MediaDefender parent on the ropes
p2pnet news | P2P:- ARTISTdirect, parent company to online scalp hunter MediaDefender, is in trouble.
It’s called in a team of specialists to "assist in the exploration of strategic alternatives," says TorrentFreak, dryly observing:
"That’ll be alternatives to liquidation, then."
MediaDefender has been reeling drunkenly ever since its confidential data started showing up online.
"MediaDefender defender Randy Saaf and his cohorts are going blind as they try to restore their credibility, which, thanks to the leaks of their confidential material, is in tatters," p2pnet reported last September, going on:
"And it couldn’t have come at a worse time for the company, a favourite with the likes of the MPAA (Motion Picture Association of America), RIAA (Recording Industry Association of America) and entertainment cartels behind them."
ARTISTdirect bought MediaDefender for $42.5 million cash in 2005 claiming, "MediaDefender’s Internet anti-piracy solutions have been utilized by many of the major music and entertainment companies in the $160 billion global music and movie industries as an effective means of thwarting illegal downloading and driving consumers to pay for authorized digital content".
Wrong. But never mind. It looked good to shareholders.
Then, "In September 2007, disaster struck," says TorrentFreak, continuing >>>
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 [such as they were] 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.
Now Salem Partners have been hurriedly pulled in to try and sort out the mess, says the story, adding:
"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. Looks like the worst of the financial pain hasn’t even been reported yet."
The pic is from a p2pnet spoof which jested Saaf and Herrera were to be arraigned on 10,00,324 charges of illegal uploading with intent to deceive, bandwidth theft, and grievous misrepresentation.
Definitely stay tuned.
Also See:
TorrentFreak – MediaDefender Parent Company Facing Liquidation, February 26, 2008
reeling drunkenly – MediaDefender fiasco: update III, September 19, 2007
p2pnet – MediaDefender boss Randy Saaf arrested, September 22, 2007
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February 26th, 2008 at 6:04 pm
I guess stupidity really makes blind, didn’t history tech us never to mess with the mases?But i guess some really never learn.
One does not simply go into p2p and show them the middle finger.
One does not simply walk into Mordor either
)
The Internet = The World (this is becoming a synonim at a astonishing rate)
How naive can u be to not realize that eventually the more people u piss off the bigger the chance u Meed Your Maker. The one that’s gonna crush your skull to pieces.
Let this be a symbol to the future of freedom.
The power is shifting towards the people. The more they fight it the stronger we get.
I would love to see the looks on the big corporation’s faces as they watch they’re fortresses crumble in they’re hands.
February 27th, 2008 at 9:32 am
So essentially, when hackers take these matters into their own hands instead of waiting for the law to catch up the matter get resolved. Awesome.
February 27th, 2008 at 12:08 pm
The crackers should go and ruin MediaSentry next. Its these scumbags who are providing IP’s to the RIAA making the Sue ‘Em All campaign possible.