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.
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aaawww … lemme puke in their cereal bowl for them. I don’t give a fuck about them. Good riddance, one more tyrant down. Rise!
A celebrity jeopardy quote sums up how I feel about MediaDefender “suck on it Trebeck, suck it long and suck it hard!”
Bye Bye Mother Fuckers Bye Bye and that was all she wrote.
Thank you TF! You have made my day!
Was feeling a bit low today… a bit depressed for a lot of reasons but this is like someone turned on the light in my darkness!
Ohhh am going to sleep like a baby knowing a lot of fuckwits are going to be missing their sleep!
Another tentacle lost from the RIAA monster!
HEHEHEEHE am going to laugh myself silly to sleep! Oh actually… will open a bottle of bubbly like my brother filesharer on top!
Cheers and bottoms up!
Head Shot anyone ?
Yaaaaaaaaaay!
actually i will comment on wades post
how about you ask you imaginary friends dad if he even liked his job odds are this will be the best thing that ever happened to him (if they even go down) more than 50% of all male do not like their current work status but do not want to leave because of the fear of not getting another job most likely your imaginary friends family’s quality of living will increase because the father has experience and most likely a good record
if you don’t talk you sound a lot smarter than the idiot who does
This was COPIED from STEVEROSS4PRES.COM
NOT COOL!
lol STEVEROSS4PRES.COM is funny as hell!
nice!
Yeah, I’ve seen that STEVEROSS4PRES.COM site posted around a lot, not bad.
Funny guy
[quote comment="298916"]Yeah, I’ve seen that STEVEROSS4PRES.COM site posted around a lot, not bad.
Funny guy[/quote]
Yeah, hope he wins!
[quote comment="298917"][quote comment="298916"]Yeah, I’ve seen that STEVEROSS4PRES.COM site posted around a lot, not bad.
Funny guy[/quote]
Yeah, hope he wins![/quote]
Yeah, but he needs a lot of support for that to happen.
LOL!!!!! This made my day. Hope all those loser parasites have to find a REAL job. Now if only this happened to the MAFIAA.
Do you think piratebay or any other p2p tracker site would want to buy the company?
If the company is worth a fraction of its former value, it could be interesting to shut down the operations and horde the company secrets so no other company could attempt to use them.
Or turn the company into a p2p tracker website. That would be ironic, twisted, and hilarious. Somebody buy the domain name quick!
This is what happens when you fuck a stranger in the ass! — Walter dixit
I’m glad. I couldn’t care less that they’re losing their jobs. Working for the wrong cause will hopefully always fail, and if you can’t see that, it’s your own fault. I only feel bad for their kids, but I’m sure they have enough money to live on until the next job.
Mediadefender has stock and customers?
What does it DO????
[quote comment="298929"]Mediadefender has stock and customers?
What does it DO????[/quote]
Look at #64
http://mediadefender.justgotowned.com/
does the plummet have anything to do with the U.S recession and not just the $600,000 loss? Most-likely not but just wondering.
Thank You Anonymous 2007, well done.
If I were in another chair, I would’ve twirled around and rejoiced. But instead, I just kind of yelped and laughed.
MD deserves to lose all their ill-gained profit.
They didn’t hack into anything, one of the people in MediaDefender had been forwarding all emails to a web mail account, which circumvents their in-house security. He used a weak password on the account which they cracked.
Also, I wouldn’t worry too much about the heads of Mediadefender. They seem to have nice jobs of cybersquatting and so forth to fall back upon. Read the emails for a hilarious list of the ones owned by Octavio, including “BITCHESILIKETOFUCK.COM” and “LESBOWL.COM”
All large companies employ people, no shit…
IF your friends father worked here, tell him to get a new job
Lol, pwned!
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