Pseudo.com Sends Everyone Home After Failing to Find a Business Partner By Greg Lindsay
Streaming broadcaster Pseudo Programs Inc. closed its doors on Monday after a financial savior failed to materialize.
CEO David Bohrman at 1 p.m. called together his staff of 175 employees to tell them that he and president Tony Asnes were negotiating a deal to keep the company afloat. At 2:30 he assembled them once again, this time to tell them that there would be no deal after all, and that they should go home. ''As of now,'' he told them, ''we are all ex-Pseudo employees.''
Bohrman had been shopping Pseudo around to the investment community since July, trying to raise $40 million to keep afloat a company burning through $2 million a month. ''But after a month or two we realized investors were not beating down the door,'' he says. The company's focus quickly shifted to finding a merger partner or a buyer, with the help of investment bank CIBC Oppenheimer. The most serious suitor was the London-based Pacific Century CyberWorks, says a source close to the discussions. Pacific Century CyberWorks owns ''Network of the World'' (NOW.com), a broadband content site. The company is owned by Richard Li, who owned satellite broadcaster StarTV before selling it to News Corp.
As recently as May, Pseudo had raised $14 million from a roster of investors including the media arm of French luxury conglomerate LVMH. (Pseudo had raised $18 million the year before.) So why not turn to these same investors for help? ''Our investors have been great,'' Bohrman says, ''but there's only so much in good faith you can ask. They put in a fair amount of money the first time, but you realize you need fresh investors. If it was a small amount to complete a deal that was secure, fine. But no one in this market was stepping in.''
Pseudo's prospects as a media company had long been in doubt, thanks to its deadly combination of high production costs and low traffic. At no point in its history did Pseudo attract enough unique visitors to be measurable by Media Metrix, whose coverage begins at 200,000 visitors per month. Even the company's much ballyhooed streaming broadcast coverage of the Republican and Democratic National Conventions this year did little to boost traffic by a significant amount.
In June, Bohrman fired 58 staffers and announced a new strategy called ''PseudoCenter,'' which would consolidate the site's programming into a single, live feed and cut costs at the same time. The site went dark for three weeks before the conventions, relaunching in August. A print and outdoor media campaign had been planned for this fall.
Also present at the announcement of Pseudo's demise was Joshua Harris, the company's flamboyant founder who was already an Internet millionaire from his founding stake in Jupiter Communications. Harris began Pseudo in 1994 as an outgrowth of his multimedia experiments on the Prodigy online service. Pseudo started as an online radio station before expanding to video; it was also known for the massive parties that often became part of the programming itself, many held in Harris's own loft.
In 1999, Harris handed off CEO duties to Lawrence Lux, hoping he would take the company public by that fall. But after feuding with the board, Lux left in November. Bohrman was recruited from CNNfn in January, and immediately began trying to make sense of the company's financial strategy. ''The burn rate was much, much higher (than $2 million a month) when I got here,'' he says, ''and was supposed to go much higher.''
After Bohrman's announcement on Monday, Pseudo employees were told to begin cleaning out their desks. They had the rest of Monday and four hours later in the week to remove their belongings. Severance pay remains in doubt.
The mood among the dispossessed was one of a proud resignation. ''It was a place ahead of its time,'' says PseudoPolitics executive producer Sam Hollander. ''I think people feel about Pseudo the way some feel about Spy. It did not end up being financially successful but was a great magazine. It was a place whose time had not yet come, but was very exciting to work there.'' At the same time, he allows, ''Perhaps a lot of the content was too hip for the room. The bandwidth for this stuff is still not here yet.''