I want to believe in National Lampoon (AMEX:NLN). The folks that brought us the traveling Griswolds and the food-heaving Bluto Blutarsky can't be all that bad, can they? Unfortunately, it's been 29 years since Bluto yelled out "food fight," and 24 years since Clark Griswold packed up his family to head to Walley World.

The company bearing the National Lampoon brand these days is feeling awfully irrelevant -- and just not as funny -- as it panders to a smaller audience.

Oh, National Lampoon is still targeting the toga-donning campus hipsters that it once owned. Unfortunately, they aren't necessarily paying attention at this point. Investors have dismissed the stock -- placing it on double secret probation, if you will -- and National Lampoon has been equally dismissive.

Am I saying that the company is like someone doing a keg stand at a fraternity bash? You bet. The company's fiscal third-quarter press release was issued at 4:21 a.m. on Saturday, two days after it unceremoniously filed with the SEC. Sure, it's actually three hours earlier out in the company's West Coast base, but this leaves me wondering whether National Lampoon didn't actually attend that Friday night kegger before submitting the release.

The numbers don't look pretty when you're sober. Revenues fell by 47% to a mere $0.8 million. The deficit did narrow to $1.2 million -- or $0.18 a share -- but it's clearly still a deficit. The red ink is troublesome because you're talking about a company with negative working capital and book value.

Channeling Dean Wormer
"Fat, drunk, and stupid is no way to go through life, son," Dean Wormer said.

Despite the glory and impressive lineage, National Lampoon checks in at a market cap of less than $20 million. Really. It's barely a pimple on the Wall Street radar, and those who do buy into a company this small should be aware of the volatility and risks involved.

At this point, Blutarsky would stuff his face and pound his cheeks to explode: "I'm a zit, get it?"

The problem is that National Lampoon has maintained the maturity of a Blutarsky, but without the rabble-rousing spirit of a seven-year college undergrad willing to slap on a pirate costume and make something happen.

The company has been content to license its name and run fledgling websites, but without the vision and wisdom that a seasoned comedy pro should command. That may change, now that the company is taking bold steps to bankroll its own future.

Until recently, National Lampoon licensed its properties to third-party film studios and book publishers. Taking a page out of the Marvel (NYSE:MVL) playbook, though obviously on a much smaller scale, National Lampoon is starting to produce its own films and put out its own books.

The first film on the slate will be National Lampoon's Bag Boy, set to hit a multiplex near you later this year. Films aren't cheap. Even when you skimp on casting -- and just so we're clear here, the stars here are Dennis Farina and Paul Campbell (Will from the Nobody's Watching online video phenomenon) -- marketing and distributing a theatrical release is a tall task, made even taller by National Lampoon's lackluster financials.

A hit can go a long way. Even if taking a comical look at grocery stores is material that's been recently mined by Employee of the Month and the Chad Vader online serial, I think there's room for another sleeper hit. Even a marginal success can have a material impact, making things that much easier for the company's next film, Ratko, The Dictator's Son.

A little bit louder now
Putting out its own films and books may be a gamble worth taking, but the company could still have bigger interests in some of its ventures. National Lampoon radio is promising outlet. I'm just starting to hear it as channel 154 on XM Satellite Radio (NASDAQ:XMSR). Unfortunately, the company has just a 25% interest in the venture.

There are also lost opportunities in cyberspace. A lot of the money the company is making these days is coming from online advertising. Comedy sites like NationalLampoon.com, TogaTV.com, and now DrunkUniversity.com are generating online content, while it distributes clips through revenue-sharing deals with sites like AOL, Joost, and YouTube.

The company isn't doing a very good job in promoting its virtual presence. Its YouTube page has less than 200 subscribers. YouTube stars Smosh and Longelygirl15 have 121,000 and 95,000 subscribers, respectively.

Even with limited funds, National Lampoon is in a better position to stand out in the clip culture revolution. However, it's a fringe player there, and it apparently isn't the top campus draw, either.

The company claims to reach a nearly a quarter of the country's college students, but what's really going on with the coeds?

  • Facebook supposedly turned down a $1 billion offer from Yahoo! (NASDAQ:YHOO) last year.

  • News Corp. (NYSE:NWS) is generating $300 million a year in advertising through Google (NASDAQ:GOOG) alone.

  • IAC/InterActiveCorp (NASDAQ:IACI) acquired a majority stake in CollegeHumor.com last year that valued the site at a lot more than all of National Lampoon is worth today.

So where's the shortcoming, National Lampoon? Is it the lack of a funny bone, or deficiencies in marketing and monetization? It may be both, but I'm not amused. At this point in your life cycle, you should be laughing all the way to the bank, instead of slipping on 10,000 marbles.

Marvel and Yahoo! are Motley Fool Stock Advisor newsletter selections.

Longtime Fool contributor Rick Munarriz never made it to Walley World, but he has been to Magic Mountain -- the real Walley World -- a few times. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.