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Cable Tech

MobiTV enters Chapter 11, secures $15.5M to stay afloat

Facing a major cash crunch, MobiTV has filed for voluntary Chapter 11 bankruptcy and the pursuit of a process that could result in the pay-TV tech vendor selling most of its assets.

MobiTV said it has secured some critical financing to facilitate the restructuring along with assurances that its customers, which include T-Mobile and dozens of small and midsized cable operators, will continue to be served as the process plays out.

MobiTV's filing, made with the US Bankruptcy Court for the District of Delaware, comes more than a week after Light Reading reported that MobiTV was in financial straits and in need of additional funding or a buyer to keep the lights on.

Although MobiTV said it will continue "to serve customers in the ordinary course" during its restructuring, how it will all end is hazy at best. MobiTV said it has received a commitment for $15.5 million in debtor-in-possession (DIP) financing for a restructuring that could include a "going-concern sale" under section 363 of the Bankruptcy Code, which could lead to the sale of substantially all its assets.

If MobiTV's new facility is approved by the court, the company said it will be able to continue operating. That includes payments of employee wages and benefits, providing service to existing platform customers, and making ongoing payment of other obligations during the Chapter 11 period.

"The Company is committed to working with its lenders and stakeholders towards a speedy and successful resolution of the case," said MobiTV, a company that has raised more than $200 million.

MobiTV's initial bankruptcy filings show that the company owes millions to dozens of creditors, including video tech vendors, tech licensing firms and several programmers. Here's a sampling of that list:

Table 1:

Creditor Unsecured Claim
Rackspace $4 million
Silicon Valley Bank $3 million
MPEG LA $2.9 million
Cybage Software Private Ltd. $1.35 million
ATEME $1.09 million
Bear Cloud $1.04 million
Elemental Technologies (Amazon) $558,186
Rovi Guides (Xperi/TiVo) $512,149
ABC Cable Networks Group $362,230
Fox News Network $349,800
Koravus $343,980
Persistent Systems $341,961
Kwan Intellectual Property Law $255,368
Globecast America $161,100
Trigapps $150,400
EPB Fiber Optics $150,206
NTT Global Data Centers $105,202
Telia Carrier US Inc. $96,705
GuidePoint Security $89,750
A&E Television Networks $89,726
Level 3 Communications (CenturyLink) $89,287
Comcast Cable Communications $85,856
Digital Reality Trust $85,785
MTV Networks $84,000
Discovery Communications $82,735
RPX Corp. $79,246
KPMG $76,981
ValueLabs $75,053
Amino Technologies $75,000
Source: MobiTV filing.

MobiTV's filing also lists dozens of security shareholders. Oak Investment Partners XII holds 44.48% of MobiTV's common stock, 45% of its Series AA convertible preferred shares and 45% of its Series BA convertible preferred stock. Others with sizable holdings include Ally Commercial Finance and Homathko River Partners.

Partners include T-Mobile, C Spire, Cable One

MobiTV provides both a managed, cloud-based product/platform and on-premises options that enable cable operators, telcos and other service providers to offer pay-TV streaming services. MobiTV has largely focused on a subscription-based, hosted streaming platform enabling partners to launch branded apps that package and deliver a lineup of national cable networks alongside local broadcast channels for which the service provider has rights. Sources said MobiTV has been operating under a pay-as-you-go model on a per-subscriber basis, without setting minimum subscriber requirements and commitments. That lack of minimum requirements is one of the big holes in MobiTV's business model, sources said.

It's unclear at this point what a sale of assets will mean for MobiTV's partners, which include T-Mobile, which is using MobiTV's platform for its new TVision service. Other MobiTV partners include Consolidated Communications, MCTV, Vast Broadband, Windstream, C Spire and EPB, among several others. Dozens of operators have inked deals with MobiTV through an agreement negotiated with the National Cable Television Cooperative (NCTC), an organization that strikes product and programming deals on behalf of hundreds of cable operators and telcos.

Additionally, Cable One teamed with MobiTV in January on a new IPTV service called Sparklight TV that was to launch in select markets in early 2021 and in all Cable One markets by year-end. As of last month, Cable One said it was continuing its launch of Sparklight TV as planned. Sparklight TV did not come up on Cable One's Q4 2020 earnings call last week.

Light Reading has asked Cable One, NCTC and T-Mobile for additional comment on the MobiTV situation.

Update: T-Mobile declined to comment. Cable One reiterated that is is "continuing with our launch of Sparklight TV as planned."

FTI Consulting and FTI Capital Advisors have been retained as MobiTV's financial advisor and investment banker, subject to approval of the Court, to assist in the negotiation of strategic options. Pachulski Stang Ziehl & Jones LLP and Fenwick & West LLP are serving as MobiTV's legal advisors.

CEO letter to clients

Update: MobiTV CEO Charlie Nooney tried to allay concerns in a letter (PDF) to the company's clients.

"Please be assured that this action does NOT mean the Company is going out of business," Nooney wrote. "We will continue to provide live and on-demand video solutions to our customers and will continue to review our services through the case proceedings. In connection with the Chapter 11 filing, the Company has secured important bridge funding commitments which will allow MobiTV to continue business as usual operations during the pendency of the proceeding."

Nooney added that the restructuring could take months, but anticipates it being completed in the second quarter of 2021.

Sources said MobiTV enacted a layoff late last year and went through another round late last month that included people in MobiTV's sales organization.

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— Jeff Baumgartner, Senior Editor, Light Reading

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