Social TV: GetGlue Calls Off Deal With Viggle
GetGlue called off its deal to merge with Viggle on Sunday, saying in a blog post that the two will remain independent.
"Today we've decided that GetGlue will not be merging with Viggle. The two companies remain friendly and think highly of each other," GetGlue founder and CEO Alex Iskold said in the post. "We are moving forward as an independent company, and all of us at GetGlue are excited about growing our social network and the leadership position on the second screen. We have a strong product and partnership pipeline for 2013, and look forward to delighting our users and expanding the relationships with major networks, studios and brands."
The social-TV landscape has become increasingly crowded and competitive. The merger of Viggle and GetGlue was originally seen as a way for the companies to obtain a predominant share of the marketplace. Now, the question is if there's enough market share out there for both to survive on their own.
Mr. Iskold did not elaborate in the post as to why the deal fell through. Viggle announced in November that it planned to acquire GetGlue for $25 million in cash plus 48.3 million shares of stock. This deal was contingent upon Viggle raising convertible debt financing of at least $60 million. According to a Securities and Exchange filing on Jan. 8, the merger had a closing date of Dec. 19 and the companies were discussing an extension and "other potential modifications."
GetGlue, whose investors include Time Warner Inc., Rho Ventures, RRE Ventures and Union Square Ventures, boasts 3.5 million users, over 75 major networks and studios who routinely promote their content, and major brands like Coca-Cola, Pepsi, Intel, Gap, and Mercedes who have sponsored advertising campaigns.
Viggle, a startup less than a year old that's backed by media entrepreneur Robert F.X. Sillerman, rewards users who check into TV shows with points that can be redeemed for gift cards to retailers such as Amazon, iTunes and Hulu. Viggle has about 1.2 million registered users.
"Social TV is a small, nascent market at this point, but by merging and becoming the market leader we are in a position to attract more brands who want to work with us," John Small, chief financial officer at Viggle, said in an interview at the time of the acquisition announcement. The acquisition of GetGlue also gives Viggle, a pure mobile player, a web presence that allows for broader consumer reach, he said.
In a statement today, Mr. Sillerman implied that Viggle's organic growth made the acquisition less important. "During the time we started talking to GetGlue about an acquisition and since the merger agreement was signed in November, we have seen impressive growth in our business," he said. "We are pleased with this positive momentum."
The termination of the agreement was cordial, Mr. Sillerman added. "We wish GetGlue and Alex all the best."
Viggle has been burning through cash, reporting a loss of $19.5 million for the quarter ended Sept. 30, 2012, according to an SEC filing.
Mr. Sillerman has been supporting the company, extending his existing loan agreement with Viggle in December from $12.5 million to $15 million. In January, that credit line was further increased to $20 million and a further advance of $1 million was made by Mr. Sillerman's investment firm, according to a filing.
GetGlue declined to comment and Viggle didn't immediately respond to requests to comment.