UBO dot bankrupt - Urban Box Office Network Inc - Brief Article

Black Enterprise, Jan, 2001 by Cliff Hocker

Urban Website's spending habits force it to file Chapter 11

Every month brings the crash of yet another dotcom business. November revealed the insolvency of Urban Box Office Network Inc. A start-up multimedia company that developed content for distribution to the international urban market via cable, satellite, and the Internet, UBO filed for Chapter 11 in the U.S. Bankruptcy Court of the Southern District of New York. Although its total assets were reportedly $9.9 million, UBO was liable for $7.1 million to six holders of secured debt and owed nearly $6.8 million to 650 holders of unsecured debt. Owners with a stake of more than 5% were listed as the estate of George Jackson, Adam Kidron, and Frank Cooper. Later, Chase Capital Partners and other venture capitalists held the majority share.

Perhaps UBO's fate was sealed by the untimely death of Jackson, its first CEO, at age 42. A former president of Motown Records, Jackson was one of the producers of the movies House Party II and New Jack City.

UBO was incorporated in May 1999, and just as it started clicking, Jackson died in February 2000 of a stroke.

"He was somebody who I think could have navigated these changing Web waters better than any of the people who were left to run the company after he died," says Greg Mays, former CFO at NetNoir.com and former vice president for site development at Hookt.com. "I think [after Jackson's death] was when UBO started to fall apart internally in terms of there not being leadership that everyone could believe in. To the extent that venture capitalists invest in teams, I'm sure George Jackson was critically important to that equation."

Kidron, a white partner, succeeded Jackson as CEO, and revenues continued to drop.

UBO developed sites and bought properties like Hairweb, but sales of advertising banners were lackluster. Since its launch in June 2000, UBO reportedly attracted 400,000 unique visitors, but without Jackson, attempts to obtain a new round of financing fell through.

"The mistakes UBO made were no different than the mistakes of many of the mainstream consumer sites," says Bo Kemp, president and CEO of Vanguard Neomedia, a New York City-based network of business-to-business Internet properties focusing on the urban entertainment and media space. "The need to grow quickly requires you to spend a lot of money on marketing to get your name out, to brand yourself. It requires you to finance a lot."

David Dickerson, who provides marketing services to major music labels and does music point-of-sale software business through Bowie, Maryland-based D.D.C. Inc. and its subsidiary, eyes & ears entertainment, says, "I don't think it was necessarily that the people that remained, Adam Kidron or Frank Cooper, couldn't get it done, but I think the revenue stream was overestimated. People weren't real clear what business they were in."

The site claimed to have an urban mind-set, but sold products like coffee makers and Britney Spears CDs.

Besides trying to do too much too quickly, UBO's Websites lacked the technology to automate updating content or to put publishing power in the hands of their communities of visitors, according to Omar Wasow, executive director of Blackplanet.com.

"What you saw on a lot of UBO properties was a lack of software infrastructure, whether it was for managing content or managing e-commerce, or any of the complicated back-end functions that allow a Website to function effectively," says Wasow.

UBO's hiring practices seemed to be another nemesis.

"UBO hired too many people and the wrong people. They hired 300 mostly marketing people in six months," says Siddiq Bello, executive producer of New York-based Addictive Media Development. "That many people in that short a time span only further helped to deplete their [monetary] resources."

UBO sought to do a "content play" online by using the Web as its primary media vehicle, says Mays. Successful players like BET, MSNBC, and CNN use a mix of television and cable for cross-promotion. UBO's presumed goal to stream high-bandwidth content got bogged down in slow 56K dial-up connections.

Since the bankruptcy, the consensus is that UBO was a wasted opportunity, says "Crispus Attucks," the editor of UrbanExpose.com, an eight-month-old New York City-based Website that analyzes media.

"I think the next generation of sites now have a blueprint of what not to do," says Attucks.