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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one less in MAFIAA
Hahahahahaha, don’t fuck with the free world!
[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.[/quote]
What about the OiNK? And other admins? You forget everything, you sad f***!
[/quote]
[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]
*hint* *hint*
How many people have been fined / jailed / prosecuted for file sharing because of MD / MPAA / MAFIAA and other bullcrap? Many more lives were screwed because of what they do! The Dutch ISP (forgot the name) had lost many of their clients just because of a takedown order. Do you not think that affects anything?
You are saying to think about the consequences but you have not seen the consequences of actions of the ones that created the problems in the first place!
You are a fuc**** idiot!!!!
Mediadefender just got F in the A.
“Head Shot anyone ?” (#54)
Nah, mate, Head Shot is too clean. I prefer to think of it like they got shot in the balls - much messier, and now MD is stumbling around, bleeding and in pain. Mwah ha ha! (I want someone to kick it while it’s down - I’m praying for some hilarious Pirate Bay intervention.)
Oh, and @ Wade:
Tell your friends dad that I hate him - he can’t have been too upset when ARTISTdirect went from a 1-cent company to a $3 company, and now he and all the other guys are reaping what they sowed - you can’t sell your soul to the Devil and not expect him to collect.
So long and thanks for all the fish. Muppets
@Wade:
Your friends’ father might be out of work, but what about all the people his company have ruined forever?
They have been collecting data which have been used to sue their asses from earth to the moon and back again..
Fuck your friends’ father.
@ #57,#58,#59,#60, and #61 — Gee, you got all those posted within two minutes. Guess all those late nights trolling pedo sites learning the art of one-handed typing have paid off.
die anti-p2p scum.
And that is whats called Pwnt Toast.
i’m on a torrent right now and they are still polluting, ip 209.133.122.211 port 6882
[quote comment="298805"]The pirate bay should definitely aise funds to buy media defender, that would be really funny.[/quote]
Hahahaha! ROFL! Would be nice.
It’s stupid to create a company for this, there’s already RIAA, etc.
This is not the play of a company…
And yes, i think some stuff should be pirated, since some companies just don’t care about their customers…
Next to go…. web sheriff!
Any bets?? :p
Ceeee-le-bra-tions, yeh, come on!!!
Great news!!!
…and everybody piss on their graves too.
[quote comment="299220"][quote comment="298805"]The pirate bay should definitely aise funds to buy media defender, that would be really funny.[/quote]
Hahahaha! ROFL! Would be nice.
It’s stupid to create a company for this, there’s already RIAA, etc.
This is not the play of a company…
And yes, i think some stuff should be pirated, since some companies just don’t care about their customers…[/quote]
Ahh well put comrade. The oppresive chains of capitalism are finally being undone! I too am tired of being forced at knife point by thugs in the private sector to buy Movies, Music, Software, Cars, etc.
Hillary be praised! Soon we won’t even have to pay for healthcare or be responsible for our own retirement.
I must commend the hacker’s bravery when he heroicly decided to tip off pedofiles as to the alleged child porn sting. Pedofile-Americans should not have their rights infringed upon by anyone. And Im glad you all agree.
Putin 08
http://theunexplainedforum.com
[quote comment="299396"]
Ahh well put comrade. The oppresive chains of capitalism are finally being undone! I too am tired of being forced at knife point by thugs in the private sector to buy Movies, Music, Software, Cars, etc.
Hillary be praised! Soon we won’t even have to pay for healthcare or be responsible for our own retirement.
I must commend the hacker’s bravery when he heroicly decided to tip off pedofiles as to the alleged child porn sting. Pedofile-Americans should not have their rights infringed upon by anyone. And Im glad you all agree.
Putin 08[/quote]
Satire is not your forte.
[quote comment="299416"]Satire is not your forte.[/quote]
And clever responses aren’t yours, but that isn’t your fault. You are the perpetual victim here, I think we can safely blame those bigwigs down at the recording industry for your failed education.
But now, finally, after years of RIAA opression, us middle class medium income suburbanites have spoken in one voice: “We will be victims no longer!” By downloading and enjoying other people’s property we can deliver a decisive blow to the Pro Oil War, Endangered Animal Poaching, Transgenderist, Anti-Progressive Thought Criminals at Mediadefender.
P.S. MD and RIAA are responsible for Global Warming.
Way to keep thinking inside the box Comrade #328374, together lets continue to raise free stuff awareness.
[quote comment="299463"][quote comment="299416"]Satire is not your forte.[/quote]
And clever responses aren’t yours, but that isn’t your fault. You are the perpetual victim here, I think we can safely blame those bigwigs down at the recording industry for your failed education.
But now, finally, after years of RIAA opression, us middle class medium income suburbanites have spoken in one voice: “We will be victims no longer!” By downloading and enjoying other people’s property we can deliver a decisive blow to the Pro Oil War, Endangered Animal Poaching, Transgenderist, Anti-Progressive Thought Criminals at Mediadefender.
P.S. MD and RIAA are responsible for Global Warming.
Way to keep thinking inside the box Comrade #328374, together lets continue to raise free stuff awareness.[/quote]
I heard you likes men :)
Good. ^_^ Fuck MediaDefender, and fuck TPB too. =P
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