The Hollywood Reporter reports that top entertainment and music companies like Discovery, CBS, Fox, and NBCUniversal are facing millions in lost royalties if a planned bankruptcy auction of Delivery Agent goes through.
Delivery Agent was founded in 2005; the company runs digital platforms that sell licensed merchandise and has generated more than $800 million in revenue. After an unsuccessful IPO stint, the company filed for Chapter 11 bankruptcy in September.
Now, in Delaware Bankruptcy Court, Hillair Capital Investments is proposing to lead a sale of the company through a bankruptcy auction—and licensors are claiming that they are owed far more than the debtor is claiming.
We’ve crunched the numbers where available:
- Discovery says it is owed 14% royalties and an annual minimum guaranteed royalty payment of $1 million, but that it hasn’t recieved any payments since Q2 2015. Based on its claims for amount owed, Discovery cleared over $11.4 million in retail sales during the intervening time.
- HBO claims it is owed $1.2 million in royalties—the licensor might have counted anywhere from $8–11 million in retail sales for the same time period.
- 20th Century Fox seeks over $157,000 in unpaid royalties for merchandise sold through the CBS and Star Trek stores.
- Bravado Intl. Group claims it is owed $3 million.
- Warner Music Group subsidiary Rhino Entertainment doesn’t know how much it is owed, tragically enough.
- Other companies like CBS and Showtime are balking at a provision that would allow Delivery Agent’s buyer to assume their licensing agreements.
- Interestingly, NBCUniversal claims that even if Delivery Agent is sold, the things that make up its ecommerce sites such as their design, URLs, and customer data cannot be transferred.