Just two months ago,
lesser-known Viggle said it would buy startup GetGlue for $25 million in cash, plus stock
that was worth about $53 million at the time of the deal. Viggle said it would
run both brands and keep GetGlue's 34 employees, with GetGlue CEO Alex Iskold
scoring a Viggle senior executive position and board seat. Both companies are
based in New York.
But somewhere in the past few
weeks, something went wrong.
On Sunday, Iskold sent a note
to reporters who covered the November merger announcement. He included a link
to a short -- and short on details -- GetGlue blog post saying
simply that the company is "staying independent." (Time Warner,
CNNMoney's parent company, is a GetGlue investor.)
Viggle released a short
statement from CEO Robert Sillerman that barely mentioned the scrapped deal.
Sillerman said simply that the merger cancellation "was cordial," and
expressed his best wishes for GetGlue. Viggle has "seen impressive growth
in our business" since the proposed GetGlue buy, he added.
Viggle, which bills itself
"the first ever loyalty program for television," is a publicly traded
company. Its financial disclosures suggest that it could have had a hard time
ponying up the cash for GetGlue. The company declined to comment on that point.
According to its last
quarterly report, Viggle (VGGL)
had a mere $738,000 in cash on hand at the end of September. Meanwhile,
Viggle's shares are down almost 20% this month alone, with an 8% slide on
Monday after the merger cancellation was announced.
Viggle is taking out loans
from CEO Robert Sillerman to fund its working capital needs, according to a
regulatory filing submitted Friday. Sillerman's investment company extended a
$10 million credit line to the company in June. It was subsequently increased
several times and now stands at $20 million. Viggle has tapped the credit line
several times, including a $1 million advance it took last week.
On January 8, Viggle
disclosed that it and GetGlue were "discussing an extension" of the
closing date for the merger -- just a few days before it was called off.
And so the companies will
remain on their own paths in the social TV field, also known as "second
screen" apps that tap into TV viewers' use of mobile devices while they
watch their favorite shows. More than a dozen startups have popped up to take
advantage of the trend, with each platform taking a slightly different approach.
[ Watch the related video, click Here ]
Viggle awards users points
for "checking in" through an app when they watch TV shows. The app
uses audio fingerprinting technology to identify automatically which show a
user is watching. Then, users can cash in points for gift cards from partners including
Barnes & Noble (BKS,
Fortune
500), Best Buy (BBY,
Fortune
500), Chili's, Apple's (AAPL,
Fortune
500) iTunes and more.
Viggle's parent company was
founded in June 2010, but the TV check-in service didn't launch until January
2012. The platform's user base is now at 1.2 million.
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