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)
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120 Responses
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One down. Good.
Now let’s do Media Centry.
we can hire idiots who record IPs in torrent swarms 24/7 and make millions!
No. Let do this for people using Mute or Tor where every sharer seem to have 100 of thousand of IP address. This is more fun.
“So if you think it is great that hundreds of people are going to be out of work”
They are not people. They are parasites. This will teach them a lesson not to do something dishonest and unethical! Plus good luke to find a job, particularly in hight tech, with such a bullet on your CV: Oh! I was working for a corporation of tugs!
Ha!
They are Fucked Up, LoL
Excuse me while I wipe a tear from my eye…
…from laughing too hard. :`D
HAHA these guys deserve what they got, 100%.
[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]
Unlike most of the people that quoted you I won’t say he deserves to loose his job. But you probably won’t get credit for your story on this site and personally I have to tell you I simply don’t care!
They are helping RIAA/MPAA to sue the shit out of people that did nothing but download a few songs. I feel no sympathy for them.
I’m sure noone of them would spare me if they earned just 10$ from delivering information to sue me. So honestly… Tell me… Why SHOULD I care…?
[quote comment="298654"]To quote Tyler Durden:
Do not fuck with us[/quote]
QFT
<3 Fight Club :-)
They are really fucked up! lolz
as always seen before
http://proxy4school.blogspot.com/
I can’t help but be amused by this. They got what was coming to them.
[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]
I’ll agree it’s a shame to see people lose their jobs, but you can always get another job. But in all movements someone ends up getting their asses handed to them. Think of all the people who were hurt financially by blacks becoming free at the end of the civil war, and what about the racist pigs when they finally (100 years later) got their rights. Or women, the ultra patriarchal men were hurt when they got the right to vote. No matter what someone’s gonna get hurt, so go with the side you think is right or stay out of it.
MediaDefender for liquidation!! W00T..
Lollll.
Ha.. Stuff ‘em and their selfish attitudes.
Let them go find a real job.
I’ll give you a buck fifty for MediaDefender. Another buck if Randy comes clean my house.
Very sad, but that’s a decision you have to make when you work for a company like that and now you have to question whether working for a million dollar company with such poor security is worth it?
http://www.mp3kiwi.com
woot, fuckers. x)
At the end of the day Randy Saaf - the guy responsible for this company even existing in the first place - is still worth $40 million+ and still has a $350k/year salary. Spreading crap through torrents is still very very lucrative, whether you want to believe it or not. only reason for the sudden drop in media defenders stock price is because of the leak of their source code.
[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]
(Cue the violin.) Oh, boo-hoo. Maybe your friend’s father should have been a bit more choosy about who he decided to work for. Obviously for him it was all about the paycheck and nothing about right or wrong. Squirt some tears for him if you like, but I won’t. Anybody, and I mean EVERYBODY associated with scum like Randy Saaf and Co. deserves what they get.
[quote comment="298618"]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.[/quote]
What was that? Sorry, I was just popping some more champagne and couldn’t hear you over the sound of the party. Let me guess, you’re still whining about the fate of people that work/worked/slimed for Media Defender? Cry me a river, douchebag. Who told them to do such a “job” anyway? If you’re going to make a living by trading on/causing the misery of others, then just suck it up when karma bites you in the ass for having the moral fortitude of a slug. There’ll be no tears shed here for any of those dirtbags. Now the next step is for trackers to sue Randy Saaf and Octavio Herrara personally to relieve them of their ill-gotten gains. There should be no letup until they are crushed underfoot and broken like the vermin they are. Now, where’s my glass of bubbly?
[quote comment="298618"]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.[/quote]
I certainly hope so. Couldn’t happen to a more deserving bunch of assholes. :)
[quote comment="298618"]So if you think it is great that hundreds of people are going to be out of work….[/quote]
I think it’s absolutely terrific that THESE particular hundreds of people are going to be out of work. :)
[quote comment="298618"]I think you are a prick.[/quote]
Since you are obviously someone who spends much time on your knees sucking industry dick, I will defer to your expertise in this matter. :P
The pirate bay should definitely aise funds to buy media defender, that would be really funny.
To wade (#14)
WTF do you mean “he does nothing to stop file sharers” by working there he is part of the machine and as such deserves to be kicked with the rest of them (check nazi reference by someone above)… if you need another way of looking at it.. think of the links in a chain.I do wish the “bigger” boys in the company suffer more, but sadly that may not happen… but hope your pals dad and his family suffer… yes, i want their entire families to suffer… like I want the entire families of the RIAA get cancer, smallpox, AIDs etc..if not all at once..one disease at a time.
[quote]
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.
[/quote]
Well boo fucking hoo… think about all the collage kids whose lifes were fucked by the lawsuits… single parents… grandparents (dead people? :p) etc
Live by the gun, did by the gun… profit via scum, suffer and die like scum.
[quote]
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. [/quote]
I wonder if the above quote were the exact words used by the RIAA before they started sueing…. read the above again and think about it.
In closing you might think or say I am a “prick”.. although I disagree I still respect your opinion.. but I think reading my post and your post… far fewer people are going to think I am a prick than those that think you are a cunt (and not a proper one either… coz I happen to like pussy).
As for this article/report…. WOOT! WOOT!
[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]
karma sure is a freak’n (female dog) lol
What you’re saying is true, but there are other jobs. People need to let go of the idea that you land a job and don’t have to worry about it ever again. Shoot, I wish I had a job, this way I’d be able to afford a new car and my stupid tuition. This guy at least has experience under his belt.
So, when he goes out looking for a job, he might just be the dude who takes the job from my student ass because said organization doesn’t want to deal with the faults of the inexperienced.
Life isn’t fair, but we can make it fair and believe it or not, file sharing and the freedom of the net can be a stepping stone to making life fair. I’m not good with words and this is a simple response, so I’ll leave out the things I know that lead me to such a conclusion.
Again, I feel bad for these people, but they can find other jobs no problem.
The joy. The happiness.
[quote]Well boo fucking hoo… think about all the collage kids whose lifes were fucked by the lawsuits… single parents… grandparents (dead people? :p) etc[/quote]
Exactly!!! Don’t forget the people that didn’t even have a computer were busted and fined.
Everyone crying about people losing their jobs should STFU. They should have chosen a different line of work. Should fight in a “war” that can’t be won.
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