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DirectTV to Pull The Plug on Viacom (Updated 7-11-12)

Viacom and Direct TV in Dispute

(Update – As of this morning Nickelodeon, MTV, VH1, Comedy Central and other cable channels owned by Viacom were taken off of DirecTV’s lineup early Wednesday morning, beginning a channel blackout that has angered viewers across the United States. In total 20 million homes lost access to Viacom’s channels)

DirectTV® subscribers might wake up tomorrow saying “I want my MTV”. DirectTV® and Viacom have been in negotiations and those negotiations came to a halt last night. DirectTV® claims they have made their final offer to Viacom and will be removing Viacom’s 22 channels (MTV, Spike TV, VH1, Comedy Central and Nickelodeon to name a few) at midnight tonight.

At the heart of negotiations is Viacom’s request for a 30% rate increase that would amount to over $1 billion dollars. Because of Viacom’s size they can bundle all of their channels into the negotiations. DirectTV® said, “You should be able to decide which Viacom channels you want and which you don’t.”

Viacom claims that DirectTV® subscribers have made Viacom the most watched programmer and accounted for 20% of all of its viewing. They also claim that they are only paid for 5% of the viewing and the increase is justified.

Wall Street has been talking about Viacom’s value being in decline. Cable and Satellite providers are under attack from streaming videos and Netflix. The ratings decline for networks like MTV and Nickelodeon it is creating a perfect storm for distributors to drop Viacom from its line up. A few years ago this would be unthinkable just based on Nickelodeon. UBS analyst John Janedis recently downgraded his rating on Viacom’s due to concerns related to ongoing ratings weakness. He wrote in his report: “We continue to think the concerns related to Netflix/Amazon viewing are overblown in the near-term, but from a content perspective, our sense is that returning series at MTV are under-performing, which will translate to further make-goods and a drag on ad growth in fiscal year 2013″.

Why is this important to MMA fans? The loss of DirectTV® hurts the expansion plans of Bellator, who is in partnership with Viacom. Partnership really mis-states the relationship. Viacom owns a large chunk of Bellator. Bellator can’t jump ship the way the UFC left Spike, they’re stuck until sold off. Bellator goes where Viacom goes.

Many thought the Viacom deal would allow Bellator to become the second largest American Mixed Martial Arts promotion. Suddenly Viacom itself is in danger of The Judgement by the market. With One FC’s ten year deal with ESPN STAR for Asian distribution and the DirectTV® Viacom deal hanging by a thread we may see One FC take the number two spot in the sport. Thinking that an Asian distribution deal doesn’t threaten Bellator’s North American position would be a mistake. The missing facts are: Victor Cui, CEO and owner of One FC, was at one time a senior director for ESPN STAR, and ESPN STAR is a 50-50 joint project between ESPN and Rupert Murdoch’s News Corp – the single largest media presence in North America, which includes, yes, FOX.


C

The House is gearing up for a battle over spending taxpayers money on sports sponsorship.  The focus is on NASCAR but you cannot cut NASCAR without affecting all sports.  The UFC recently inked a deal with the US Marines and many Mixed Martial Artists (“MMA”) have been sponsored by Military divisions.  If the measure passes these expenditures would cease.

Republicans are divided over topics that usually unite them (spending cuts, military and NASCAR) and the Democrats are excited to have the distraction.  At the heart of the battle is the $80 million dollars spent on sports sponsorships and the return on that investment.   The proponents say $20 million a race is way too much.  While supporters of the sponsorship programs, like Army National Guard Director Lt. Gen. William Ingram Jr. say “the program is effective. “  Without the draft, the Military needs to find ways to reach their target demographic.

There is no question that the Military’s target demographic is watching NASCAR and UFC type events.  The in-content exposure is valuable and hard to miss.  When marquee brands like Nike are cutting TV and Print spending by 40% in favor of Team and Event sponsorships it seems like an odd move by the House to pressure the Military in exactly the opposite direction.

As the US Marines learned with their UFC deal, there are other valuable sports properties that allow the Military to reach its target demographic and not spend $20 million per event.  The model in play with the UFC makes a ton of sense for The Marines.  The Marines are getting in-content branding on the most sought after sports property around.  They get interaction with the athletes, digital placement on the UFC’s website and more.

Unlike NASCAR or other sports like Bull Riding, MMA also opens the door to real engagements with the target demographic. This engagement can go well beyond the recruiting phase too.  We all have seen the UFC and Marine marketing program.  The House should be looking at ways to get more for the expenditures.  Ideas like:

  • MMA Athletes showing up during Basic Training to help during Combatives Training.

  • Military discounts on Merchandise and Tickets.

  • Armed Forces MMA Team – While on Active Duty the ability to train and compete at the amateur level (like they do with other sports like Boxing and Wrestling).

  • Veterans that were on the Armed Forces Team get immediate entry into TUF and their Pro card is paid for, in return they continue to represent their Branch of service.  Guys like Brian Stann should be a sponsored athlete and a part of a program that helps transition the soldier athlete to a professional athlete.

  • Lifetime free entry in signature events like Grapplers Quest and NAGA for active Military and Veterans.

Ideas like those will only enhance the ROI.  From a MMA perspective the price the Military allegedly spends on one race would fund all of the above programs for several years.  Every service member will learn some form of hand to hand combat during their enlistment.  There is no reason not to offer MMA as a Team Sport on the bases.  The opportunity to enhance the return on investment has never been better.

The House needs to realize that it is less about how much they spend and more about how they spend it.  If NASCAR has become too expensive then find other sport properties that reach the same demographic.  If you can find sports like MMA that weave into the basic structure of current Military life then you can find others.  You don’t have to spend $20,000,000 per race to reach your target demographic.  You don’t have to kill off your marketing plans because one part of the plan has become too expensive.  Just replace it.  The sport of Mixed Martial Arts would welcome this budget and the branding would be dominant and active 24/7 like our Military.


Turner Broadcasting To Buy BleacherReport.com

Money to Burn

Turner Broadcasting Systems (TBS) is rumored to be in talks to buy BleacherReport.com for $200 million. The two companies are not commenting but sources close to deal, including the website AllThingsD, are reporting that the framework of the deal is in place and due-diligence has begun.

The Bleacher Report raised $40 million in venture capital since its inception in 2007. The site is primarily made up of user-generated content. It’s the user-generated content that has Bleachers Reports competitors crying foul, saying the sites contributors borrow content already released. The argument is weak. Twitter breaks news about 15 minutes ahead of the AP. Social networks are the hub of user generated content. YouTube was full of user generated videos when it was bought for billions.

Bleacher Report has done a great job at adding relevant content at a rapid rate. The contributors have helped propel Bleacher Report to over 9 million uniques per month. In 2010 the company generated an estimated $5 million in revenue. The year over year growth has slowed a bit to an estimated 8% from 2010 to 2011. In 2011 the company hired Rich Calacci away from CBS Interactive and he transformed the sales almost instantly. His team is on pace to bring in over $30 million in ad revenue from partners such as Red Bull, Muscle Milk, Pizza Hut and more.

Bleacher Report is selling at a premium, even for a sports based platform. Compare the potential sale to AOL’s purchase of HuffingtonPost.com for $315 million. At the time of the sale to AOL it had 25 million uniques per month and was doing just over $30 million in revenue. The Huffington Post was considered a prestigious website with real reporters and it’s user generated content is generally contributed by celebrities.

Many are asking why TBS is being so aggressive with its valuation of the Bleacher Report. TBS will likely use its vast resources to enhance the BleacherReport.com traffic. There is no question that TBS is seeking to replace the over 9 million unique visitors its ad network lost when they lost Sports Illustrated this spring. TBS is also losing PGA.com at the end of 2012. Bleacher Report saw its competitor MMAJunkie.com and Big Lead Sports’ sales to USA Today Sports Media Group. Leaving Bleacher Report as the only independent website on ComScore’s top 10.

We see a trend in journalism. The barrier to entry has never been lower. User generated content is the fuel for the World Wide Web. We have operated a user generated fan driven content website for years. We were punished by a major movie studio for most of those years until last year they announced they were launching their own user-generated content fan site.

The new online media properties seem to tout their in house publishing technologies almost as much as the content they produce. Bleacher Report is not the only user generated sports platform. Vox Media, a venture-backed startup, operates the SB Nation sports blog network

Add up the pieces – revenue potential, the loss of Sports Illustrated web traffic, PGA.com relationship coming to an end, a powerful publishing platform, and a core base of passionate contributors and the deal starts to make more sense for Turner than it might at first look.


Fight School

SchoolHouse

Last night’s UFC on FX 4 main event was everything that the major brands want to avoid. There is not a lot of control during a fight. If a guy bites another guy’s ear off the world will be watching. If a guy flips off his opponent a few times on FX, the world will be watching.

The Marketing VP that tells me the sport is too violent and the athletes are too unpredictable was just proven right. The Marketing VP that was taking a “wait and see approach” is going to wait a little bit longer. It is bad enough that we have a champion calling on the Major Brands and a few weeks later show up on TMZ arrested for a DUI single car accident with women that are not his fiancee.

The baseline of this sport should be that it is a form of Martial Arts. You can promote a fight without tarnishing your brand or the value of the guy you are fighting. What did James Tooney call Randy Couture? Then Randy beat him up. So what does that make James? Trash talk is not about taking away from the athletes that compete, discounting those around you. It is about promoting yourself, building your brand and following.

Gray Maynard flipping off Clay Guida is about as far away from being a Martial Artist as you can get. In today’s connected world you cannot say you are one thing and be another. If you are the main event on a televised fight you need to carry yourself accordingly. There is a fine line between promoting a fight and losing your cool. The UFC releases athletes for sending stupid or inappropriate jokes on Twitter but is silent when a fight looks more like an episode of Jersey Shore than a UFC Main Event. The UFC should hand down some serious sanctions for this behavior, and FX should hand the UFC some serious sanctions.

Who is managing these athletes? Where is the training and education of what it means to build your own brand and respect the brand platforms that you are leveraging to build yours? Talking about Coors Light while standing on a Bud Light logo, getting DUI’s, flipping the bird on National TV, and ‘motorboating’ female journalists all hurt the sport’s growth potential. Anderson Silva is reportedly being paid $250,000 to work with Burger King in Brazil. How many Burger Kings are in Brazil vs the US? Yet there are no reports of any mainstream deals of this size for any US based Mixed Martial Artist. I can almost assure you that there won’t be anytime soon if our high profile athletes keep acting the way they are acting in and outside of the Octagon.

There will be enough people that will trash or try to diminish the opponents you face. Your role as a Martial Artist is to respect the sport and your opponents and to train hard to give yourself every advantage possible to win. The way you carry yourself will affect your earnings and the earnings of those that come after you. What do you want your legacy to be?


Seven Years Into the MMA Boom and The 18-35 Male is Seven Years Older

There has been a lot of talk about The Ultimate Fighter show and a lot of it has been kind of negative. If you look at the series with less angry eyes you will see that any show that can last 16 seasons is a successful series. NBC’s ‘Cheer’s’, one of the most successful series ever, ran 11 seasons. “The Ultimate Fighter’ (“TUF”) first aired in 2005 and is on its 7th year of being on Television going on its 16th season in the US and 2nd season Internationally. The show is now growing internationaly, in its second season in Brazil.

This got me thinking, many say the first season of TUF triggered the explosive growth that led many to claim MMA is one of the fastest growing sports in the US.. TUF and other UFC Televised fights were rating successes in the male 18-35 demographic. Marketers are still talking about how MMA is a hit with males 18-35 and by all indications growing in popularity amongst females in the same demographic. This is what the advertisers are focused on. This valuable demographic has a history of being “elusive” and has been since the early 2000’s. But it’s been seven years since the Boom of MMA, the ’18-35′ of 2005 is now ’25-42′. Who is focusing on the 25-42M demographic that helped kick start this sport? Or for that matter the early adopters of the sport: the 30-55 Male?

As the sport matures and the fan base increases within the core demographic, brands should not lose sight of the fans that helped create the early iconic brands of the sport. As we age (yeah I am one of them) so do our tastes. However we still like a lot of the same things we used to like. Most of us are passionate about the sport and that passion stands the test of time. We are the demographic that gave this sport its legs and made sure it was able to run.

Look no further than the American Express retirement commercials from the late 90’s and today to see how sophisticated brands are shifting their message. They have gone from showing gray haired grandparents quietly puttering in their flower gardens to ‘salt and pepper’ youthful looking, yet older people out in the world on adventures with sky diving, snorkeling and enjoying their retired life. American Express knows that different generations age differently and wish to be advertised to differently.

I recently turned 40 and I do not think I would wear many of the current MMA brands myself. I like my tee shirts and Chuck Taylors like most guys my age, but no foil, wings or skulls with swords in the eye sockets are going to look right at my kids parent teacher conference.

The MMA specific brands need to remember the people that bought the products that built 100 million dollar companies are getting older and we still have money to spend if you want to make products we can use. For every core demographic there are secondary demographics of younger and older fans. One thing that can’t be ignored is that these fans are getting older as the sport matures and branding and message should be adjusted to continue to reach them.

Below you will find a pretty interesting infographic that shows the habits of the Generation Y or Millennium Generation. Let us know if you agree or disagree.

Jason Genet


Content is not King

In the Media world the saying goes “Content is King”. The idea is: build it and they will come. Yet the kings of content, the movie studios, lose huge sums on most projects. Why? If asked most successful business people they will tell you success is a blend of hard work, luck, and controlling the controllables. Movie studios are well run corporate machines, their workers work hard, and management controls what it can. But they’ve lost control of distribution. At one time, movie distribution meant one thing: movie theaters. Own the theaters, and you control distribution. No longer. The battle is what happens with the content once it is released.

Distribution has never been so easy and the trends in technology suggest it’s going to get even easier. But across the world, content creators are filing for bankruptcy. And it’s not just movie studios, all content creators are struggling. The content creation business under assault from all quarters.

Two industries were the big winners in the Dot Com Boom and Bust. Porn and Gambling made huge sums and increased their market share while others floundered. Today, the Gambling companies have largely been shut down by the US Government and Porn is having to reinvent itself. Lack of control over their content has pretty much destroyed the Adult Industry. And you would be hard pressed to find anyone on Capitol Hill pushing for Piracy law revision for them.

You used to hear adult film stars say porn was a vehicle to launch a mainstream career and some of them actually accomplished that goal. Today most performers use the industry to subsidize their income. It is well known that many in the adult industry now derive their income from hooking and use their porn exposure simply as advertising.

Female performers have seen the pay decrease from around $3000 a scene (naughty time) now earn closer to $650 per scene (still good money if you are doing what you love). The male performers now earn about $150 per scene (I know some of you are saying where do I sign). The decrease in earnings is a direct result of the piracy, ease of distribution (DIY), and the low barrier of entry that allowed for mass-quantity and low quality films that flood the net. Yet the amount of Adult Production studios has gone from the hundred to just a few remaining production companies.

The adult industry business is on the verge of extinction. The blame? The same thing that gave the industry it’s prolific rise, The Internet. The Internet makes controlling content next to impossible. Even mainstream creators of content are struggling. The advertisers that pay for some of the content creation are struggling. The non-internet based distribution platforms tap into the Internet and give the target consumer the ability to buy the content and watch it when they want without commercial interruption. Devices like Boxee, Ruku, Apple TV and others allows the target consumer to stream the content they want when they want it.

Choices, on top of choices: you do not just have the ability to watch it when you want or how you want, you can also watch what you want. You prefer BBC to CBS? No trip to England required. Want to see a guy do the Cinnamon Challenge? Content creation and distribution is cheaper and easier than ever before. There are 60 hours videos uploaded every minute on YouTube alone. There is more content added to the Internet in a day than the average person will be able to consume in a lifetime. And the trend is accelerating.

What we can learn from the changes is that control is king. If your content becomes a part of a Peer to Peer (P2P) platform. If you cannot control and protect where it goes or get paid when it goes you lose.

A decent digital video camera costs under $150.00. Most Televisions sold today, come with the ability to watch YouTube and other user generated content. Most cell phones, tablets and computers come with the ability to shoot, edit and upload content.

Those numbers are a fraction of the budgets of the major production studios. Lionsgate who by all accounts is considered to have “modest” production budgets, is spending $80 million to make ‘The Hunger Game’ movie series (just over $15M per movie). While most would view a $15 million dollar investment that has already returned over $400 million a wise investment. When you are up against the commoditization of content it only takes a few misplaced $15 million dollar projects to sink a company.

So the creators are finding creative ways to protect themselves. You don’t have to look much farther then the UFC to see how creators of content are using both new and traditional ways to distribute their media. The parent company Zuffa, is a leader the legal fight to fight piracy or control where their content ends up.

Lionsgate pre-sold ‘The Hunger Games’ international film rights before the film was finished. Many view this as a risky venture, surely they could have got more based on the success of the movie right? Wrong, there is even less control in the International market. It is better to lock in a set amount Vs. running the risk of not ever really knowing what you made. The success of the first movie will drive up the International pre-sales in the future. Plus do not forget the global merchandise opportunities that come from a successful project like ‘The Hunger Games”. Building on the Hunger Games success, Lionsgate, through acquisitions, built a library with over 13,000 titles — which generates $150 million in annual cash flow.

Lionsgate will continue to produce content for the various platforms that the consumers are gravitating towards. Yet, to truly control the content you need to own the platform and be able to monetize the platform. Just look at the adult industry and the lack of control of the platforms used to distribute their content. They have zero control and their industry is dying. The barrier of entry has become non-existent. They are not using 3-D (most are not), 15 million dollar budgets or best selling books to help sell their content. Bottom line, Control is king.

Jason Genet


Facebook Changes and How They Affect Things You Like

facebook_logo

If you have been following the Ingrained Media or have been following Facebook news that is not IPO related then this may not be news to you. However, if you have not read our Facebook blogs then now would be a good time. The one thing that seems to be certain about Social Media, is that the networks seem to come and go.

Despite knowing this information, these facts never seem to stop the major brands from pouring tons of money into building brand value on networks that have limited lifespans and that they do not own. The good news for these brands is that spending money to promote your Facebook page just became a requirement. The news coming from Facebook is that reach is more important than Likes. They are no longer pushing your content to those that like your page. Users will have to find your your page and check it or, and this would make the Shareholders happy, you can now promote your message. That is right, if you think your message needs to reach the people who like you, Facebook has provided you the ability to promote that message, for a fee. Yes, you have to pay to do this and the amounts that you will pay and the amount of people you can actually reach, all vary by the actions of those who follow you.

Yes, that means that Facebook is requiring users to be social. For the lurker you either search out the content, subscribe (which is getting harder to do) or hope the brand will pay to push the message to you, if you are not interacting you will not see the post. Facebook wants Brands pay to promote their message and thus increasing a brand’s exposure and decreasing the value for the visitor the Brand is desperately trying to reach or connect with.

Here at Ingrained Media we have been saying this for the last few years. Reach is the most important factor on Social Media. If Brands were running analytics they would have already seen that their actual reach vs the amount of people who follow or like is extremely low. Unless the Brand is engaging with the followers and providing unique content the actual reach has limited and return on investment is low. Paying to promote Tweets or FB messages can be effective but if you are not extracting the relationships then I see no value.

Pretty much every television commercial or print ad has the Brand’s Facebook page. The Brands are paying money to tell people about Facebook or Twitter. They are asking the consumers to follow them (some are) but now Facebook is telling you that you have to pay to reach them. So for those brands that have millions of Likes that were created by contests, unique content, engaging with the fans or followers or by the commercials promoting the brand’s Facebook channel, you now have to pay to communicate. Sure the user signed up and said let’s engage but Facebook wants to be paid for that. If Sally the home baker with just over 1,000 friends wants to tell everyone of them about her home bake sale on her Fan Page she will have to pay.

Social Media was supposed to be this great equalizer, right? Yet the big brands have the big numbers and mom and pop still have the smaller number of fans or followers. What exactly is Social Media then? It is an indicator that people like to connect with like minded people on the net. This is not anything new, but the Brands continue to look for some magical solution to connect and engage with the consumers. They want to build brand loyalty and reach their target consumer. The consumer has become more elusive and advertising to them is less about see my brand and more about connect with my brand. For the small to medium size businesses Facebook ads would be a better solution vs paying to promote to people who may or may not be engaging with you.

Connections are lasting engagements. If that is the true goal why in the world would you spend any money to build these engagements on platforms that you do not own, control, or fully understand? Those that were successful and played a role in building Facebook’s almost billion users, they would like to thank us by charging us to communicate our message. No thanks.

Brands need to be looking at these social media platforms like ripe hunting grounds. They can be a great source of things you need but they do not last forever. Make sure that you are investing in building your own platform and use Facebook, Twitter, Pintrest and any of the other popular social networks to target your potential consumer and extract them to your own platform. Invest in building great content on your own platform and use these third party social aggregators to identify the people you want to reach, pay to tell them about your network. A place where they can come and hang out with other like minded users. Think of it like a virtual rewards program. If it is worth doing it is worth owning. By building this platform you can control the controllables and your investment into your own social media content.

For some of you that might not be feasible, maybe you have limited resources or time. Maybe you are a small business or a local brick and mortar. My initial reaction would be if you fall into this category then do you really need a Facebook page for your business? Just because the brands you know are doing it doesn’t make it right (as we mentioned above) and even if it was effective for Wal Mart why would you assume that it will work for you? Could you service 1% of Facebook’s members if they decided to purchase from you? Of the almost billion users of Facebook how many of them would actually be your customer? You could still have your own social community but if you were not interested in that approach then you should be looking into Geo Social solutions. Such as Yelp, Fourquare etc.. These networks are much more community based and your time spent connecting on them will have a direct impact on your business.

If you are a Fan of pages and want to have the content pushed to you, there are a few things you need to “try” and do. I use the word try because Facebook has been doing different things for different users a lot more frequently. This means you may not see the promote button or be able to subscribe to a page. Here are some tips:

1. Find a page you’ve “liked.”
2. Hover you mouse over the “Liked” button. Which may or may not work.
3. Try clicking the “Liked” button. That also may or may not work.
4. After clicking “Liked,” try hovering over it again. This may or may not work.
(Sensing a theme? Access isn’t consistent…nor intended to be easy, I have a feeling. Please keep trying.)
5. Once you (finally) get a drop down menu, confirm “Show in News Feed” is selected. In theory, this should put all more posts from the page back in your newsfeed.

Even doing the steps above won’t guarantee that you get to see what your favorite brand or celebrity post on their page. The new Facebook algorithm is designed to push content to those that are truly interacting with the brand. Liking the page is not a “true interaction”, subscribing to the page will not be a “true request”, Facebook’s algorithm will determine what you see on your page no matter what you ask for or request. If you are a Facebook lurker and do not interact with the page you will not get the feed on your timeline. Unless the owners of the page pay Facebook to feed you the post. So ultimately the brands will have to pay to inform you or you will be required to interact with the page to get the information automatically.

The saddest part of these changes is that they are not ways to increase the value of the community but to increase the value of the company. Facebook has to answer to its shareholders and is expected to earn money and show that it can be a viable business. Up until this point the money had been made off the traffic. Now the traffic will have to participate and the brands that helped create that traffic will have to pay to communicate.

Jason Genet
CEO of Ingrained Media


Jon Jones vs The Canadian Immigration

 

If you missed it UFC Light Heavyweight Jon “Bones” Jones plead guilty to  Driving While Intoxicated (DWI) today.  For those of you that have never traveled to Canada you might not realize that a DWI is considered a “serious” offense.  I praise Mr. Jones for taking responsibility and handling this matter as expeditiously as possible.

The effect of this conviction go beyond the sentence that will be handed down by the judge.  As an example, if you are traveling to Canada, before you are allowed to enter the Country you will be asked  “Have you ever been convicted of a crime?”  When your answer is “yes”, you will likely be turned away.  If you have been convicted  of a DUI or DWI within the last ten years you will not be allowed entrance.  According to the Canadian Criminal Code driving while impaired is a serious crime.  The attitude is supported by most Canadian citizens.

The common person with a conviction may be considered rehabilitated “after” a certain period has expired from the completion of the sentence imposed.  You must apply for rehabilitative status and demonstrate your rehabilitation.  The usual post conviction waiting period is five years.  After this five-year waiting period the person must submit the following documents:

  1. An application form IMM 1444E
  2. A passport size photograph
  3. A copy of your passport data pages
  4. An FBI police certificate
  5. A state police certificate
  6. Copies of court documents indicating the charge, section of law violated, the verdict, and sentencing
  7. Proof of completed sentences, paid fines, court costs, ordered treatments, etc.
  8. Copies of the text of the law describing the offence.
  9. Detailed explanation of the circumstances surrounding the offence
  10. Three letters of reference from responsible citizens.
  11. A non-refundable processing fee of $180 USD

Further information can be found at Citizenship and Immigration Canada’s webpages, Overcoming Criminal Inadmissibility and Overcoming Criminal Inadmissibility – Frequently Asked Questions.

It might be possible to get a temporary resident permit to enter Canada prior to rehabilitation, but this is up to the passport control officer’s discretion and requires a $200 (Canadian) fee.  The temporary resident permit is meant to allow entry for exceptional circumstances, which would include reasons of national interest or on strong humanitarian or compassionate grounds, which a UFC event is not.

It remains to be seen how the Jones conviction will effect the UFC plans.

Jason Genet


To NING or Not to NING

We have been a paying NING member for many years.  We feel that social media is about owning engagements.  We used NING to build private label websites with built in social communities.  Our sites have been some of the best in their category.  This success is a blessing and curse at the same time.  We have some of the biggest fan networks that you can build on NING.  

Why would I call that type of success a curse?  Because the effort put into building a successful network on NING on helps NING.  You are building a community full of content that benefits NING over the network creator.  So after 400,00 photos, 300,000 videos, 450,000 blogs from over 64,000 members we are leaving NING.

Our new communities will launch with http://www.shane-carwin.com.  The new Carwin Community will be similar to the NING community but will encompass some of the features we love about NING. The entire network has been ported over so if you are a member of the NING site you are a member of the new site.  The migration wont be easy as we have over 13 NING Pro accounts to move.  However our super talented team have already begun the process. 

Exciting times ahead!

 

Jason Genet


K-Swiss Taps Out of MMA

K-Swiss the parent company of Form is exiting the Mixed Martial Arts landscape. Form was one of the few companies that had a true endorsement model and activated around the athletes and sport.  According to the companies Edgar filings they bought Form in 2010 for $1.6 million and lost about $3.7 million before tapping out.

From their public filing:

13. Form Athletics
On July 23, 2010, the Company entered into a Membership Interest Purchase Agreement (“Purchase Agreement”) with Form Athletics, LLC (“Form Athletics”) and its Members to purchase Form Athletics for $1,600,000 in cash. Form Athletics was established in January 2010 to design, develop and distribute apparel for mixed martial arts under the Form Athletics brand worldwide. The purchase of Form Athletics was part of an overall strategy to enter the action sports market, however, during the third quarter of 2011, the Company decided to no longer pursue operating in this line of business, as discussed below. Operations of Form Athletics have been accounted for and presented as a discontinued operation in the accompanying Consolidated Financial Statements.

Pursuant to the Purchase Agreement, the Company was obligated to pay additional cash consideration to certain Members of Form Athletics in an amount equal to Form Athletics’ EBITDA for the twelve months ended December 31, 2012 (“Form CPP”). The purchase price of $1,600,000 and the net present value of the initial estimate of the Form CPP was capitalized. The fair value of the Form CPP was determined each quarter based on the net present value of the current quarter’s projection of Form Athletics’ EBITDA for the twelve months ended December 31, 2012. Any subsequent changes to the Form CPP was recognized as interest income or interest expense during the applicable quarter.

The acquisition of Form Athletics was recorded as a 100% purchase and the Form CPP liability was recognized and accordingly, the results of operations of the acquired business were included in the Company’s Consolidated Financial Statements from the date of acquisition. A trademark asset totaling $3,150,000 and goodwill of $539,000, were recognized for the amount of the excess purchase price paid over fair market value of the net assets acquired. The amount of goodwill that was deductible for tax purposes was $507,000 and will be amortized over 15 years.

At July 23, 2010, the acquired assets and liabilities assumed in the purchase of Form Athletics was as follows (in thousands):

Balance at
July 23, 2010
Inventories

$ 39
Intangible assets

3,689

Total assets

$ 3,728

Current liabilities

$ 18
Form CPP

2,110

Total liabilities

2,128
Contribution by K•Swiss Inc.

1,600

Total stockholders’ equity

1,600

Total liabilities and stockholders’ equity

$ 3,728

Since Form Athletics began operating in early 2010, operating results prior to the Company’s purchase of Form Athletics were not significant and pro forma information was not materially different than what was reported on the Company’s Consolidated Financial Statements.

14
During the second quarter of 2011, after a review of sales, backlog, cash flows and marketing strategy, the Company determined that its investment in the Form Athletics goodwill and trademark was impaired and recognized impairment losses of $3,689,000 (see Note 5) and reversed the Form CPP liability of $2,110,000, which was recognized as interest income.


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