MediaDefender Parent Company Facing Liquidation
Written by enigmax on February 26, 2008After suffering humiliation at the hands of a hacker in 2007, the future of anti-piracy company MediaDefender is in serious doubt. Its parent company, ARTISTdirect, has called in a team of specialists to “assist in the exploration of strategic alternatives.” That’ll be alternatives to liquidation, then.
In early 2005, online music business ARTISTdirect saw its stock being traded at just a cent. Then in mid 2005, it paid MediaDefender founders, Randy Saaf and Octavio Herrera, $43m for their anti-piracy company and the stock rocketed to beyond $3.00. Smiles all round - but not for long.
In September 2007, disaster struck. MediaDefender had gathered many enemies due to their anti-p2p activities. One of them decided to teach the company a lesson by hacking into their systems and leaking their internal emails and closest secrets to the Internet. The effect on the company and its operations was dramatic.
Within days, seemingly everyone knew about the MediaDefender leak and inevitably, news started filtering through to MediaDefender’s customer base. With the company’s secrets out in the open, and its operations virtually shut down, people started asking if it was possible for the business to continue and if it did, how effective could it be? MediaDefender’s customers weren’t happy, and the company was forced to issue $600,000 in credits to them by way of compensation for a total lack of results in the 3 months following the leak. But this was just the beginning.
In a SEC filing, the financial damage started to become clear. As a result of the hacking, by November 2007 MediaDefender had lost a massive $825,000 - and growing. Before the email leak, stock was around the $2.25 mark. Three months later in December 2007, things were starting to look bleak as stock plummeted to $0.63.
With the stock sitting today at $0.51, ARTISTdirect needed to take some drastic action - and they have, calling in Los Angeles based financial services company, Salem Partners LLC, to try and sort out the mess. Salem Partners are to explore “strategic alternatives” for the business (which is currently $30m+ in debt), such as restructuring, merger or sale. For this service they will be rewarded well: Salem are on a $50,000 a month retainer for the first 4 months with numerous six and seven-figure bonuses woven in to the rates, dependent on the deals they manage to do.
They could decide to sell MediaDefender off as a separate entity, so it’s possible that Randy and Octavio would like to buy their old business back. One thing is certain - it won’t fetch anything near the $43m they sold it for. The pair currently pick up $350k a year each at MediaDefender so they’re not quite at rock-bottom yet, but would they even want it back after last year’s disaster? Time will tell.
Potential buyers will probably choose to wait a little. According to a source, ARTISTDirect’s current FORM 10-QSB financial statement is not online, but it should have been posted to SEC by Feb 14th 2007 March 31st 2007. Looks like the worst of the financial pain hasn’t even been reported yet.
Update: A comment from a TorrentFreak reader who wanted to correct the above date:
“Most companies have financial years that end 12-31, and quarters that end 3/31, 6/30, 9/30. You file 4 reports about financials (at a minimum) per year. A quarterly report is called a 10-Q, a yearend report is called a 10-K. The forms they are filing are 10-QSB and 10-KSB, with the SB meaning small business, however they are still governed by the same rules and regulations.
Here is where it gets tricky, there are 3 types of filers. Large Accelerated, Accelerated and Non-Accelerated. Your Large Accelerated are your big boys, Ford, GE, Coca-Cola, etc, they have a market capitalization of over $700Million US. Accelerated are companies you’ve heard of, but they aren’t that big. Market capitalization of between $50million and 700million.
Non Accelerated is everything under 50million. To be filing a 10-QSB/KSB, you have to be Non Accelerated by default. So anyways, a non-accelerated company has 45 days after the end of a quarter to file a 10-Q. If their financial end of year was 6/30, their 10-Q would have been due February 14th. However, this time of year, it’s time for a 10-K, because their financial end of year is 12/31. A Non Accelerated company gets 90 days from end of year to file a 10-K. All of this means, they are due to file a 10-KSB by March 31st.”
The Pirate Bay finally got what they hoped for.
Previously: Most Popular DVDrips on BitTorrent (wk8)
Next: Swedish Record Labels See Filesharing as Virtue
124 Responses
Pages: [1] 2 3 4 5 » Show All
I was wating for it!
i cry blood for them… :D
owned
They’re probably going to fail miserably.
First comment ftw!
I could not be happier about this.
Finally! :-) Oh, so sweet.
One can only hope that RIAA and MPAA will soon follow MD on the way into the cold black oblivion.
w00t!
my heart beats pure piss for them…
haha biatches deserve it…
Just planting seeds here but maybe orgs like RIAA etc will bail them out to try and save the face of the antiP2P scene. Would be costly though.
Gotta say, that is one beauty of a hack, respec!
lol funny shit. Respects go out to the guy that did the 2007 job.
And just in case if any dumb-as-a-brick monkey gonna come here with false accusations:
1) No, filesharing isn’t stealing.
2) Yes, so called “laws” of so called “intellectual property” are created solely for the purpose of protecting the rich from the poor.
3) No, there’s absolutely no sense, virtue, merit or justice associated with said laws.
4) Yes everyone who shares copyrighted content is actually opposing legalized robbery which copyright is.
5) No, pigs won’t fly. Even if RIAA, MPAA, MD (R.I.P.) and corrupted governments want them to.
fuck em, I shit on their unemployed faces
p2p ftw!
While this is a major win for the file-sharers, think about it. I have a friend whose father works for AD, in a pretty small capacity, but it is still his career. He does nothing to stop file sharers, but now he is gonna be out of work.
So, before you all cheer and say great, think about people who are likely to be displaced by this action, and kids whose lives are going to degrade dramatically because of a company who is just doing their job.
It is rightful to fight against what we think is wrong, but people are affected by things like this, peoples lives will be screwed by this. So if you think it is great that hundreds of people are going to be out of work….I think you are a prick.
Serves them right….bastards!
Hahahah!
So let’s check the scorecard. The RIAA/MPIAA darling MediaDefender waged a war on P2P, and in return, they got fucked up the ass so hard their PARENT COMPANY now owes 30+ million dollars in debt.
Justice, thy name is AWESOME.
[quote comment="298618"]and kids whose lives are going to degrade dramatically because of a company who is just doing their job[/quote]
You know, Nazis also said that they were “just doing their job” or “carrying out their orders” or some other crap like this.
Everyone chooses his own fate. Those guys could be on our side and win. But they chose wrong and… well, it’s a war.
Arrgh, walk the plank, yeh smelly thugs!
P2P Insurgency blowout!
Bend over Media Defender, the schooling ain’t over yet…Dipfucks!
To Wade:
You are right. The people who are working for MD/AD are fucked. but then again, they knew fully well that the company’s were legally on shaky ground and could lose out any day. Its no more different than people losing jobs working for startups. That’s just life. 90% of all businesses fail. You adjust to the risk and move on. I know. I owned one and failed at it. i still have $ 150,000 in bills to pay after 4 years. Hasn’t stopped me though from moving ahead.
To quote Tyler Durden:
Do not fuck with us
[quote comment="298618"]While this is a major win for the file-sharers, think about it. I have a friend whose father works for AD, in a pretty small capacity, but it is still his career. He does nothing to stop file sharers, but now he is gonna be out of work.[/quote]
If you value career stability, you shouldn’t be working for a company that paints a humongous bullseye on itself. The moment they purchased MediaDefender, whose whole existance revolves around fighting an unwinnable war against filesharing, he should have run for the hills, if only because it’s a clear sign the CEO is smoking crack.
Call me a prick, but if neither you nor him could see disaster looming on the horizon, I call you both dumb as a stump.
[quote comment="298618"]While this is a major win for the file-sharers, think about it. I have a friend whose father works for AD, in a pretty small capacity, but it is still his career. He does nothing to stop file sharers, but now he is gonna be out of work.
So, before you all cheer and say great, think about people who are likely to be displaced by this action, and kids whose lives are going to degrade dramatically because of a company who is just doing their job.
It is rightful to fight against what we think is wrong, but people are affected by things like this, peoples lives will be screwed by this. So if you think it is great that hundreds of people are going to be out of work….I think you are a prick.[/quote]
BWAHAHAHAHAetc…
Cant believe record labels actualy payed them multi million sums….
Anyone wanna start a company and suck from the bleeding dinosaur?
we can hire idiots who record IPs in torrent swarms 24/7 and make millions!
Wade, you call that “work”? I call it prostitution.
Pages: [1] 2 3 4 5 » Show All
Responses are closed
All remaining responses will continue to be archived. Use the TorrentFreak forums if you want to discuss something.