GlobalMedia.com In Trouble
Faced with the possibility of having to shut down atthe end of the year, Globalmedia.com (www.globalmedia.com), received a fastcash infusion of $1 million in a complex stockdeal on Wednesday.
GlobalMedia signed share purchase agreements toraise US$1 million from shareholder, Standard RadioInc., a Canadian media company. Four board members(Winston Barta, Robert Fuller, Jack MacDonald and L.James Porter) resigned on Wednesday in connection withthe financing deal. The change in the board was tomake the company "more attractive for funding", saidCEO Jeff Mandelbaum.
In a statement, the company said that the $1 millionwill allow GlobalMedia to continue to operate for 4 to6 weeks, after which, it will need to obtain"additional financing in order to continue as agoing-concern."
To cut even more costs, 25 percent of the staff was cutacross the board recently. "The company needed to havea clear path to profitability and this move was theprudent thing to do," said Mandelbaum. Globalmedia nowhas about 75 employees in its Vancouver offices.
On Friday, GlobalMedia named media veteran, BarrPotter, as the new president and COO. Mandelbaum, whowas previously president, retains his CEO and chairmantitles. Potter will oversee the day-to-day operationsof the company while Mandelbaum will deal with financing andbuilding "key customer relationships.
Mandelbaum said that the company made some mistakes inthe past that it won't repeat. For one, he said, hewon't give away streaming services for free. Previously, GlobalMedia offered its streamingservices to radio stations for free, while getting acut of advertising and e-commerce revenues.
"We realized we needed to shift the business model,"he said. "Free doesn't work. We'll be looking forenlightened radio stations that realize streaming isnot free and not an experiment."
GlobalMedia will continue to provide radiostations with custom players and e-commerce solutionsbut will also create "high-end, custom built solutionsfor clients" like its recent NFL deal. He said thecompany will be more services-based and act more likean application solutions provider (ASP).
GlobalMedia has been active this year in acquiringeven more radio stations. It acquired stations fromCMGI's iCAST and Magnitude Network for $6 millionafter CMGI wanted out of the radio services business. Instead, iCAST chose to focus on creating Internetradio stations, although that still hasn't stoppedCMGI from possibily closing iCAST. GlobalMedia alsopurchased the webcasting assets of OnRadio in June for$9 million.
So what is the solution for radio providers? Is itin-stream advertising? "No, it's part of thesolution," he said. But he did say that static bannersare not effective for advertising. Mandelbaum hintsabout upcoming annoucements where GlobalMedia willpartner with advertising and e-commerce companies toincrease its revenues.
But with BroadcastAmerica's recent bankruptcy filingand CMGI's dismantling of Magnitude Network, is therestill money to be made from terrestrial radiobroadcasters? Mandelbaum thinks so, saying he's still"bullish on radio."
GlobalMedia's stock price has tanked in the lastfew months, trading below a dollar for the last month. The company's 52 week high is 9 5/8. If the companydoes close its doors, it will be the firstpublicly-owned streaming company to shut down.