ComedyWorld Internet Radio Venture Ended With
Sell-Off of Equipment to Make Its Final Payroll
by Sandy Wells
By some accounts, the auction held in the spacious
Los Angeles facilities of the moribund Internet radio venture
known as ComedyWorld.com exceeded expectations.
When the business, now in Chapter 7 bankruptcy
proceedings, closed down last spring, managers locked the doors
behind them. Employees found themselves waiting for weeks to retrieve
personal belongings and, in some cases, a final paycheck, while
every last bit of equipment was accounted for.
"We wanted to secure our assets that were
there so we wouldn’t be plundered and that there would be
a maximum amount of cash to pay the employees," said former
Comedyworld.com Director of Engineering Barry Thomas. He is now
chief technology officer at StratosAudio, Inc., a company that
provides interactive technology company for conventional radio
broadcasters.
While most bankruptcy auctions can only expect
to get a modest percentage of the original value of the equipment
being sold off, the Aug. 20 event was rather successful.
Over the 10-and-a-half-hour period, more than
250 registered bidders from Citadel, Premiere Radio Networks,
Infinity, Trinity, the Victor Group, individuals, reps from smaller
companies and dealers bid on items from 1,850 lots.
They bid on rows of file cabinets, scores of
microphones, 150 PCs, 10 MACs, server equipment, seven Digidesign
Pro Tools systems, four audio edit studios, three multitrack audio
production studios, a radio network distribution center, at least
40 sets of headphones, video equipment, a box of Comedyworld.com
posters, even a baby’s crib.
The roughly $3.5 million worth of relatively
new equipment sold for an estimated $550,000.
Never lulled
"Bidding was competitive," said auctioneer
Ray Bleau. "At times it was frenzied. The broadcast and video
equipment had heavy participation. There were never any lackluster
periods and the crowd remained throughout the sale."
By the end of the day, everything had been sold
off.
"The turnout was pretty hot," said
Thomas. "We did better than the low-end estimate and a little
less than the high-end."
The Pro Tools 001 systems, originally $7,500,
went for roughly $3,000. Infinity picked up most of a $200,000
automation system for $45,000. The system included a confidence
monitor that mimicked a local affiliate, allowing Comedyworld.com
engineers to verify whether a programming element had played,
making troubleshooting a breeze.
A $10,000 reception console reportedly went
for $50. Such was the ignominious end for an idea that six months
before had appeared to have tremendous potential.
Poised for growth, 20 audio and video studios
had been placed inside trailers housed within a 50,000-square-foot
warehouse in the Marina Del Rey area of Los Angeles.
The long-term plan, according to Thomas, was
to move everyone into an adjoining building, remove the trailers
and convert the remaining space into a parking garage for the
70-plus Los Angeles employees (another 40 worked on the Web site
in San Francisco).
While Internet venture money made Comedyworld.com
possible to begin with, it also created problems later. Initially
flush with cash to build up the infrastructure, the company also
spent like a broadcast station.
Its business model, however, appeared to be
a hybrid: part Internet portal and part fledgling radio network.
"The idea was to build the value of the
Web site using the radio shows and the talent connected to them,"
said Thomas.
Jay Clark, now program director for WRKO(AM)
in Boston, joined the venture somewhat reluctantly.
"I laughed at the idea at first,"
said Clark. "But then I met with the backers in New York.
They were comfortable with the Internet, but hadn’t done
a lot of broadcasting."
Clark’s success with FM talk stations in
Orlando, Fla., and Los Angeles – stations that had a strong
comedic component – led to his role at Comedy World.
Initially he was hired to develop the content
for a terrestrial radio network that was intended to coexist with
an Internet portal containing a strong video component.
"The project started early on as a radio
project," Clark said. "The original investors wanted
to start a radio network, but they found the that the money was
more easily obtained for an Internet venture.
"The backers expected us to be run like
an Internet company. We had this Internet division spending like
an Internet company," said Clark.
Clark estimates that the company was spending
at the rate of $8 million a year.
"It was a lot of money. We spent like a
major-market radio station, but we put out a terrific product."
Through a partnership with Citadel, Comedyworld.com
was able to work with 19 affiliates, four taking the network feed
full-time.
Clark went to work training comedians to do
radio shows, complete with writers, board ops, producers and screeners.
The Internet identity associated with the network bestowed upon
the venture a certain cachet not only with investors, but also
with its fiercely loyal employees who were just as enamored of
Comedy World’s cutting-edge image.
Thomas, who has extensive experience as a radio
engineer, said the perception that Comedy World was an Internet-only
entity became a problem for the company.
"The Internet had a nebulous revenue stream.
When the economy slowed, we scaled back to our core business –
the radio network. The Internet identity, instead of being an
asset, became a liability in terms of funding and getting PDs
to consider us a programming source. It made our sales guys’
jobs a lot harder."
Testing ground
Nevertheless, Thomas said streaming audio and
video content on the Internet was a wonderful tool for testing
product.
"We had six months to refine a show before
going on the air."
The lineup in its final stages included hosts
Ahmet Zappa, son of rock icon Frank Zappa, Allen Harvey, the Boone
Brothers and "Wrestling 101" with "Big Schwag."
"It would have taken us (another) year
and a half to get to a break-even point in a normal economy. It
would have been a normal radio play at that point," Thomas
said.
However by March of this year, the investors
were getting nervous, although it was not evident to the enthusiastic
employees.
"We were within six weeks of good Arbitrons
coming in," said Thomas, referring to affiliates in Syracuse,
N.Y., Spokane, Wash., and Charleston, S.C. "And once you
show traction with a radio network, it’s a whole lot easier
to build an affiliate base."
When the bottom fell out in April, after one
of the investors yanked a bridge loan, the end was sudden. Clark
said the board operators volunteered to stay an extra week to
keep the content flowing to the affiliates until new programming
could be arranged.
"These people cared," said Clark.
"As a manager, that’s all you can ask for. There was
magic in those studios where people gave 110 percent. It came
to be a family that would grow and we’d make money, at least
that was the idea."
For those employees, the success of the auction
meant that final paycheck plus severance pay would finally arrive
in the mail.
