NEW YORK: Medialink, which has been battered by losses and continued stock drops, is considering offering itself up for sale, according to industry sources.
Sources speaking on background to PRWeek said the news broadcast company, which just announced it is selling some of its divisions, is currently shopping for a buyer.
When asked about the possibility, Laurence Moskowitz, CEO and chairman of Medialink, wrote in an e-mail, “If I had a nickel for every time we've heard that rumor over 22 years, we'd all be retired. We're focusing our talent, energy, and resources on our award-winning creativity and skills in creating, distributing, and tracking rich content on behalf of our valued clients, many of whom we've served for those 22 years.”
Last Thursday, Medialink said it is selling its digital video tracking services business, Teletrax, one of its few profitable divisions. Koninklijke Philips Electronics, which already owned 24% of Teletrax, will assume the rest by month-end, pending due diligence procedures. In Q2, which ended June 30, Teletrax revenues jumped $568,000, or 75% from the same period last year. In 2006, Medialink sold US Newswire to PR Newswire.
In addition, Medialink said World Television Group would acquire some of its UK assets by the end of the month, also pending due diligence.
“This is a very difficult time for Medialink as a company and, obviously, for our various units,” Moskowitz said, during the earnings conference call. “We saw that the requirements for continued investment [in Teletrax] and the resources necessary from a technical and financial standpoint were a stretch for us to bear. This is an opportunity to focus our resources on what we know best.”
Meanwhile, Medialink's Q2 earnings, released August 14, showed continued losses. It reported a net income loss of $8 million on revenues of $7 million for Q2, a 15.4% decrease from revenues during the same period last year. Earnings from its media communications services decreased during Q2 by $1.9 million, a 24.5% decrease in revenues from 2007. Year to date, the company has earned $14.1 million in revenues, a 13.3% decrease from 2007's half-year figures. Revenues for its media communications services decreased by $3.2 million, or 21.3%, during the first half. Medialink saw an operating loss of $10.5 million, including impairment charges of $2.4 million related to long-lived assets for the first six months of 2008.
Medialink was the first among service companies to go public on January 30, 1997, but the company, which is listed on the NASDAQ, has been in danger of being delisted since mid-May. According to its rules, the NASDAQ can send notice that a company risks being delisted after 30 days below that threshold, and Medialink's stock closed on August 14 at 49 cents, the 27th day it has closed under a dollar.
Moskowitz, though, continued to sound a positive note. “Video has become the dominant medium of the era,” he said. “We advise, we consult, we create, we produce, we distribute, we track, and that's exactly where we want to be.”
Others in the industry think that, with things much changed from when Medialink began, its attentions might have turned elsewhere.
“Based on their earnings call, the company seems to be indicating that it wants to focus its attention on a number of things, including some M&A opportunities,” said Shoba Purushothaman, CEO of The NewsMarket. “The current environment for production services is very different from when Medialink started nearly 20 years ago... It is plausible that the industry has changed so much that it may not be feasible for them to reinvent themselves.”