Outdoor Channel Board also considered the likelihood that potential acquirors would have an interest in a transaction and the potential synergies and other factors that could affect the consideration that such other parties could be prepared to pay. At the conclusion of these series of meetings, the Outdoor Channel Board authorized management, with Lazard’s assistance, to pursue a non-public third-party solicitation process in which both strategic and financial potential acquirors would be contacted. As part of this process, the Outdoor Channel Board concluded that it was unnecessary to maintain the special committee of disinterested directors for purposes of the review and evaluation of offers that arose out of the solicitation process. Unlike the discussions that occurred in 2010, it was anticipated that the Massie Parties would receive the same form of consideration as the other Outdoor Channel stockholders. As a result, the Outdoor Channel Board determined that the interests of the Massie Parties and the other stockholders were aligned and a special committee of disinterested directors was unnecessary.

From August through November 2011, a total of 85 parties were contacted, 65 of which were private equity firms and 20 of which were potential strategic bidders. These contacts lead to the execution of confidentiality agreements and due diligence reviews by 29 parties and the receipt of seven indications of interest. None of such parties submitted final proposals or continued significant discussions with Outdoor Channel.

Shortly following completion of this initial process, Outdoor Channel engaged in communications with four separate parties, including certain parties that had not been contacted during the initial process such as InterMedia Partners and a private equity firm, which we refer to herein as Party A.

In November 2011, representatives of Outdoor Channel and representatives of InterMedia Partners held preliminary discussions regarding a potential business combination transaction involving IMOTSC and Outdoor Channel. From time to time thereafter, representatives of Outdoor Channel and InterMedia Partners continued to discuss a potential transaction and certain high level diligence matters.

Also in November 2011, Party A submitted a preliminary non-binding indication of interest proposing an acquisition of Outdoor Channel for a purchase price ranging from $7.15 to $7.35 per share. Following further discussions and negotiations, this range was increased to $7.50 to $7.80 per share in a subsequent indication of interest delivered in December 2011. Outdoor Channel requested that Party A provide additional details regarding the proposed financing for the potential transaction and Party A indicated that a fully financed bid would be forthcoming.

From January 2012 through June 2012, Outdoor Channel and IMOTSC continued to exchange high level due diligence materials, including financial forecasts and tax data regarding their respective businesses.

On February 15, 2012, Party A submitted a revised preliminary non-binding indication of interest proposing an acquisition of Outdoor Channel for a purchase price of $6.55 per share for the Massie Parties and $7.25 per share for all other shareholders, equivalent to a $6.99 weighted average price per share. The indication of interest did not provide details on Party A’s potential financing sources despite Outdoor Channel’s request to do so.

Following receipt of Party A’s proposal, at the direction of the Outdoor Channel Board, Lazard contacted Party A and requested that Party A increase its proposal and provide additional details regarding its proposed financing. Party A declined to increase its proposal and discussions were discontinued.

In April 2012, Thomas E. Hornish, the President and Chief Executive Officer of the Outdoor Channel, had a call with representatives of InterMedia Partners to discuss a framework for a potential transaction, including

 

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InterMedia Partners’ desire to structure a transaction in which InterMedia Partners would own a controlling interest in the combined company. This structure would also have the added benefit of preserving the value of IMOTSC’s existing tax assets.

On May 31, 2012, Mr. Hornish and Tom Allen, the Chief Financial Officer of Outdoor Channel, held a preliminary diligence call with representatives of InterMedia Partners and IMOTSC regarding IMOTSC’s magazine business. Lazard also joined the call. Representatives of InterMedia Partners and IMOTSC provided a general overview of the print media business and the current and prospective opportunities and challenges faced by the industry. The call focused on matters relating to the historical trends, stability and sustainability of the subscriber base and profitability of the magazine business.

In mid-June 2012, Party A indicated that it desired to reinitiate discussions regarding a potential transaction and that a proposal would be forthcoming.

On June 15, 2012, Messrs. Hornish and Allen met, together with Lazard, with representatives from InterMedia Partners to continue discussions regarding a potential transaction. During such discussions, Mr. Hornish indicated that Outdoor Channel would be willing to undertake a transaction in which Outdoor Channel stockholders would hold 40% of the combined company’s pro forma equity ownership after taking into account the cash consideration that would be payable to Outdoor Channel stockholders.

From June 21 through July 1, 2012, representatives of Outdoor Channel and InterMedia Partners continued to meet to negotiate the principal terms of InterMedia Partner’s proposal. The negotiations focused on the consideration, comprised of cash and shares of the combined company, to be received by Outdoor Channel stockholders.

On June 28, 2012, Party A submitted a revised preliminary non-binding indication of interest proposing an all-cash acquisition of Outdoor Channel for a purchase price of $7.50 per share subject to financing and other conditions. The indication of interest did not provide details on Party A’s potential financing sources although Party A indicated that a fully financed bid would be forthcoming.

On July 2, 2012, the Outdoor Channel Board held a special meeting, with representatives of Outdoor Channel’s management and legal and financial advisors in attendance, to discuss IMOTSC’s and Party A’s respective proposals. At the meeting, Messrs. Hornish and Allen provided the Outdoor Channel Board with an overview of the status of discussions with InterMedia Partners and Party A. Lazard then summarized for the Outdoor Channel Board financial terms proposed by IMOTSC, which contemplated the combined company entering into a new debt facility for $120 million with the proceeds to be used to refinance existing indebtedness of IMOTSC’s magazine business and the balance to be used, along with available cash, to fund the cash portion of the consideration payable to Outdoor Channel stockholders in the proposed transaction. The proposed transaction would result in consideration comprised of approximately $125 million in cash and a 30.7% pro forma equity ownership for Outdoor Channel stockholders in the combined company and a 69.3% pro forma equity ownership for IMOTSC equity holders. Outdoor Channel stockholders would be entitled to elect to receive $7.60 per share in cash or shares of the combined company’s common stock, subject to proration. Mr. Hornish also indicated to the Outdoor Channel Board that since the companies had exchanged only limited due diligence information then to date, the proposal would be subject to executing a confidentiality agreement and completing detailed due diligence. After further discussion, the Outdoor Channel Board authorized management to continue negotiations with IMOTSC on the basis of the proposed terms, but directed management to seek to increase the percentage equity ownership of Outdoor Channel stockholders in the combined company. The Outdoor Channel Board also discussed the status of discussions with Party A, including the prospects of improving Party A’s proposal and Party A’s request for exclusive negotiations, and directed management to engage in further discussions with Party A, but to indicate that Outdoor Channel would be unable to enter into exclusivity until Party A was able to provide more clarity and certainty regarding its proposed financing arrangements.

 

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Following the board meeting, in accordance with the Outdoor Channel Board’s directions, Mr. Hornish and Lazard contacted representatives of InterMedia Partners and proposed an increase in the pro forma equity ownership of Outdoor Channel stockholders in the combined company from 30.7% to 32.6% and an increase in the per share cash election amount from $7.60 per share to $7.85 per share and the aggregate of cash being distributed to Outdoor Channel stockholders remaining equal to approximately $125 million.

On July 11, 2012, representatives of InterMedia Partners delivered to Outdoor Channel a written counterproposal reflecting a pro forma equity ownership for Outdoor Channel stockholders in the combined company of 30.7%, and an increase in the per share cash election amount to $8.00 per share and the aggregate of cash being distributed to Outdoor Channel stockholders remaining equal to approximately $125 million. The counterproposal also included an $8 million termination fee payable by Outdoor Channel to IMOTSC under certain circumstances, a proposed voting agreement that would limit the ability of the Massie Parties and certain other affiliates from voting in favor of an alternative transaction for a certain period after termination of a merger agreement and a prohibition on Outdoor Channel from soliciting alternative proposals for a limited period following execution of the merger agreement. The proposal also indicated that the combined company would have seven directors, four selected by InterMedia Partners and three designated by Outdoor Channel.

On July 13, 2012, Outdoor Channel management met in person with Party A and its financing sources for purposes of facilitating Party A’s and such financing sources’ due diligence processes. Following this meeting, Party A continued to perform diligence on Outdoor Channel and held conference calls with Outdoor Channel management. Initially following these meetings, Party A indicated that it was working toward delivering a fully financed cash proposal to acquire Outdoor Channel at $7.50 per share, but would likely require the Massie Parties to convert a portion of their stock into new equity of the surviving corporation, and stated that it would be in a position to deliver such proposal shortly.

On July 18, 2012, InterMedia Partners revised its July 11, 2012 proposal for a transaction in which Outdoor Channel stockholders would receive either (1) the same consideration as set forth in the July 11th proposal of 30.7% of the pro forma equity ownership of the combined company and a per share cash election amount of $8.00 per share (an aggregate of approximately $125 million) or (2) if the Massie Parties agreed to the provision limiting their ability to vote for any alternative acquisition for a period of at least one year, 31.3% of the combined company’s pro forma equity ownership and a per share cash election amount of $8.10 per share (an aggregate of approximately $125 million). Each of the options would include a termination fee of $8 million payable by Outdoor Channel to IMOTSC under certain circumstances and the prohibition of a go-shop provision. Subsequently in August 2012, InterMedia Partners further revised its proposal to increase Outdoor Channel stockholders’ pro forma equity ownership to 31.65% in the event the Massie Parties agreed to their one-year restriction.

On July 23, 2012, representatives of Outdoor Channel followed up with Party A regarding the status of its proposal. Party A indicated that it was continuing to work on a proposal and stated again that it would be able to deliver a fully financed cash proposal within a matter of days.

On July 27, 2012, Messrs. Hornish and Allen met in face-to-face meetings with representatives of InterMedia Partners to discuss the proposed transaction. Conversations focused on the business and strategic rationale for the proposed transaction and InterMedia Partners’ plans for the combined company.

On August 2, 2012, the Outdoor Channel Board held a special meeting, with representatives of Outdoor Channel’s management and legal and financial advisors in attendance, to discuss the proposed transaction. At the meeting, Messrs. Hornish and Allen provided the Outdoor Channel Board with an overview of the status of the discussions with InterMedia Partners regarding its plans for the operations of the combined business, including various strategies for combining the two networks and potential synergies to be realized from the proposed transaction. Lazard discussed with the Outdoor Channel Board certain potential strategic options for Outdoor Channel, including a recapitalization of the company on a standalone basis, and summarized financial terms of InterMedia Partners’ and Party A’s respective proposals. The Outdoor Channel Board then discussed the

 

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advantages and disadvantages of implementing various potential strategies and other matters pertaining to the combined company. Peter Kern of InterMedia Partners joined for a portion of the meeting to discuss his vision for the combined company with the Outdoor Channel Board. The members of the Outdoor Channel Board asked several questions of Mr. Kern and discussion ensued. In response to questions from the Outdoor Channel Board, Mr. Kern indicated that while he was not able to commit to a detailed strategy for the operation by the combined company of the two channels, the combination would increase the ability of the combined company to broaden the existing subscriber base as well as to enter into new distribution agreements and maintain or renew existing agreements with satellite systems, telephone companies and cable multiple system operators. Additionally, in response to questions, Mr. Kern clarified that the decision to structure the transaction to have a surviving public company, as opposed to a going-private transaction, was primarily to provide an opportunity for liquidity for the InterMedia investors, and was an important objective for InterMedia. Mr. Kern also addressed questions pertaining to the proposed management of the combined company, noting that he had not at that time made a determination as to the appropriate management structure or the identity of specific executives of the combined company. The Outdoor Channel Board indicated that identifying acceptable candidates for management of the combined company would be an important factor in obtaining its support of the proposed transaction. Following discussion, Mr. Kern left the meeting, and Messrs. Hornish and Allen updated the Outdoor Channel Board on the status of Outdoor Channel’s due diligence review of IMOTSC’s business and certain key findings identified to date. These findings primarily related to trends in the subscription bases and profitability of IMOTSC’s network and magazine businesses as well as potential levels of duplication in the subscriber bases of the two networks, which were, in each case, consistent with Outdoor Channel’s expectations.

On August 7, 2012, at the Board’s direction, representatives of Lazard discussed with Party A the status of Party A’s proposal and terms of its proposed financing. Party A continued to state that fully committed financing would be forthcoming.

On August 8, 2012, the Outdoor Channel Board held a special meeting, with representatives of Outdoor Channel’s management and legal and financial advisors in attendance, to discuss Party A’s proposed transaction. At the meeting, Messrs. Hornish and Allen provided the Outdoor Channel Board with an overview of the status of discussions with InterMedia Partners, including InterMedia Partners’ proposal regarding the form and amount of consideration to be delivered to Outdoor Channel stockholders in the proposed transaction and the proposed restrictions on the Massie Parties. The Board then discussed with Outdoor Channel’s advisors the proposed termination fee payable by Outdoor Channel to IMOTSC under certain circumstances described in the merger agreement and other deal protection provisions. After discussion, the Outdoor Channel Board directed management to negotiate a lower termination fee. Messrs. Hornish and Allen then updated the Board on the status of discussions with Party A. In the view of the Outdoor Channel Board and management, discussions with Party A would not likely to result in a transaction due to the fact that after approximately nine months of intermittent discussions and detailed due diligence, including receipt of financial forecasts of Outdoor Channel’s business and meetings with Outdoor Channel’s management, Party A had not submitted a firm proposal with specifics of its proposed equity and debt financing despite continued assurances from Party A that it would do so. In addition, the Outdoor Channel Board felt it was unlikely that Party A would continue to stand behind its then current offer of $7.50 given its attempt in February 2012 to decrease its offer price. The Outdoor Channel Board then considered a proposal by IMOTSC to enter into exclusive negotiations. Although at such time IMOTSC had not secured fully committed financing, based on the results of Outdoor Channel’s due diligence and the detailed terms of IMOTSC’s acquisition proposal, it was clear that IMOTSC was in progressing discussions with lenders and that it had resolved the primary terms of its proposed financing. The Outdoor Channel Board further weighed these factors against the current IMOTSC offer, which the Board determined had a higher value than Party A’s offer and, due to IMOTSC’s substantial assets, the potential for synergies in the combination of the two business and a transaction structure that proposed a lower leverage ratio than the transaction proposed by Party A, was believed more likely to be financed and ultimately consummated than Party A’s proposal. Based on these factors, the Outdoor Channel Board authorized management to enter into exclusivity with IMOTSC subject to negotiating an acceptable termination fee, and subject to the condition that the exclusivity period would automatically terminate upon any decrease to IMOTSC’s proposed purchase price.

 

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Following the meeting, Messrs. Hornish and Allen had several calls with representatives of InterMedia Partners to discuss the proposed termination fee. As a result of these discussions, IMOTSC decreased the proposed termination fee to $6 million and Mr. Hornish indicated that Outdoor Channel would be prepared to enter into exclusive negotiations with IMOTSC. In connection with the ongoing discussions and to facilitate the exchange of additional due diligence materials, Outdoor Channel and IMOTSC then entered into a mutual confidentiality agreement on August 13, 2012, which agreement required Outdoor Channel to negotiate exclusively with InterMedia Partners for a period of 30 days.

Beginning in August 2012, representatives of Outdoor Channel and InterMedia Partners commenced detailed due diligence investigations, provided access to certain non-public materials and other data through on-line data rooms and facilitated in-person diligence meetings. Outdoor Channel also engaged a nationally recognized outside accounting firm to perform due diligence on financial and accounting aspects of IMOTSC’s business and a third party print media consultant to perform due diligence on IMOTSC’s print media business. The exchange of due diligence materials between the parties continued until execution of the merger agreement.

On September 4, 2012, IMOTSC delivered a draft of the proposed merger agreement to Outdoor Channel. From September 4 through the announcement of the transaction, representatives of Paul, Weiss, Rifkind, Wharton & Garrison LLP, which we refer to as Paul Weiss, counsel to InterMedia Partners and IMOTSC, and Wilson Sonsini engaged in negotiations and exchanged drafts of the merger agreement to finalize the terms and conditions of the transaction. The principal matters discussed included the amount and events triggering the payment of the termination fee by Outdoor Channel, deal protection provisions, IMOTSC’s position that its obligations to close the transaction should be conditioned on its ability to obtain debt financing, the timing for the delivery of audited financial statements on the combined IMOTSC business and the overall liability of the parties in the event of certain breaches of the merger agreement. These negotiations and exchanges of draft merger agreements continued until execution of the definitive merger agreement.

On September 6, 2012, Messrs. Hornish and Allen met in person with representatives of InterMedia Partners and IMOTSC to conduct further due diligence discussions regarding the publishing business of IMOTSC. Lazard also attended this meeting, and given that Outdoor Channel did not currently operate a print media business, representatives of Kliger Media Associates, LLC, which is referred to herein as Kliger Media, a print media specialist engaged by the management of Outdoor Channel to assist it in its due diligence of IMOTSC’s publishing business, also attended. During this meeting, Messrs. Hornish and Allen, along with the Kliger Media representatives, engaged in discussions with the expectation of gaining a better understanding of the trends, stability and sustainability of the profitability and circulation base of the print media business. Additionally, their diligence focused on obtaining additional information and a better understanding regarding the costs and expenses of the business. Messrs. Hornish and Allen had previously indicated their concern about the future profitability of the magazine business given a perceived decline in the general economic outlook of the print media industry and the discussion focused on the fact that the magazine titles of IMOTSC were of a specialty nature, as opposed to general interest. In IMOTSC’s view, its results of operations had been and could continue to be relatively stable sources of revenue and profitability since its specialty magazines had not experienced the same degree of circulation decline as other general interest magazines had experienced over the last few years.

On September 11, 2012, the Outdoor Channel Board held a special meeting, with representatives of Outdoor Channel’s management and legal and financial advisors in attendance, to discuss the potential transaction with IMOTSC. At the meeting, Messrs. Hornish and Allen provided the Outdoor Channel Board with an overview of the status and findings of the due diligence then performed to date. Management’s review did not identify any specific issues with respect to IMOTSC’s business, including in respect of IMOTSC’s distribution agreements and operating results, that would preclude further discussions between the parties. Similarly, IMOTSC had indicated a willingness to proceed with discussions following its due diligence investigation of the business of Outdoor Channel. Following management’s presentation, representatives of Kliger Media gave an oral presentation to the Board regarding the results of its due diligence on IMOTSC’s publishing business, including their independent view that IMOTSC’s print media business appeared relatively stable and would be better

 

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insulated from the circulation decline experienced by general interest magazines with larger subscription and newsstand bases. Although Kliger Media did not present a quantitative analysis comparing the relative degree of magazine circulation decline in either subscriptions or newsstand sales, or a comparison of IMOTSC circulation decline as compared to print circulation decline generally, Kliger Media forecasted a relative stability in the IMOTSC circulation base based on, among other things, the unique specialty markets served by its publications, the strength of IMOTSC’s key brands, the accomplishment of IMOTSC’s prior work to re-engineer its circulation model, right-size its staff, re-build its internal content management system and position its key brands for digital growth, and the strength and stability of its current management, editorial staff and salesforce. Representatives of Wilson Sonsini then led the Outdoor Channel Board through a discussion of the material terms of the merger agreement, including the provisions relating to deal protection and financing risks and the lack of a definitive proposal for the governance of the combined entity. Messrs. Hornish and Allen indicated that, based on the continued due diligence investigation and the matters to be negotiated on the proposed merger agreement, they would recommend that the Outdoor Channel Board extend the exclusivity period under the confidentiality agreement with IMOTSC for an additional 30 days. The Outdoor Channel Board determined to extend the exclusivity period through October 12, 2012. As discussions between Outdoor Channel and InterMedia Partners progressed, the exclusivity period was extended from time-to-time thereafter through the date of execution of the merger agreement.

Following the meeting on September 11, 2012, the parties continued their due diligence investigations and engaged in discussions and negotiations relating to the terms of the merger agreement, which continued to focus on financing and governance matters. During such time, representatives of Outdoor Channel and IMOTSC discussed a proposal to remove the financing condition initially proposed by IMOTSC in favor of a termination fee that would be payable by IMOTSC in the event that the financing was not available to close the transaction. Additionally, at the direction of the Outdoor Channel Board, representatives of Wilson Sonsini indicated to IMOTSC that the Outdoor Channel Board needed to understand and be comfortable with IMOTSC’s proposal for the management of the combined entity prior to approving the proposed transaction. Wilson Sonsini further indicated that, while open-minded to another proposal, the Outdoor Channel Board had a great deal of confidence in Outdoor Channel’s current management and would be supportive of a transaction in which Messrs. Hornish and Allen continued in their roles with the combined company.

On October 9, 2012, the Outdoor Channel Board held a special meeting, with representatives of Outdoor Channel’s management and legal and financial advisors in attendance, to discuss the potential transaction with IMOTSC. At the meeting, Messrs. Hornish and Allen provided the Outdoor Channel Board with an overview of the status of discussions with InterMedia Partners and its advisors, including the progress on the negotiations of the terms of the proposed merger agreement and governance of the combined company, including the composition of the management of the combined company, for which IMOTSC proposed that the current management of Outdoor Channel continue in their roles with the combined company, and related matters. Messrs. Hornish and Allen then updated the Outdoor Channel Board on certain outstanding items that would need to be completed prior to signing the proposed merger agreement, including finalization of the audit of the consolidated financial statements of IMOTSC’s magazine and channel businesses, the renewal of certain agreements with certain key distributors of Outdoor Channel, the status of the negotiations between InterMedia Partners and its lenders in respect of the financing for the proposed transaction and finalization of outstanding terms of the proposed merger agreement. Representatives of Wilson Sonsini then reviewed in detail with the Board such outstanding terms of the proposed merger agreement, including the terms of the proposed termination fee that Outdoor Channel would be required to pay IMOTSC in certain circumstances, the terms of a proposed reverse termination fee payable by IMOTSC in the event that the financing was not available at the time of closing and additional deal protections requested by IMOTSC. Lazard discussed with the Board certain financial matters that could impact the valuations of Outdoor Channel and IMOTSC, including updated financial information provided by the managements of Outdoor Channel and IMOTSC for the 2012 fiscal year and such managements’ expectations regarding potential synergies. Management of Outdoor Channel then reviewed with the Board projected financial information regarding IMOH that had been prepared by management of Outdoor Channel and IMOTSC and management’s view of such projections.

 

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Following the October 9th board meeting, representatives of Outdoor Channel and InterMedia Partners continued to negotiate the terms of the merger agreement and to discuss the terms of IMOTSC’s proposed financing. In particular, negotiations focused on, among other things, the timing of the date at which either party to the merger agreement would have the right to terminate the agreement in light of the corresponding period for which IMOTSC’s lenders were willing to provide committed financing, limitations on IMOTSC’s liability in the event of termination, and terms of the arrangements with management of the combined company and the proposed $2 million advisory fee payable to InterMedia Partners in connection with the transaction. During this time, the parties also continued to engage in due diligence, and Outdoor Channel reviewed draft consolidated financial statements of IMOTSC.

On November 9, 2012, Messrs. Hornish and Allen met with representatives of InterMedia Partners to discuss the status of the transaction and to revisit the economics previously agreed to at the time the parties entered into exclusive negotiations in light of the results of Outdoor Channel’s and InterMedia Partners’ respective due diligence investigations.

Following such discussions, Messrs. Hornish and Allen indicated the desire of Outdoor Channel to pay to its stockholders in connection with the transaction a special dividend prior to end of the calendar year, and IMOTSC indicated that such dividend would be acceptable provided that the aggregate amount of the dividend, which was estimated to be approximately $6.5 million, was deducted from the cash consideration to be delivered to Outdoor Channel stockholders in the merger. As a result of these discussions, the parties initially agreed to increase the number of shares to be distributed to Outdoor Channel stockholders from 30.7% to 31.5% of the pro forma equity ownership of the combined company, that Outdoor Channel would be permitted to make the proposed special cash dividend, with a resulting equivalent decrease to the cash consideration to be paid in the merger from $125 million to approximately $118.5 million, that the termination fee to be paid by Outdoor Channel under certain circumstances would be increased from $6 million to $6.5 million and that the proposed management advisory fee of InterMedia Partners would be increased from $2 million to $2.5 million.

On November 13, 2012, the parties held several conference calls to finalize the economic terms of the proposed transaction, focusing on the aggregate amount of the equity of the combined company that would be issued to Outdoor Channel stockholders as consideration. At such time, the parties indicated their concerns regarding the liquidity of the combined company following closing and their desire to decrease the total cash consideration payable to Outdoor Channel stockholders to $115 million. InterMedia Partners proposed that to compensate Outdoor Channel stockholders for the decrease in cash consideration, the amount of stock consideration to be received by the Outdoor Channel stockholders would be increased by approximately the same value, resulting in Outdoor Channel stockholders receiving an aggregate of 32.4% of the combined company.

On November 14, 2012, the Outdoor Channel Board held a special meeting, with representatives of Outdoor Channel’s management and legal and financial advisors in attendance, to discuss the potential transaction with IMOTSC. At the meeting, Messrs. Hornish and Allen provided the Outdoor Channel Board with an overview of the status of discussions with InterMedia Partners and its advisors. Following the discussion, representatives of Wilson Sonsini advised the Outdoor Channel Board of its fiduciary duties in connection with the potential transaction and then discussed the terms of the proposed merger agreement, support agreement, lockup agreement and registration rights agreement. The Outdoor Channel Board also discussed other actions to be taken in connection with the transaction, including the proposed declaration of a $0.25 per share cash dividend that would be paid to Outdoor Channel stockholders in December 2012. As requested by Outdoor Channel, Lazard reviewed with the Board its financial analysis of the Outdoor Channel merger consideration inclusive of the $0.25 per share dividend and rendered to Outdoor Channel’s Board an oral opinion, subject to confirmation in writing upon completion of all definitive documentation, to the effect that the consideration to be paid to holders of Outdoor Channel common stock (other than holders who are entitled to and properly demand an appraisal of their shares of Outdoor Channel common stock) was fair, from a financial point of view, to such holders. The Outdoor Channel Board engaged in a discussion of the advantages of the transaction and a number of countervailing factors as more fully described in the section “Outdoor Channel Reasons for the Outdoor Channel

 

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Merger.” Following such discussions, the Outdoor Channel Board, subject to completion of all definitive documentation, unanimously determined that the merger agreement and the Outdoor Channel merger were advisable and in the best interests of Outdoor Channel and its stockholders, approved the merger agreement and recommended that Outdoor Channel stockholders adopt the merger agreement. The Outdoor Channel Board also declared the $0.25 per share cash dividend to be paid to Outdoor Channel stockholders in December 2012 in connection with the transaction.

On November 15, 2012, given that the merger agreement had not been executed and that the dividend had been declared the prior evening, Outdoor Channel requested that Lazard update its financial analysis of Outdoor Channel assuming the payment of the dividend declared by the Outdoor Channel Board the prior day. Lazard indicated that its oral opinion rendered the prior day should be considered withdrawn.

Later on November 15, 2012, the Outdoor Channel Board reconvened and received an update on the finalization of the merger agreement and related transaction matters from Wilson Sonsini. As requested, Lazard reviewed with Outdoor Channel’s Board its updated financial analysis of the Outdoor Channel merger consideration and rendered to Outdoor Channel’s board of directors an oral opinion, confirmed by delivery of a written opinion dated November 15, 2012, to the effect that, as of that date and based upon and subject to the assumptions, factors and qualifications set forth in such opinion, the consideration to be paid in the Outdoor Channel merger to holders of Outdoor Channel common stock (other than holders who are entitled to and properly demand an appraisal of their shares of Outdoor Channel common stock) was fair, from a financial point of view, to such holders. At the conclusion of the meeting, the Outdoor Channel Board unanimously determined that the Merger Agreement and the Outdoor Channel merger were advisable and in the best interests of Outdoor Channel and its stockholders, approved the Merger Agreement, recommended that Outdoor Channel stockholders adopt the Merger Agreement and authorized management to enter into the Merger Agreement.

During the evening of November 15, 2012, IMOTSC and Outdoor Channel executed and delivered the merger agreement. The directors and executive officers of Outdoor Channel and the Massie Parties also executed and delivered the Support Agreement, the Massie Parties and Mr. Hornish executed and delivered the Lock-Up Agreement and the Massie Parties executed and delivered the Registration Rights Agreement.

On the morning of November 16, 2012, IMOTSC and Outdoor Channel issued a joint press release announcing the transaction.

Outdoor Channel Reasons for the Outdoor Channel Merger

During the course of its deliberations on the mergers, the Outdoor Channel Board held numerous meetings and consulted with Outdoor Channel’s senior management and legal and financial advisors. The Board considered a number of alternatives to enhance Outdoor Channel’s competitive position and to increase stockholder value. The Outdoor Channel board believes the proposed transaction is in the best interests of Outdoor Channel and its stockholders. In reaching its decision to approve the transaction, the Board reviewed, evaluated and considered numerous factors and a significant amount of information and data, including the following:

 

   

The intensely competitive nature of the broadcasting industry in which Outdoor Channel competes, including strategic and financial challenges associated with operating a single-channel network, and Outdoor Channel’s need to expand its subscriber base to increase revenues from subscriber fees and advertising.

 

   

The highly complementary nature of Outdoor Channel’s and IMOTSC’s respective businesses and shared target markets focused on outdoor enthusiasts.

 

   

The companies’ relative distribution strengths and weaknesses based on carriage agreements with the major cable, satellite, and telecommunication companies in the United States.

 

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Outdoor Channel’s business plans and strategic objectives, as well as the risks to executing its business plans and accomplishing these strategic objectives in light of the current business environment and trends in its industry;

 

   

Outdoor Channel’s business and competitive prospects if it remains an independent company and the scale and other skills and assets required to compete effectively, noting in particular:

 

   

consolidation trends among cable, satellite, and other video service operators, resulting in considerable leverage in favor of these operators when negotiating with single-network content providers such as Outdoor Channel;

 

   

the importance of scale in such competitive market environments and the associated challenges to growth as an independent company;

 

   

the significant and increasing cost of complying with obligations as a publicly traded micro-cap company; and

 

   

Outdoor Channel’s historical and forecasted financial condition and results of operations and other anticipated operating performance metrics and, in light of such financial information and data, the difficulties faced by Outdoor Channel to retain and enhance its competitive position and the challenges it would confront to its prospects for growth if it continued as a single-channel stand-alone operator.

 

   

the current macro-economic climate and conditions in the United States and around the world, and the potential impact of these conditions on Outdoor Channel’s business and prospects as an independent company;

 

   

current conditions in the financial market generally, as well as the current and historical market prices of Outdoor Channel common stock, the current and historical market prices of Outdoor Channel common stock relative to those of other industry participants and general market indices and the illiquidity of micro cap stocks in general;

 

   

the potential availability of appraisal rights for Outdoor Channel stockholders who properly exercise their statutory appraisal rights under Delaware law under certain circumstances, however, the Outdoor Channel Board did not discuss the specifics of the recent Delaware case law regarding appraisal rights in cash/stock election mergers and the specific circumstances under which appraisal rights may or may not be available in such mergers;

 

   

possible alternatives to the mergers (including the option of continuing to operate Outdoor Channel’s business independently), the timing and the likelihood of accomplishing the business plans and strategic objectives of those alternatives and potential benefits and risks of those alternatives;

 

   

the results of Outdoor Channel’s discussions with certain third parties that would reasonably be expected to have interest in acquiring Outdoor Channel relating to a possible acquisition of Outdoor Channel, and Outdoor Channel’s ability under the terms of the merger agreement to negotiate with third parties concerning certain unsolicited competing acquisition proposals if Outdoor Channel receives such a proposal during the pendency of the mergers;

 

   

the ability of Outdoor Channel to seek specific performance against IMOTSC in the event IMOTSC breaches the merger agreement under certain circumstances;

 

   

the terms of the merger agreement that would reasonably be expected to have an impact on the likelihood Outdoor Channel will receive an unsolicited competing acquisition proposal during the pendency of the mergers (including the termination fees that would be payable under certain circumstances in connection therewith); and

 

   

the terms of the Support Agreement with certain Outdoor Channel stockholders, including the fact that such Support Agreement terminates upon termination of the merger agreement.

 

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In reaching its decision to approve the merger agreement and the Outdoor Channel merger, and to recommend that Outdoor Channel stockholders adopt the merger agreement, the Outdoor Channel Board determined that the following were positive reasons to support the merger agreement and the mergers:

 

   

the belief of the Outdoor Channel Board that the merger consideration to be received by Outdoor Channel stockholders in the Outdoor Channel merger compares favorably to a range of values of Outdoor Channel as an independent company based on traditional valuation analyses such as discounted cash flow analyses, comparable companies’ trading statistics analyses and comparable transaction analyses;

 

   

the belief of the Outdoor Channel Board that the merger consideration to be received by Outdoor Channel stockholders in the merger provides greater certainty of value (and less risk) to Outdoor Channel stockholders relative to the potential trading price of Outdoor Channel common stock over a longer period of time after accounting for the long term risks to Outdoor Channel’s business resulting from operational execution risk and evolving industry dynamics;

 

   

the fact that the combined company is anticipated to realize estimated annual after-tax net run rate savings of approximately $5.1 million derived from cost synergies (net of integration and implementation costs and after taxes) and tax attributes with a net present value of approximately $38.0 to $40.3 million that are anticipated to be retained by IMOH due to IMOTSC’s significant tax basis that will be amortized over a period of many years and net operating loss carryforwards;

 

   

the expectation that the exchange of Outdoor Channel common stock of IMOH common stock pursuant to the mergers generally would be nontaxable to Outdoor Channel stockholders for United States federal income tax purposes to the extent of the IMOH common stock they receive;

 

   

the belief of the Outdoor Channel Board that the mergers are likely to be completed in light of the limited number and nature of the closing conditions contained in the merger agreement, including the fact that, subject to certain exceptions, the condition relating to the accuracy of Outdoor Channel’s representations and warranties would be satisfied unless such inaccuracies would reasonably be expected to have a material adverse effect on Outdoor Channel;

 

   

the belief of the Outdoor Channel Board that the combined company will have an increased ability to enter into new carriage agreements and maintain or renew existing agreements or arrangements with, and carriage by, satellite systems, telephone companies and cable multiple system operators due to an increased ability to offer incentives to such operators in negotiating such agreements;

 

   

the fact that a portion of the merger consideration to be received by Outdoor Channel stockholders consists of IMOH common stock, which will enable Outdoor Channel stockholders to share in the future growth and anticipated synergies of the combined company;

 

   

the fact that the issuance of shares of IMOH common stock to be received by Outdoor Channel stockholders will be registered and the shares of IMOH common stock will be freely tradable;

 

   

the belief of the Outdoor Channel Board that Outdoor Channel stockholders will receive the highest value of consideration reasonably obtainable in the Outdoor Channel merger due to:

 

   

the belief of the Outdoor Channel Board that after extensive negotiations with representatives of IMOTSC, Outdoor Channel obtained the highest price that IMOTSC is willing to pay for Outdoor Channel;

 

   

the fact that the Outdoor Channel Board, with the assistance of Outdoor Channel’s management and legal and financial advisors, evaluated a list of third parties that it believed would be reasonably expected to have interest in an acquisition of, or combination with, Outdoor Channel based on their respective businesses, strategic objectives and financial capabilities, contacted and held preliminary discussions with some of those third parties to determine their level of interest in an acquisition of, or combination with, Outdoor Channel, but ultimately did not receive any offers or proposals to acquire, or combine with, Outdoor Channel that the Outdoor Channel Board believed to be superior;

 

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the belief of the Outdoor Channel Board that the combined company should have a greater range of options to access private and public equity and debt markets to fund future capital needs, which are likely to be greater than the options available to Outdoor Channel alone;

 

   

the fact that Outdoor Channel is permitted under the terms of the merger agreement, subject to the limitations and requirements contained in the merger agreement, to furnish confidential information to, and conduct negotiations with, any third party that has made an unsolicited proposal to acquire Outdoor Channel, and ultimately terminate the merger agreement with IMOTSC to accept a superior acquisition proposal from a third party under certain circumstances and subject to certain conditions, including the payment to IMOTSC of a $6.5 million termination fee; and

 

   

the opinion, dated November 15, 2012, of Lazard to Outdoor Channel’s Board as to the fairness, from a financial point of view and as of such date, of the consideration to be paid in the Outdoor Channel merger to holders of Outdoor Channel common stock (other than holders who are entitled to and properly demand an appraisal of their shares of Outdoor Channel common stock), which opinion was based on and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken by Lazard as more fully described in the section entitled “Opinion of Outdoor Channel’s Financial Advisor.

In reaching its decision to approve the merger agreement and the Outdoor Channel merger, and to recommend that Outdoor Channel stockholders adopt the merger agreement, the Outdoor Channel Board considered the following potentially negative aspects of the merger and consequences of announcing the merger, but nevertheless determined that the merger agreement and the merger are advisable and in the best interests of Outdoor Channel stockholders:

 

   

risks relating to the similar content and target markets of the two companies’ broadcast channels and the impact and perception of the combination on cable, satellite, and other video carriers;

 

   

the risk that the transactions might not be consummated in a timely manner or at all;

 

   

the restrictions contained in the merger agreement on Outdoor Channel’s ability to solicit competing acquisition proposals and the requirement that Outdoor Channel pay a termination fee of $6.5 million to IMOTSC in order to terminate the merger agreement and accept a superior acquisition proposal from a third party, which may discourage third parties from making a competing proposal to acquire Outdoor Channel;

 

   

the potential loss of commercial relationships prior to the completion of the mergers as a result of such counterparties potential unwillingness to do business with IMOTSC and/or IMOH, or other potential disruptions to commercial relationships that are important to Outdoor Channel as a result of the mergers;

 

   

the restrictions on the conduct of Outdoor Channel’s business prior to the completion of the mergers, requiring Outdoor Channel to conduct its business in the ordinary course and preventing Outdoor Channel from taking certain specified actions, subject to specific limitations, all of which may delay or prevent Outdoor Channel from undertaking business opportunities that may arise pending completion of the mergers;

 

   

the fact that elections to receive the Stock Consideration or the Cash Consideration by Outdoor Channel stockholders are subject to proration, potentially limiting the benefits of such elections to such electing stockholders;

 

   

the potential negative effect of the public announcement of the mergers on Outdoor Channel’s ability to retain management, sales, and other key personnel;

 

   

the risk of diverting management’s focus and resources from other strategic opportunities and from operational matters while working to implement the mergers;

 

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the risk that the mergers would not be completed and that Outdoor Channel would be required to operate its business independently after experiencing the disruptions and negative consequences of the announcement and pendency of the mergers;

 

   

the fact that gains arising from the cash portion of the merger consideration would be taxable to Outdoor Channel stockholders for United States federal income tax purposes;

 

   

the fact that a portion of the merger consideration consists of cash and such portion will be taxable to Outdoor Channel stockholders for U.S. federal income tax purposes as described in “Material U.S. Federal Income Tax Consequences” beginning on page 203;

 

   

the interests that certain of Outdoor Channel directors and executive officers may have with respect to the merger, in addition to their interests as stockholders of Outdoor Channel generally, as described in “Principal Stockholders or Holders of Equity Interests—Principal Stockholders of Outdoor Channel Before the Proposed Transaction and of IMOH After the Proposed Transaction”;

 

   

the challenges and costs of integrating the assets, operations, strategies, cultures and organizations of the constituent companies;

 

   

the risk that key management and other personnel might not remain employed by IMOH;

 

   

the risk that IMOTSC’s stockholders will control the combined company and the fact that IMOTSC’s stock ownership is concentrated in the hands of relatively few stockholders; and

 

   

the amount of indebtedness required to finance the merger and the related restrictions to which the combined company would be subject.

The preceding discussion of the information and factors considered by the Outdoor Channel Board is not, and is not intended to be, exhaustive. In light of the variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Outdoor Channel Board did not find it practicable to, and did not, quantify or otherwise attempt to assign relative weights to the various factors considered in reaching its determination. In addition, the Outdoor Channel Board did not find any single factor or set of factors dispositive in its decision. Rather the Outdoor Channel Board conducted an overall review of the factors described above, including discussions with Outdoor Channel’s senior management and legal and financial advisors, and determined it was in the best interests of the stockholders of Outdoor Channel to approve the merger agreement.

Recommendation of the Outdoor Channel Board of Directors

The Outdoor Channel Board unanimously recommends that Outdoor Channel’s stockholders vote “FOR” Proposal No. 1 to adopt the merger agreement. The Outdoor Channel Board also recommends that you vote “FOR” Proposal No. 2 to approve, on an advisory (non-binding) basis, the “golden parachute” compensation payable or that could become payable to the Outdoor Channel named executive officers in connection with the mergers. The Outdoor Channel Board further recommends that you vote “FOR” Proposal No. 3 to adjourn the special meeting, if required, to permit further solicitation of proxies on the proposal to adopt the merger agreement, if necessary.

Certain Financial Projections

Outdoor Channel makes public only very limited information as to future performance and does not as a matter of course provide specific or detailed information as to earnings or performance over an extended period. The financial projections below are included in this proxy statement/prospectus because this information was considered by the Outdoor Channel Board in evaluating the proposed mergers. The financial projections related to Outdoor Channel, which are referred to as the Outdoor Channel financial projections, and the stand-alone financial projections related to Outdoor Channel’s aerial cameras business, which are referred to as the aerial

 

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cameras business financial projections, were prepared by management of Outdoor Channel. The financial projections relating to IMOH, which are referred to as the IMOH financial projections, and the projections of the estimated net cost synergies anticipated to be realized in the mergers, which are referred to as the net cost synergies projections, were prepared in combination by management of Outdoor Channel and IMOTSC. The IMOH financial projections were initially prepared by IMOTSC’s management and revised by Outdoor Channel’s management to adjust certain assumptions incorporated into the projections. The adjustments primarily reflected: (1) Outdoor Channel management’s more optimistic view of the rate of growth of Outdoor Channel subscribers but with slightly reduced aggregate affiliate fees as a result of lower per subscriber fees for the broader distribution, (2) a more conservative view of the growth rates for the advertising CPM (cost per thousand) rates for Outdoor Channel, and (3) a slightly more optimistic view of rates of growth of subscribers for The Sportsman Channel. However, the aggregate effect of these adjustments did not result in a meaningful variance from the IMOH revenue and adjusted EBITDA projections that were initially prepared by management of IMOTSC. Additionally, Outdoor Channel management supplemented the model to include estimates of stock-based compensation expense and capital expenses which were not included in the initial IMOTSC draft but are reflected in the projections below. All such financial projections were provided to Outdoor Channel’s financial advisor and Outdoor Channel’s financial advisor was directed to use such financial projections in connection with its opinion. The financial projections were not prepared with a view to public disclosure or compliance with the published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. The financial projections do not purport to present operations in accordance with GAAP. Outdoor Channel’s internal financial forecasts (upon which the Outdoor Channel financial projections and the aerial cameras business financial projections are based) are, in general, prepared solely for internal use and capital budgeting and other management decisions and are subjective in many respects and thus susceptible to interpretations and periodic revision based on actual experience and business developments.

The financial projections also reflect numerous assumptions made by management including assumptions with respect to general business, economic, market and financial conditions and other matters including effective tax rates and interest rates and the anticipated amount of borrowings, all of which are difficult to predict and many of which are beyond Outdoor Channel’s and IMOTSC’s control; and do not necessarily reflect revised prospects for Outdoor Channel’s or IMOH’s business, changes in general business or economic, conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time these projections were prepared. Accordingly, there can be no assurance that the assumptions made in preparing the financial projections will prove accurate. There will be differences between actual and projected results, and actual results may be materially greater or less than those contained in the financial projections. The inclusion of these projections in this proxy statement/prospectus should not be regarded as an indication that Outdoor Channel, IMOTSC or their respective representatives considered or consider such projections to be necessarily predictive of actual future events, and the financial projections should not be relied upon as such.

None of Outdoor Channel, IMOTSC or any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of Outdoor Channel or IMOH compared to the information contained in the financial projections, and none of them intends to update or otherwise revise the projections to reflect circumstances existing after the date prepared or to reflect the occurrence of future events.

The financial projections are forward-looking statements. For information on factors which may cause Outdoor Channel’s future financial results to materially vary, see “Cautionary Statement Regarding Forward-Looking Statements” on page 50. The Outdoor Channel financial projections have been prepared using accounting principles consistent with Outdoor Channel’s annual and interim financial statements as well as any changes to those principles known to be effective in future periods. These projections do not reflect the effect of any proposed or other changes in GAAP that may be made in the future. Any such changes could have a material impact on the information shown below.

The prospective financial information included in this Registration Statement on Form S-4 has been prepared by, and is the responsibility of, the management of Outdoor Channel. Neither Outdoor Channel’s,

 

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IMOTSC’s nor any other independent registered public accounting firms have examined, compiled or performed any procedures with respect to the accompanying prospective financial information and, accordingly, do not express an opinion or any other form of assurance with respect thereto. The Report of the Independent Public Registered Accounting Firm for IMOTSC included in this offering document and the Report of the Independent Registered Public Accounting Firm for Outdoor Channel incorporated by reference in this offering document relate to the historical financial information of IMOTSC and Outdoor Channel, respectively. Such reports do not extend to the prospective financial information and should not be read to do so.

Outdoor Channel Financial Projections

The following is a summary of the Outdoor Channel financial projections prepared by Outdoor Channel’s management and provided to the Outdoor Channel Board and Outdoor Channel’s financial advisor. The Outdoor Channel financial projections set forth below exclude projected financial results of Outdoor Channel’s aerial cameras business, which are set forth below separately, given Outdoor Channel’s announcement in June 2012 that it was exploring strategic alternatives for the business, which process is still ongoing.

 

     Fiscal Quarter
Ending
December 31,
2012E
     Fiscal Years Ending December 31,  
(in millions)       2013E      2014E      2015E      2016E      2017E  

Revenue

   $ 19.9       $ 70.5       $ 74.0       $ 77.6       $ 81.2       $ 85.1   

Adjusted EBITDA(1)

   $ 2.9       $ 10.6       $ 11.9       $ 13.2       $ 14.5       $ 15.9   

Unlevered Free Cash Flow(1)

   $ 1.0       $ 5.5       $ 6.3       $ 7.2       $ 7.7       $ 8.7   

 

(1) Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, and Unlevered Free Cash Flow, as used in the Outdoor Channel financial projections, are financial measures that are not presented in accordance with GAAP and include stock-based compensation charges and exclude certain non-recurring charges.

Aerial Camera Financial Projections

The following is a summary of the financial projections of the aerial camera business of Outdoor Channel prepared by Outdoor Channel’s management and provided to the Outdoor Channel Board and Outdoor Channel’s financial advisor.

 

     Fiscal Quarter
Ending
December 31,
2012E
     Fiscal Years Ending December 31,  
(in millions)       2013E      2014E      2015E      2016E      2017E  

Revenue

   $ 6.2       $ 11.7       $ 12.1       $ 12.6       $ 13.1       $ 13.6   

Adjusted EBITDA(1)

   $ 2.0       $ 1.2       $ 1.3       $ 1.4       $ 1.4       $ 1.5   

Unlevered Free Cash Flow(1)

   $ 0.9       $ 0.8       $ 0.7       $ 0.7       $ 0.7       $ 0.7   

 

(1) Adjusted EBITDA and Unlevered Free Cash Flow, as used in the Aerial Camera financial projections, are financial measures that are not presented in accordance with GAAP and include stock-based compensation charges and exclude certain non-recurring charges.

IMOH Financial Projections

The following is a summary of the IMOH financial projections prepared by management of IMOTSC and Outdoor Channel, and provided to the Outdoor Channel Board and Outdoor Channel’s financial advisor. The IMOH financial projections reflect the business of IMOH on a pro forma basis assuming consummation of the mergers. The IMOH financial projections set forth below exclude projected financial results of Outdoor Channel’s aerial cameras business, which are set forth above separately, given Outdoor Channel’s announcement

 

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in June 2012 that it was exploring strategic alternatives for the business, which process is still ongoing. Further, the IMOH financial projections do not reflect estimated cost synergies, net of the cost to achieve such synergies, which are separately set forth below, and tax attributes with a net present value of approximately $38.0 to 40.3 million that are anticipated to be retained by IMOH due to IMOTSC’s significant tax basis that will be amortized over a period of many years and net operating loss carryforwards.

 

     Fiscal Years Ending December 31,  
(in millions)    2013E      2014E      2015E      2016E      2017E  

Revenue

   $ 181.8       $ 191.0       $ 204.2       $ 220.4       $ 239.5   

Adjusted EBITDA(1)

   $ 41.4       $ 46.0       $ 53.7       $ 63.1       $ 74.9   

Unlevered Free Cash Flow(1)

   $ 23.3       $ 25.9       $ 30.6       $ 36.2       $ 43.4   

 

(1) Adjusted EBITDA and Unlevered Free Cash Flow, as used in the IMOH financial projections, are financial measures that are not presented in accordance with GAAP and include stock-based compensation charges and exclude certain non-recurring charges.

Net Cost Synergies Projections

The following is a summary of the projections of estimated cost synergies, net of integration and implementation costs and after taxes, anticipated to be realized by IMOH in the mergers as prepared by the management of IMOTSC and Outdoor Channel, and provided to the Outdoor Channel Board and Outdoor Channel’s financial advisor.

 

     Fiscal Years Ending December 31,  
(in millions)    2013E     2014E      2015E      2016E      2017E  

Net Cost Synergies

   $ (0.4   $ 3.4       $ 5.1       $ 5.1       $ 5.1   

 

(1) Net Cost Synergies, as used in the net cost synergies projections, is a financial measure that is not presented in accordance with GAAP.

Opinion of Outdoor Channel’s Financial Advisor

Outdoor Channel has retained Lazard to act as Outdoor Channel’s financial advisor in connection with the mergers. As part of this engagement, Outdoor Channel’s Board requested that Lazard evaluate the fairness, from a financial point of view, of the consideration to be paid in the Outdoor Channel merger to holders of Outdoor Channel common stock. On November 15, 2012, at a meeting of Outdoor Channel’s Board held to evaluate the mergers, Lazard rendered to Outdoor Channel’s Board an oral opinion, confirmed by delivery of a written opinion dated November 15, 2012, to the effect that, as of that date and based upon and subject to the assumptions, factors and qualifications set forth in such opinion, the consideration to be paid in the Outdoor Channel merger to holders of Outdoor Channel common stock (other than holders who are entitled to and properly demand an appraisal of their shares of Outdoor Channel common stock) was fair, from a financial point of view, to such holders.

The full text of Lazard’s written opinion, dated November 15, 2012, to Outdoor Channel’s Board, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken by Lazard in connection with its opinion, is attached to this proxy statement/prospectus as Annex B and is incorporated into this proxy statement/prospectus by reference. Lazard’s engagement and its opinion were for the benefit of Outdoor Channel’s Board (in its capacity as such) and Lazard’s opinion was rendered to Outdoor Channel’s Board in connection with its evaluation of the Outdoor Channel merger consideration from a financial point of view and did not address any other aspects of the mergers. Lazard’s opinion did not address the relative merits of the mergers as compared to any other transaction or business strategy in which Outdoor Channel might engage or the merits of the

 

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underlying decision by Outdoor Channel to engage in the mergers. Lazard’s opinion was not intended to and does not constitute a recommendation to any stockholder as to any election to be made in respect of the Outdoor Channel merger consideration or how any stockholder should vote or act with respect to the mergers or any related matter.

In connection with its opinion, Lazard:

 

   

reviewed the financial terms and conditions of an execution version, provided to Lazard on November 15, 2012, of the merger agreement;

 

   

reviewed certain publicly available historical business and financial information relating to Outdoor Channel and certain historical business and financial information relating to IMOTSC;

 

   

reviewed various financial forecasts and other data relating to the business of Outdoor Channel prepared by Outdoor Channel’s management and financial forecasts and other data relating to the business of IMOH on a pro forma basis prepared by IMOTSC’s management as adjusted by Outdoor Channel’s management and approved for Lazard’s use by Outdoor Channel;

 

   

held discussions with members of Outdoor Channel’s and IMOTSC’s senior managements with respect to Outdoor Channel’s, IMOTSC’s and IMOH’s businesses and prospects, including projected cost synergies, net of certain integration costs, anticipated by such managements to be realized in the mergers, referred to as the net cost synergies, and net operating losses and other tax benefits estimated by such managements to be utilized by IMOH, collectively referred to as the tax benefits;

 

   

reviewed public information with respect to certain companies in lines of business Lazard believed to be generally relevant in evaluating the businesses of Outdoor Channel and IMOH, respectively;

 

   

reviewed the financial terms of certain business combinations involving companies in lines of business Lazard believed to be generally relevant in evaluating the business of Outdoor Channel;

 

   

reviewed historical stock prices and trading volumes of Outdoor Channel common stock; and

 

   

conducted such other financial studies, analyses and investigations as Lazard deemed appropriate.

Lazard assumed and relied upon the accuracy and completeness of the foregoing information, without independent verification of such information. Lazard did not conduct any independent valuation or appraisal of any of the assets or liabilities, contingent or otherwise, of Outdoor Channel, IMOTSC or IMOH, or concerning the solvency or fair value of Outdoor Channel, IMOTSC or IMOH, and Lazard was not furnished with any such valuation or appraisal. Lazard was not provided with long-term financial forecasts relating to IMOTSC on a standalone basis and Lazard was directed by Outdoor Channel to utilize the financial forecasts relating to IMOH prepared by IMOTSC’s management as adjusted by Outdoor Channel’s management referred to above in performing its analyses. With respect to the financial forecasts and other estimates and data utilized by Lazard in its analyses, including the potential net cost synergies and tax benefits, Lazard assumed, with Outdoor Channel’s consent, that they were reasonably prepared on bases reflecting the best currently available estimates and judgments as to the future financial performance of Outdoor Channel and IMOH, such net cost synergies and tax benefits and the other matters covered thereby. In addition, Lazard assumed, with Outdoor Channel’s consent, that such net cost synergies and tax benefits would be realized in the amounts and at the times contemplated thereby. Lazard assumed no responsibility for and expressed no view as to any forecasts, estimates or data or the assumptions on which they were based. In addition, Lazard relied, at Outdoor Channel’s direction, upon the assessments of Outdoor Channel’s management as to the ability of Outdoor Channel’s and IMOTSC’s managements to integrate the businesses of Outdoor Channel and IMOTSC.

Lazard’s opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date of its opinion. Lazard assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of its opinion. Lazard did not express any opinion as to what the value of IMOH common stock actually would be when issued or the

 

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prices at which securities of Outdoor Channel or IMOH (if a public trading market for such securities existed) might be transferable or trade at any time subsequent to announcement of the mergers.

In rendering its opinion, Lazard assumed, with Outdoor Channel’s consent, that the mergers would be consummated on the terms described in the merger agreement without any waiver or modification of any material terms or conditions. Representatives of Outdoor Channel advised Lazard, and Lazard assumed, that the merger agreement, when executed, would conform to the execution version reviewed by Lazard in all material respects. Lazard also assumed, with Outdoor Channel’s consent, that obtaining the necessary governmental, regulatory or third party approvals and consents for the mergers would not have an adverse effect on Outdoor Channel, IMOTSC, IMOH or the mergers. Lazard further assumed, with Outdoor Channel’s consent, that the mergers would constitute for U.S. federal income tax purposes an exchange under Section 351 of the Code, and that the special cash dividend of $0.25 per share on outstanding shares of Outdoor Channel common stock declared by Outdoor Channel’s Board in connection with the mergers would be paid as contemplated. Lazard did not express any opinion as to any tax or other consequences that might result from the mergers, and Lazard’s opinion did not address any legal, tax, regulatory or accounting matters, as to which Lazard understood that Outdoor Channel obtained such advice as it deemed necessary from qualified professionals.

Lazard expressed no view or opinion as to any terms or other aspects (other than the Outdoor Channel merger consideration to the extent expressly specified in its opinion) of the mergers, including, without limitation, the form or structure of the Outdoor Channel merger consideration or the mergers or any terms, aspects or implications of any registration rights agreement, support agreement, lock-up agreement or other agreements or arrangements entered into in connection with, or contemplated by, the mergers. In addition, Lazard expressed no view or opinion as to the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the mergers, or class of such persons, relative to the Outdoor Channel merger consideration or otherwise. The issuance of Lazard’s opinion was approved by Lazard’s opinion committee. Except as described in this summary, Outdoor Channel imposed no other instructions or limitations on Lazard with respect to the investigations made or procedures followed by it in rendering its opinion.

In preparing its opinion to Outdoor Channel’s Board, Lazard performed a variety of financial and comparative analyses. The following is a brief summary of the material financial and comparative analyses that Lazard deemed to be appropriate for this type of transaction and that were reviewed with Outdoor Channel’s Board by Lazard in connection with rendering its opinion. The summary of Lazard’s financial analyses described below is not a complete description of the analyses underlying its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, is not readily susceptible to partial or summary description. In arriving at its opinion, Lazard considered the results of all of the analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis considered by it. Rather, Lazard made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses. Accordingly, Lazard believes that its financial analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.

In its financial analyses, Lazard considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Outdoor Channel and IMOTSC. No company or transaction used in Lazard’s analyses is identical to Outdoor Channel, IMOH or the mergers, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading, acquisition or other values of the companies and transactions analyzed. The estimates contained in Lazard’s analyses and the ranges of valuations resulting from any particular analysis are not

 

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necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the results derived from, Lazard’s analyses are inherently subject to substantial uncertainty.

The financial analyses summarized below include information presented in tabular format. In order to fully understand Lazard’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Lazard’s financial analyses.

Introduction. In connection with its opinion, Lazard performed a selected companies analysis, selected precedent transactions analysis and discounted cash flow analysis of Outdoor Channel on a standalone basis. Lazard then compared the implied equity value per share reference ranges for Outdoor Channel derived from these analyses with the implied per share value reference ranges for the Outdoor Channel merger consideration. In deriving implied values for the stock portion of the Outdoor Channel merger consideration, Lazard performed a selected companies analysis and discounted cash flow analysis of IMOH on a pro forma basis and multiplied the resulting implied equity value reference ranges for IMOH by 32.4% (the aggregate pro forma equity ownership of holders of Outdoor Channel common stock in IMOH upon consummation of the mergers).

Selected Companies Analyses. Lazard performed separate selected companies analyses of Outdoor Channel on a standalone basis and IMOH on a pro forma basis based, in the case of IMOH, on a “sum-of-the-parts” analysis of its network/television and print divisions. Financial data of Outdoor Channel were based on financial forecasts and other estimates and data prepared by Outdoor Channel’s management. Financial data of IMOH were based on financial forecasts and other estimates and data prepared by IMOTSC’s management as adjusted by Outdoor Channel’s management. Financial data of the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information.

Outdoor Channel (Excluding Aerial Camera) and IMOH’s Network/Television Division. In performing separate selected companies analyses of Outdoor Channel and IMOH’s network/television division, Lazard reviewed certain financial information of Outdoor Channel, IMOH’s network/television division and the following nine selected publicly traded companies, four of which are pure play cable network companies, referred to as the selected pure play companies, and five of which are diversified media companies, referred to as the selected diversified companies, which companies generally were selected because they are U.S. publicly traded companies with primary or substantial operations in the cable network industry in which Outdoor Channel and IMOH’s network/television division operate:

 

Selected Pure Play Companies

  

Selected Diversified Companies

AMC Networks, Inc.

   CBS Corporation

Crown Media Holdings, Inc.

   News Corporation

Discovery Communications, Inc.

   The Walt Disney Company

Scripps Networks Interactive, Inc.

   Time Warner Inc.
   Viacom Inc.

Lazard reviewed, among other things, enterprise values of the selected companies, calculated as equity values based on closing stock prices as of November 14, 2012 plus debt and minority interests less cash, cash equivalents, investments in unconsolidated assets and net present value of tax assets, as a multiple of calendar year 2013 estimated earnings before interest, taxes, depreciation and amortization as adjusted for stock-based compensation, referred as adjusted EBITDA. The overall low, mean, median and high calendar year 2013 estimated adjusted EBITDA multiples observed were 8.5x, 9.6x, 9.8x and 10.2x, respectively, for the selected pure play companies and 6.6x, 7.2x, 7.4x and 7.9x,

 

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respectively, for the selected diversified companies. Based on its professional judgment after taking into account such observed multiples with particular focus on the selected pure play companies since those companies’ primary operations are in the cable network industry in which Outdoor Channel and IMOH’s network/television division operate, Lazard then applied a selected range of calendar year 2013 estimated adjusted EBITDA multiples of 8.0x to 10.0x derived from the selected companies to corresponding data of Outdoor Channel and IMOH’s network/television division.

IMOH’s Print Division. In performing a selected companies analysis of IMOH’s print division, Lazard reviewed certain financial information relating to IMOH’s print division and two selected publicly traded consumer magazine companies, Lagardère Groupe SCA and Meredith Corporation, which companies generally were selected because they are publicly traded companies with a significant portion of their operations attributed to the consumer magazine industry in which IMOH’s print division operates. Lazard reviewed, among other things, enterprise values of the selected companies, calculated as equity values based on closing stock prices as of November 14, 2012 plus debt and minority interests less cash, cash equivalents, investments in unconsolidated assets and net present value of tax assets, as a multiple of calendar year 2013 estimated adjusted EBITDA. The overall low and high calendar year 2013 estimated adjusted EBITDA multiples observed for the selected companies were 2.7x and 6.6x, respectively. Based on its professional judgment after taking into account such observed multiples, Lazard then applied a selected range of calendar year 2013 estimated adjusted EBITDA multiples of 4.5x to 5.5x derived from the selected companies to corresponding data of IMOH’s print division.

This analysis indicated an implied enterprise value reference range for Outdoor Channel of approximately $84 million to $106 million. An implied equity value per share reference range for Outdoor Channel was then calculated by subtracting net debt (as adjusted for the $0.25 per share cash dividend to be paid in December 2012), adding the implied enterprise value reference range for aerial camera of approximately $7 million to $9 million derived from the discounted cash flow analysis described below and dividing the resulting amount by the number of shares of Outdoor Channel common stock outstanding. With respect to IMOH, this analysis indicated an implied overall enterprise value reference range of approximately $298 million to $371 million (based on implied enterprise value reference ranges for IMOH’s network/television division and print division of approximately $256 million to $320 million and $43 million to $52 million, respectively). An implied equity value reference range for IMOH was then calculated by subtracting net debt and adding the estimated net present value of the tax benefits estimated by Outdoor Channel’s and IMOTSC’s managements to be utilized by IMOH of approximately $38.0 million to $40.3 million, which implied equity value reference range was reflected both before and after giving effect to potential net cost synergies anticipated by such managements to be realized in the mergers of approximately $45.8 million to $54.0 million. Implied per share value reference ranges for the Outdoor Channel merger consideration were then calculated by multiplying the resulting implied equity value reference ranges for IMOH by 32.4%, adding the aggregate cash consideration payable in the Outdoor Channel merger and dividing the resulting amount by the number of shares of Outdoor Channel common stock outstanding.

This indicated the following approximate implied equity value per share reference range for Outdoor Channel, as compared to the approximate per share value reference ranges implied for the Outdoor Channel merger consideration:

 

Implied Equity Value Per Share

Reference Range for Outdoor Channel

  

Implied Per Share Value Reference Range

for the Outdoor Channel Merger Consideration

    

Without Potential

Cost Synergies

  

With Potential

Cost Synergies

$5.74 - $6.65

   $6.92 - $7.87    $7.50 - $8.55

 

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Selected Precedent Transactions Analysis. Lazard performed a selected precedent transactions analysis of Outdoor Channel by reviewing publicly available financial information of the following seven selected transactions involving the acquisition of a controlling stake in U.S. fully distributed, maturing and emerging companies in the cable network industry announced since January 1, 2004 for which information was publicly available, which transactions generally were selected because they involved companies with primary operations in the cable network industry in which Outdoor Channel operates:

 

Announcement Date

  

            Acquiror             

               Target             

April 2009

   Hasbro, Inc.    Discovery Kids Network

January 2009

   Lions Gate Entertainment Corp.    TV Guide Network

May 2008

   Cablevision Systems Corporation    Sundance Channel

August 2006

   Hubbard Media Group, et al.    Ovation: The Arts Network

May 2006

   Discovery Communications, Inc.    Discovery Times Channel

November 2004

   The E.W. Scripps Company    Great American Country Network

March 2004

   Comcast Corporation    Tech TV, Inc.

Lazard reviewed, among other things, enterprise values, calculated as the purchase prices paid for the target companies in the selected transactions plus debt and minority interests less cash, cash equivalents, investments in unconsolidated assets and net present value of tax assets, as a multiple of such target companies’ number of Nielsen subscribers as of the announcement date of the relevant transaction. The overall low to high per Nielsen subscriber multiples observed for the selected transactions were $3.06 to $17.71, respectively. Based on its professional judgment after taking into account such observed multiples with particular focus on the fact that the proposed Outdoor Channel and IMOTSC mergers involve the combination of companies with similar programming content, Lazard then applied a selected range of per subscriber multiples of $3.00 to $5.00 derived from the selected transactions to corresponding data of Outdoor Channel as of November 2012. This analysis indicated an implied enterprise value reference range for Outdoor Channel of approximately $114 million to $191 million. An implied equity value per share reference range for Outdoor Channel was then calculated by subtracting net debt (as adjusted for the $0.25 per share cash dividend to be paid in December 2012), adding the implied enterprise value reference range for aerial camera of approximately $7 million to $9 million derived from the discounted cash flow analysis described below and dividing the resulting amount by the number of shares of Outdoor Channel common stock outstanding. This indicated an implied equity value per share reference range for Outdoor Channel of approximately $6.90 to $9.94.

Discounted Cash Flow Analyses. Lazard performed separate discounted cash flow analyses of Outdoor Channel on a standalone basis, Outdoor Channel’s aerial camera business unit and IMOH, on a pro forma basis. For purposes of these analyses, stock-based compensation was treated as a cash expense.

Outdoor Channel (Excluding Aerial Camera). In performing its discounted cash flow analysis of Outdoor Channel, Lazard calculated the estimated present value of the standalone unlevered, after-tax free cash flows that Outdoor Channel was forecasted to generate during the fourth quarter of the fiscal year ending December 31, 2012 through the full fiscal year ending December 31, 2017 utilizing financial forecasts and other estimates and data of Outdoor Channel prepared by Outdoor Channel’s management. Lazard calculated terminal values for Outdoor Channel by applying to Outdoor Channel’s calendar year 2017 estimated free cash flows a range of perpetuity growth rates of 1.5% to 3.0%. The present values (as of September 30, 2012) of the free cash flows and terminal values were then calculated using discount rates ranging from 9.5% to 11.5%.

Aerial Camera. In performing its discounted cash flow analysis of aerial camera, Lazard calculated the estimated present value of the standalone unlevered, after-tax free cash flows that aerial camera was forecasted to generate during the fourth quarter of the fiscal year ending December 31, 2012 through the full fiscal year ending December 31, 2017 utilizing financial forecasts and other estimates and data of aerial camera prepared by Outdoor Channel’s management. Lazard calculated terminal values for

 

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aerial camera by applying to aerial camera’s calendar year 2017 estimated free cash flows a range of perpetuity growth rates of 0.0% to 1.5%. The present values (as of September 30, 2012) of the free cash flows and terminal values were then calculated using discount rates ranging from 9.5% to 11.5%.

IMOH. In performing its discounted cash flow analysis of IMOH on a consolidated basis, Lazard calculated the estimated present value of the standalone unlevered, after-tax free cash flows that IMOH was forecasted to generate during the fiscal years ending December 31, 2013 through December 31, 2017 utilizing financial forecasts and other estimates and data of IMOH prepared by IMOTSC’s management as adjusted by Outdoor Channel’s management. Lazard calculated terminal values for IMOH by applying to IMOH’s calendar year 2017 estimated free cash flows a range of perpetuity growth rates of 1.0% to 2.5%. The present values (as of September 30, 2012) of the free cash flows and terminal values were then calculated using discount rates ranging from 9.75% to 11.75%.

For purposes of this analysis, perpetuity growth rates were derived taking into consideration long-term growth rates for Outdoor Channel, aerial camera and IMOH per the managements of Outdoor Channel and IMOTSC, as the case may be, growth rates for the industry in which they operate and the overall economy and discount rates were derived taking into account a weighted average cost of capital calculation. This analysis indicated an implied enterprise value reference range for Outdoor Channel of approximately $80 million to $118 million. An implied equity value per share reference range for Outdoor Channel was then calculated by subtracting net debt (as adjusted for the $0.25 per share cash dividend to be paid in December 2012), adding the implied enterprise value reference range for aerial camera of approximately $7 million to $9 million derived from the discounted cash flow analysis described above and dividing the resulting amount by the number of shares of Outdoor Channel common stock outstanding. With respect to IMOH, this analysis indicated an implied enterprise value reference range of approximately $355 million to $515 million. An implied equity value reference range for IMOH was then calculated by subtracting net debt and adding the estimated net present value of the tax benefits estimated by Outdoor Channel’s and IMOTSC’s managements to be utilized by IMOH of approximately $38.0 million to $40.3 million, which implied equity value was reflected both before and after giving effect to the estimated net present value of potential net cost synergies anticipated by such managements to be realized in the mergers of approximately $40.8 million to $59.5 million. Implied per share value reference ranges for the Outdoor Channel merger consideration were then calculated by multiplying the resulting implied equity value reference ranges for IMOH by 32.4%, adding the aggregate cash consideration payable in the Outdoor Channel merger and dividing the resulting amount by the number of shares of Outdoor Channel common stock outstanding.

This indicated the following approximate implied equity value per share reference range for Outdoor Channel, as compared to the approximate per share value reference ranges implied for the Outdoor Channel merger consideration:

 

Implied Equity Value Per Share
Reference Range for Outdoor Channel

 

Implied Per Share Value Reference Range for

the Outdoor Channel Merger Consideration

   

Without Potential

Cost Synergies

 

With Potential

Cost Synergies

$5.56 - $7.14

  $7.64 - $9.67   $8.15 - $10.42

Other. Lazard noted, as an additional factor that was not considered part of Lazard’s financial analyses with respect to its opinion but was referenced for informational purposes, that the historical low and high closing prices of Outdoor Channel common stock during the 52-week period ended November 14, 2012 were $5.64 and $7.88 per share, respectively, without giving effect to the $0.25 per share cash dividend, and $5.39 and $7.63, respectively, after giving effect to the $0.25 per share cash dividend.

Miscellaneous. In connection with Lazard’s services as Outdoor Channel’s financial advisor, Outdoor Channel has agreed to pay Lazard an aggregate fee contingent upon consummation of the mergers, which fee is

 

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subject to a minimum of $2.5 million plus, in the event the per share value of the Outdoor Channel merger consideration exceeds $7.50 (calculated based on Outdoor Channel’s average closing stock price over the 10 trading day period prior to closing and including the $0.25 per share cash dividend to be paid in December 2012), an additional amount equal to 3% of such excess multiplied by the number of fully diluted shares of Outdoor Channel common stock and is subject to a maximum of 1.5% of the per share value of the Outdoor Channel merger consideration multiplied by the number of fully diluted shares of Outdoor Channel common stock at closing. In 2010, Outdoor Channel paid Lazard $50,000 in connection with its engagement as Outdoor Channel’s financial advisor, which fee is creditable against the aggregate fee payable to Lazard upon consummation of the mergers. Outdoor Channel also has agreed to reimburse Lazard for its expenses, including fees and expenses of Lazard’s legal counsel, and to indemnify Lazard and related parties against liabilities and other items, including liabilities under U.S. federal securities laws, arising out of or related to its engagement. In addition, in the ordinary course of their respective businesses, Lazard, LFCM Holdings LLC (an entity indirectly owned in large part by current and former managing directors of Lazard) and their respective affiliates may actively trade securities of Outdoor Channel and certain affiliates and/or portfolio companies of InterMedia Partners for their own accounts and for the accounts of their customers and, accordingly, may at any time hold a long or short position in such securities, and also may trade and hold securities on behalf of Outdoor Channel and InterMedia Partners and certain of its affiliates and/or portfolio companies.

Outdoor Channel selected Lazard to act as its financial advisor in connection with the mergers based on Lazard’s qualifications, experience and reputation. Lazard is an internationally recognized investment banking firm providing a broad range of financial advisory and securities services. Lazard, as part of its investment banking business, is continually engaged in valuations of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, leveraged buyouts and valuations for other purposes.

The consideration payable in the mergers was determined through negotiations between Outdoor Channel and IMOTSC and was approved by Outdoor Channel’s Board. Lazard was not requested to, and it did not, recommend the specific consideration payable in the proposed mergers or that any given consideration constituted the only appropriate consideration for the mergers. The decision to enter into the merger agreement was solely that of Outdoor Channel’s Board and Lazard’s opinion and financial analyses were only one of many factors taken into consideration by Outdoor Channel’s Board in its evaluation of the mergers. Consequently, the analyses described above should not be viewed as determinative of the views of Outdoor Channel’s board or management with respect to the mergers or the consideration payable in the mergers or as to whether Outdoor Channel’s Board would have been willing to determine that a different consideration was fair.

Presentation by Outdoor Channel’s Print Media Consultant

On September 11, 2012, the Outdoor Channel Board held a special meeting, in which representatives of Kliger Media gave an oral presentation to the Board regarding the results of its due diligence on IMOTSC’s publishing business, including its independent view that IMOTSC’s print media business appeared relatively stable and would be better insulated from the circulation decline experienced by general interest magazines with larger bases of subscribers and newsstand sales. Although Kliger Media did not present a quantitative analysis comparing the relative degree of magazine circulation decline in either subscriptions or newsstand sales, or a comparison of IMOTSC circulation decline as compared to print circulation decline generally, Kliger Media forecasted a relative stability in the IMOTSC circulation based on, among other things:

 

   

the unique specialty markets served by its publications,

   

the strength of IMOTSC’s key brands,

   

the accomplishment of IMOTSC’s prior work to re-engineer its circulation model, right-size its staff, re-build its internal content management system and position its key brands for digital growth, and

   

the strength and stability of its current management, editorial staff and salesforce.

 

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Kliger Media was selected by Outdoor Channel to provide its views on these matters because of its experience and strong reputation providing consulting services to companies in the print magazine industry. Kliger Media provides services to a wide array of private equity and media publishers for both operational and business development assignments. Jack Kliger, the senior partner in Kliger Media is the current acting CEO of TV Guide Magazine and former President and CEO of Hachette Filipacchi Media, US, and EVP of Conde Nast Publications and CondeNet.

Kliger Media received a consulting fee of $25,000 from Outdoor Channel for its services. Except in connection with its engagement as a consultant to Outdoor Channel in connection with the presentation described above, during the two-year period prior to the date of Kliger Media’s engagement, no material relationship existed between Kliger Media and its affiliates and/or unaffiliated representatives and Outdoor Channel or any of its affiliates.

Outdoor Channel Stockholder Vote Required and Support Agreement

Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Outdoor Channel common stock entitled to vote.

In connection with the merger agreement, on November 15, 2012, IMOH entered into the Support Agreement with the Massie Parties, the members of the Outdoor Channel Board and the executive officers of Outdoor Channel. Under the Support Agreement, the Supporting Parties have agreed to vote their shares of Outdoor Channel common stock (i) in favor of the adoption of the merger agreement; (ii) in favor of any proposal to adjourn or postpone any meeting of the Outdoor Channel stockholders if there are not sufficient votes for approval of the matters described in the preceding clause (i); and (iii) except with the written consent of IMOH, against (x) any Alternative Proposal or (y) any other action or proposal involving Outdoor Channel that would reasonably be expected to prevent or materially impede, interfere with or delay the Outdoor Channel merger or any other transaction contemplated by the merger agreement. For additional information, see the section entitled “—Material Support and Ancillary Agreements in Connection with the Proposed Transaction—The Support Agreement.”

Interests of Certain Persons in the Mergers

In considering the recommendation of the Outdoor Channel board of directors with respect to adopting the merger agreement, Outdoor Channel stockholders should be aware that certain Outdoor Channel executive officers and directors have interests in the mergers that are different from, or in addition to, the interests of the other Outdoor Channel stockholders. These interests create a potential conflict of interest. The Outdoor Channel board of directors was aware of these potential conflicts of interest during its deliberations on the merits of the mergers and in making its decision to approve the merger agreement. The material interests are summarized below.

Outdoor Channel Equity Awards

As of November 15, 2012, Outdoor Channel executive officers and directors hold outstanding and unvested restricted stock and/or restricted stock units and/or fully vested and outstanding stock options which represent approximately 2.9% of the outstanding Outdoor Channel shares of common stock. Under the terms of their award agreements and/or their employment agreements, unvested restricted shares held by certain Outdoor Channel executive officers and all restricted shares and/or restricted stock units held by directors will become vested as of the effective time of the mergers and they will be entitled to receive the same consideration for their Outdoor Channel shares of common stock in the mergers as the other holders of Outdoor Channel shares.

The following tables show the ownership of unvested Outdoor Channel restricted stock and/or restricted stock units (based on 403,750 unvested shares and 93,024 restricted stock units) held by the Outdoor Channel executive officers and directors as of November 15, 2012 and the value of awards that are accelerating in connection with the consummation of the mergers. Additionally, Outdoor Channel directors T. Bahnson Stanley and David C. Merritt each hold 125,000 fully vested Outdoor Channel Stock Options. The exercise price of these options is greater than the per share cash merger consideration and no value was attributed to the options in the table below. These options will be converted into options to acquire shares of IMOH common stock as described in the section entitled “Treatment of Outdoor Channel Equity Awards.”

 

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The value of the accelerating unvested restricted stock and/or restricted stock units in the tables below was calculated by multiplying the number of unvested and accelerating shares of restricted stock and restricted stock units by $8.00 (which represents the per share payment amount to holders of Outdoor Channel common stock in the mergers):

 

Officer

   Number of Shares of
Unvested Restricted
Stock
     Value of Accelerating
Unvested Shares of
Restricted Stock**
 

Thomas E. Hornish*

     167,500       $ 1,340,000   

Thomas D. Allen*

     152,500       $ 1,220,000   

Catherine C. Lee*

     45,000       $ 360,000   

Douglas J. Langston

     23,750       $ 0 *** 

 

* The individual’s restricted stock awards will fully vest upon the consummation of the mergers.
** Represents the value of shares of restricted stock that will fully vest upon consummation of the mergers.
*** The vesting of Mr. Langston’s restricted stock awards will not accelerate upon consummation of the mergers and Mr. Langston’s restricted stock awards will be assumed as described in the section entitled

“Treatment of Outdoor Channel Equity Awards.”

 

Director

   Number of Unvested
Restricted Stock Units
and/or Number of Shares
Unvested Restricted Stock
     Value of Accelerating Unvested
Restricted Stock Units and/or  Unvested
Shares of Restricted Stock*
 

Ajit M. Dalvi

     15,504       $ 124,032   

David D. Kinley

     15,504       $ 124,032   

Thomas H. Massie

     15,504       $ 124,032   

Perry T. Massie**

     —           —     

David C. Merritt

     15,504       $ 124,032   

Michael L. Pandzik

     15,504       $ 124,032   

T. Bahnson Stanley

     15,504       $ 124,032   

Roger L. Werner, Jr.***

     15,000       $ 120,000   

 

* Represents the value of restricted stock units and/or shares of restricted stock that will fully vest upon consummation of the mergers.
** Mr. Massie does not hold any outstanding equity awards.
*** Mr. Werner holds a restricted stock award. All other directors hold restricted stock units.

All equity awards held by the directors will fully vest upon the consummation of the mergers.

Outdoor Channel Employment Agreements and Other Arrangements

Outdoor Channel has employment agreements with each of its executive officers that specify the severance payments and benefits to be provided upon various circumstances of termination of employment. Additionally, Outdoor Channel entered into a Transition Agreement with Mr. Werner in connection with his termination of employment with Outdoor Channel.

Thomas E. Hornish

Mr. Hornish and Outdoor Channel have entered into an Amended and Restated Employment Agreement, dated as of February 1, 2012, as amended on April 10, 2012 (the “Hornish Employment Agreement”). The Hornish Employment Agreement has an initial term through December 31, 2014 and thereafter may be renewed on mutually agreed terms. Pursuant to the terms of the Hornish Employment Agreement, if Mr. Hornish is terminated by Outdoor Channel without Cause (as such term is defined in the Hornish Employment Agreement) or if Mr. Hornish resigns for Good Reason (as such term is defined in the Hornish Employment Agreement), and

 

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in either event, such termination does not occur within the period either three (3) months prior to or twelve (12) months following a Change in Control (as such term is defined in the Hornish Employment Agreement), then Mr. Hornish will receive the following: (i) continuing payments of base salary for a period of twelve (12) months, (ii) if the termination occurs on or after July 1, a pro-rata bonus for the year of termination based on good faith estimates of the achievement of Outdoor Channel performance goals on the date of termination, (iii) reimbursement for the cost of health coverage and benefits for a period of up to twelve (12) months, and (iv) vesting acceleration of 50% of the then unvested portion of any outstanding equity award. If Mr. Hornish is terminated by Outdoor Channel without Cause or if Mr. Hornish resigns for Good Reason, and in either event, such termination occurs within the period either three (3) months prior to or twelve (12) months following a Change in Control (such time period referred to as “in Connection with a Change in Control”), then Mr. Hornish will receive the following: (i) continuing payments of base salary for a period of eighteen (18) months, (ii) an amount equal to Mr. Hornish’s full Target Annual Incentive (as such term is defined in the Hornish Employment Agreement), (iii) reimbursement for the cost of health coverage and benefits for a period of up to eighteen (18) months, and (iv) vesting acceleration of 100% of the then unvested portion of any outstanding equity award. The payment of the foregoing severance amounts is conditioned on Mr. Hornish signing and not revoking a release of claims agreement in favor of Outdoor Channel and Mr. Hornish’s continued compliance with certain non-solicitation, non-competition and non-disparagement provisions contained in the Hornish Employment Agreement, as well as Mr. Hornish’s continued compliance with the terms of a Confidential Information Agreement with Outdoor Channel, through the completion of the severance period. Additionally and pursuant to the terms of the Hornish Employment Agreement, all of Mr. Hornish’s outstanding equity awards will fully vest upon a Change in Control (including the mergers).

In connection with the mergers, Mr. Hornish, Outdoor Channel and IMOH entered into an Assumption, Acknowledgment and Amendment Agreement, to become effective upon the closing of the mergers, pursuant to which, Mr. Hornish has agreed to waive the equity acceler