Many of the smaller websites that were gobbled up by Spin Media and its predecessor company Buzz Media over the years are worried that they will be left with nothing now that Spin has undergone an assignment for the benefit of creditors.
As part of that arrangement, Spin Media LLC has been turned into a new company, Spin Media Group, with about $10 million in new funding from MC Partners and other venture firms.
“The company decided to do this restructuring thing and are saying now they don’t have to pay anything to anyone. And it’s virtually exactly the same company now, only $10 million richer,” said one website owner.
The earlier incarnations of the company were estimated to have burned through about $125 million in venture money over 10 years.
“We’ve been with SpinMedia for roughly four years now, including through the tumultuous merger of Buzz Media and Spin. Over the last six months, they’ve been getting less and less responsive, darting around questions regarding payment schedules, violating our contract (deducting random fees) and generally behaving in a less than transparent and honest manner,” said Jason Grishkoff at Indieshuffle.com.
Backers, such as the venture that teamed Ron Burkle’s Yucaipa Cos and Magic Johnson with Leo Hindrey’s InterMedia Corp., ended up with about 4 percent of the Spin Media LLC stock when they flipped Vibe Media assets into the company last year. That equity stake was wiped out in the restructing, although Yucaipa and Magic Johnson Enterprises had hung onto Soul Train.