Viking Freight, Inc.
Two Way TV, a small high tech company, is the worldwide leader in interactive television technology and games for television broadcast. Its Ark system is the standard for broadcasting interactive television features simultaneously over multiple channels on cable, terrestrial digital and satellite. With revenues of approximately £4 million at the beginning of 2003, it was still unprofitable each year in its 10-year history. The Company, owned by several ventures, including NTL Europe (40%) and Scandia Media Investments, the media venture arm of Scandia Insurance Company (40%), was losing £200 thousand per month and facing legacy liabilities of £25 million. It had recently completed an 18-month program to reduce head count from 250 to 115; its near term business prospects were limited by spending cuts at independent television channels and the financial problems facing cable operators, NTL and Telewest, its largest customers.
As Chief Operating Officer of NTL Europe, Robert A. Schmitz served as a Director of Two Way TV and led the restructuring. He was named the non-executive Chairman of a newly formed company, Two Way Media, which bought the assets of Two Way TV.
Taking an active role as Director, Quest forced a further downsizing of the company to 55, appointed a new CEO, settled commercial legacy liabilities at less than 10p per pound, and negotiated a receivables financing package to ease the liquidity crisis. The company, also burdened with two 10-year leases on office space that it no longer required, was placed into an administration procedure under the new Enterprise Act. The Administrator sold the business and assets in an auction that involved four potential strategic buyers and Two Way Media, Ltd., a new firm organized by the company’s principal shareholders. Two Way Media successfully acquired the assets of Two Way TV in November 2003. In forming the new company to acquire the assets of Two Way, NTL Europe successfully negotiated significant changes to the shareholder agreements. Mutual consent among the three shareholders on major decisions was replaced with an agreement that gives NTL Europe the right to force a sale of the company after November 2004.
During the administrative process, Quest led a review of the company’s technology, product development and strategic priorities. A new strategy was developed and implemented with the formation of Two Way Media in November 2003. The new strategy involved a shift to partnering with broadcasters and television program developers for a share of project revenues instead of performing work for hire projects. In addition, Two Way Media signed several contracts to sell its clients’ media content to mobile telephone users and is actively reviewing opportunities to expand interactive television applications to the U.S., European and Asian markets.
Two Way Media turned profitable in March 2004 for the first time in its ten-year history. The new company recently signed several important contracts that should fuel significant growth in revenues and profits. It signed contracts worth £600,000 in the first quarter of the year with ITV, the UK’s largest independent broadcaster. In addition, it signed an exclusive deal with ITV to sell mobile telephone ring-tones and screen savers. Two Way is now a profitable company with leading edge technology in one of the fastest growing segments of the media business.
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