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Broadcast America Files for Bankruptcy, Gets Acquired

Ailing radio webcaster BroadcastAmerica (www.broadcastamerica.com) said it is in the process of being acquired by SurferNETWORK.com and as part of the deal, filed for Chapter 11 bankruptcy in a Maine court on Tuesday. The financial details of the transaction weren't disclosed.

Recently, there have been rumors that BroadcastAmerica was laying off many of its employees, but a company spokesperson denied that on Tuesday. "Absolutely not, there have not been any layoffs," said the spokesperson. All 80 employees will remain, said the representative.

There were indications that BroadcastAmerica has been having trouble raising venture capital. The company was unavailable to comment specifically on why it filed Chapter 11.

BroadcastAmerica's woes may be because it has been looking to be a portal company, driving traffic to its dozens of targeted sites like BroadcastTalk.com, BroadcastEurope.com, BroadcastUrban.com, and others. Critics say that this is the wrong tactic for a radio aggregator, since it must rely on banner ads and high traffic to make money.

Michael Peterson, senior VP of streaming technologies at Coollink Broadcast said ad-insertion technologies are the best way to generate "significant early revenues". "In contrast to Broadcast America's website ad-banner model," he said, "CLBN's revolutionary live and interactive, synchronized rich-media streaming ad-insertion solution is proving to be the right revenue model for the time." Broadcast America has not been using ad insertion. In a May interview with Streamingmedia.com, John Brier, president and COO of BroadcastAmerica, said that ad-insertion trials were underway but was following its portal strategy from day one.

The combination of the two companies seems to make good sense, especially since BroadcastAmerica and SurferNETWORK (www.surfernetwork.com) are both in the business of helping radio stations stream their signals on the Internet. Together, they stream over 1,000 radio stations. New Jersey-based SurferNETWORK.com, has just 20 employees, and claims to have over 250 radio stations. It also has an in-stream targeted ad insertion system, much like those unveiled by companies like Coollink Broadcast Network (CLBN), iBEAM, and Activate.

"We believe the pairing of our two companies has tremendous potential to create the number one online radio experience on the Internet for both listeners and advertisers," said Brier, in a prepared statement. "Once the new company is formed, I believe no other Internet destination will be able to offer our breadth of quality content with proven, targeted advertising, tailored to listeners' tastes and demographics."

The new company will be called BroadcastAmerica and will keep its headquarters in Portland, Maine. Brier, currently President and COO of BroadcastAmerica, will remain President of the new company. Gordon J. Bridge, currently Chairman and CEO of SurferNETWORK.com, will become Chairman and CEO.

Can BroadcastAmerica shake its doldrums? CLBN's Peterson expressed his respect for BroadcastAmerica's efforts and said he hoped it could "rise above" their current problems. "I think there has to be a shakeout at some point in the marketplace based upon these companies ability to monetize their individual efforts. Unfortunately, it appears that BroadcastAmerica's model was unable to sustain itself in the early going."

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