While the government debates over how to solve the medical and economic implications of what’s currently happening to our country, we at VidAngel instituted a company-wide work from home program last week, and Monday morning we invited our customers to help.
In exchange for an agreement to practice social distancing (and give bigger hugs when this is all over), we are providing access to our entire offering for free, without a credit card. It was the least we could do to help families out.
It makes me uncomfortable to share these numbers, and I don’t want it to come across as bragging or taking advantage of this situation, but I am sharing these hoping other entrepreneurs are inspired to speed to a solution faster. Here’s the initial two day numbers:
– Tens of thousands have agreed to practice social distancing
– We have increased our normal daily growth rate by 50x
Obviously, we’re just a few companies. Our impact today is small, but the percentage response rate is HUGE. And those who are doing this realize now that this is a mutually beneficial proposition. We’re helping people out and they’re helping us grow. That’s the way American entrepreneurship should work.
People are anxious. People are scared. The economy is tanking before our eyes.
Social distancing is a scary prospect when people are worried about their jobs. Aside from health, fear in general is high across the country. People are worried about family members, income, and how to cope with kids being at home instead of in school. We have an opportunity to quell public concerns and replace fear with hope.
If enough of us collaborate together, at a faster rate than any governmental consensus can be reached, we can stave off the spread of disease, help calm the anxiety of those in need, and hopefully, prevent the debacle of our economic system.
With Forbes and the #GenerosityChallenge, we invite other companies to figure out how to help those stuck in their homes and beat COVID-19 the American way, through economic ingenuity. Linda.com, MasterClass, big streaming companies, and others, who will help conquer this? The mutual benefit is real, please help us scale this idea to as many web businesses as possible.
Company Submits Plan to Meet All Financial Obligations and Move Forward from Lawsuit as Vibrant and Growing Business
(Los Angeles, CA—March 5, 2020) VidAngel is announcing today that due to rapid
growth over the last year, its Trustee has filed a plan of reorganization which outlines a
strategy for the company to move out of bankruptcy. The company’s operating results,
as reflected by monthly filings over the past months and last year, reflect growth in
gross revenues, emerging success of new lines of business and the stability of the
company’s core business.
VidAngel, Inc. Trustee, George Hofmann, has issued the following statement:
“Bankruptcy law was established by Congress to give companies a chance to rehabilitate, get back on their feet, pay their creditors, and continue to move forward.
VidAngel has a reorganization plan that does just that. After entry of an adverse judgment in an amount that, initially, seemed insurmountable, the company’s business and revenues are growing, and the company is expanding into new lines of business. According to third party financial experts hired to advise me in the reorganization process, VidAngel’s robust growth makes paying the judgment in full feasible. I look
forward to the court confirming a plan so that VidAngel can emerge from bankruptcy, pay its debts and focus on growing a great business.”
VidAngel, Inc. CEO Neal Harmon has issued the following statement:
“We would not be in this position today were it not for the support and loyalty of our customers, investors, and the resilient VidAngel team. We’ve gone from avoiding threats of a shutdown to being able to say, ‘just send us the bill’. VidAngel is turning a page in its history, and we believe that we now are moving forward stronger than we’ve ever been. VidAngel remains committed to helping you, the viewer, make entertainment good for your home.”
Reorganization Filing Facts
● In light of financial results reflecting VidAngel’s business growth and future
potential, VidAngel’s Trustee has decided to file a reorganization plan to pay the
adverse judgment in full.
● Third party experts have determined, given VidAngel’s financial results to date
and the anticipated stability and growth of its current lines of business, that it is
feasible to pay off the adverse judgment over a 14-year plan.
● Under the proposed plan, VidAngel’s appeal of the California court’s judgment
will continue, the shares of its investors will be preserved and VidAngel’s
management and board will control the company moving forward.
● The plan confirmation process is anticipated to take a minimum of 60 days.
What this means for VidAngel
Should the judge confirm the reorganization plan, VidAngel is moving out of bankruptcy and on from the lawsuit as a healthy company with exciting growth.
What this means for the $62.4 Million Judgment
This reorganization also means that we get to appeal both the summary judgment ruling and the $62.4 million judgment, and feel we have a strong case. But in the event that our appeal fails, the $62.4 million judgment is not a death sentence. Third party experts have opinedthat VidAngel can pay off the judgment over a 14 year period. That’s an unbiased third party who has looked at our financials and growth prospects and is saying that VidAngel can pay this off. All $62 million.
What this means for VidAngel Investors
We are especially happy to inform our investors that, if the Trustee’s plan is confirmed by the Bankruptcy Court, VidAngel investors will retain their equity in the company and have the opportunity to share the benefits of future success.
We would not be in this position today were it not for the support and loyalty of our customers, investors, and the resilient VidAngel team. We’ve gone from avoiding threats of a shut down to being able to say, ‘just send us the bill.’
VidAngel is turning a page in its history, and we believe that we now are moving forward stronger than we’ve ever been. VidAngel remains committed to helping you, the viewer, make entertainment good for your home.
Last week, Walmart’s VUDU announced a new feature called “Family Play Mode” which automatically skips sex, violence, profanity, and drug use in 500 movies. This is the most significant development in parental and family content skipping since we launched VidAngel in 2013.
Here is what we know so far:
– They offer Disney content
– They are supporting modern streaming devices like iOS, Android, XBOX One and a few smart TVs
– They offer 500 PG and PG-13 titles
– Filmmaker discussion boards online have exploded in shock and anger.
– Commenters across social media are predicting that Family Play will be shut down by pressure from the DGA.
– When Sony announced a similar initiative back in 2017, they were attacked by the Directors Guild of America and leading Hollywood content-makers. Eventually, due to significant pressure, took “Clean Version” down.
We congratulate VUDU and Walmart on being the first major player to catch the vision of skipping.
Thursday night, the original 2016 preliminary injunction against VidAngel was ruled “permanent” — but with legally questionable modifications (here’s the order and the ruling). In January 2017, we shut down our old system and have never since used it to offer anyone’s content. Instead, we pioneered a new system, but never offered Disney’s content on it. We advised the court that we had not used the old system in any way for more than 32 months and “unequivocally” committed never to use it again absent a change in the law. But the judge nevertheless issued the new injunction.
Perplexingly, the judge granted Disney’s unusual (and legally questionable) request to broaden the injunction to include “parents, affiliates and subsidiaries,” and did so without requiring even that Disney identify those additional entities.
As we have done in the past, we will proceed with the utmost caution. We are removing the titles that are seemingly subject to the injunction. Once again we don’t know for sure which ones are because of the vagueness of the ruling. However, we know ABC and Hulu are owned by Disney and HBO is owned by TimeWarner, which also owns Warner Bros. Late last night we also removed Castle Rock. We have asked the studios if there are more entities now protected by the new injunction and await their answer.
In light of this development, might we suggest that now is the time to reach out to your senator and/or Congressional representative to urge that they support the bill to update the Family Movie Act to permit filtering of all movies?
Senator Mike Lee is preparing to introduce an update to the Family Movie Act in the Senate. This important message from the CEO of VidAngel, Neal Harmon, and a letter from the President of the Parents Television Council, Tim Winter, explains how you can help.
As a parent, nothing is more important than protecting a child’s innocence.
And, as a veteran of the entertainment industry, the truth is that there are many in Hollywood who are actively engaged in creating content that strips that innocence away from our kids, damaging lives forever.
You know this already, that’s why you use and support VidAngel, because its incredible content filtering technology protects your family. The Parents Television Council wants to protect your right to filter out the graphic sex, violence and profanity that is so pervasive in today’s media, but I need your help.
Hollywood is fighting to remove your parental right to use content filtering technology for modern streaming devices. They’ve convinced judges that you shouldn’t be able to use modern technologies to protect your family from material that you find harmful or offensive.
Legislation is being considered in Washington DC that will block the negative forces in Hollywood from taking away your right to use filtering technologies like VidAngel. If that legislative remedy is to succeed, we need bipartisan support from the most influential legislators. That’s why your senator needs to hear from you today.
First a refresher on bankruptcy – Chapter 11 means VidAngel still serves its customers and Chapter 7 means VidAngel is shut down.
We’ve reached an agreement with the studios to appoint a chapter 11 trustee in exchange for:
1) Withdrawing the studios’ chapter 7 motion
2) Under Bankruptcy law, the studios can elect whoever they choose if they don’t like the trustee that is appointed, but under this agreement, they only choose from four people we’ve agreed on in advance.
We decided to do this because we think it will allow an objective third party help us get through the chapter 11 reorganization process with more favorable results for the future of VidAngel. And it will save money that would have been spent on legal bills.
We are turning our sights to successful reorganization with the help of a trustee rather than spending unnecessary time and money fighting the studios’ motions. We’re optimistic about our prospects for reorganization.
During our court proceeding in Los Angeles, I made the point in my testimony that where I come from, people talk before they sue each other. We’ve tried to talk many times, and Disney has been unwilling to join in a conversation. So, on behalf of around 8,000 owners and tens of millions who want to skip a few things in Disney/Fox/Warner Bros. movies, I’ll continue this conversation publicly.
Let’s review a few quick facts…
1) VidAngel indisputably made your company and other Hollywood studios a profit. I think that’s why most of them did not join Disney in suing us.
2) You sued us for $125 million for it, and Federal District Court Judge Birotte commended both sides for an incredibly passionate fight. You won $62 million. We lost. At least for the moment.
3) Disney knows a trial and litigation (probably costing tens of millions to fight) in four courts could have been avoided by selling VidAngel a license.
The following is a proposal that could make everyone whole in this case if it were really about copyright protection and not about marginalizing the filtering market out of existence.
Mr. Iger, please take a close look at the raw data in this letter and ask yourself, “Does spending this kind of money to fight the filtering market make sense financially?”
VidAngel Made Money for Disney
Per an expert report at trial, unchallenged by alternative data or analysis, Disney et al would have been $229,752 poorer had VidAngel never offered their content on its service. These numbers are profits. VidAngel paid much more for the DVDs. I realize these numbers are nothing for Disney but we had barely tapped the market when Disney sued VidAngel.
A full 65% of the views for Disney et al content were views that would not have happened without VidAngel. Netflix, Amazon, Sony, Universal, Paramount and other studios who did not sue VidAngel also made profits from VidAngel’s success. 70% of the views for non-plaintiff content were views that would not have happened without VidAngel. There are so many reasons why people want to skip small bits of popular movies and TV shows.
An independent,peer-reviewed study conducted by UCLA Professor Doug Lichtman and Dr. Benjamin Nyblade found that there is a real and substantial market for filtered content, 98% of its customers used VidAngel to filter, and allowing families to select what they want to mute or skip does not decrease their enjoyment of the movies they watch. Remarkably, being able to choose to skip or mute a very small percentage of a movie makes all the difference to them. AndNRG reports that 40 percent of Americans would want to use VidAngel.
I don’t know if your legal team has communicated to you that building this new market for Disney came at great expense to VidAngel. We spent millions building technology and marketing to this new audience. You reaped profits, while we reaped losses. We happily invested to build a new market because we believe it will be very profitable when built.
5) VidAngel went to great expense to audit its movie purchases and systems to protect Disney’s interests
6) VidAngel asked you for a business solution to avoid the expense of the lawsuit
Although VidAngel’s service indisputably made it money, Disney litigated against us in 4 federal courts before getting a judgment of approximately $62.5 million. At this point, VidAngel can keep going to the Supreme Court, hoping that the Court will protect Disney from itself. Or if this were not about filtering, we could say, “You won. We lost. How about a truce?”
It is more important to VidAngel that the option to skip exists than that VidAngel owns it.
Last week we filed a motion in the bankruptcy court to transfer our filtering assets to the Skip Foundation, Inc, a 501(c)(3) organization. This foundation will become the Wikipedia of skip technology as a free global resource. If the transaction is approved by the bankruptcy court, our patent and 10,000 titles with all skip data will be free for any company or any individual in the world to use as they see fit under copyleft and Wikipedia style licenses. And the entire world can contribute to the Skip Foundation’s library of content “skips” just like with Wikipedia. Those contributions could benefit VidAngel and Disney.
Disney, Netflix, Amazon and others could adopt the technology freely and implement the technology on top of their existing streaming contracts without an agreement of any kind with VidAngel.
Here’s What We Propose
We understand you want to protect your Intellectual Property. You understand that VidAngel’s customers want to skip a few things in your movies in private. If the financial minds rather than the power minds within Disney prevail, this could be a solution.
We are prepared to consider giving Disney our Dry Bar Comedy series in satisfaction of the judgment. Dry Bar Comedy is the fastest growing comedy brand in the world with over 1.5 billion views to date. It is making millions. It is growing so fast because the creators are embracing the data behind the skips of families. You could publish its family friendly comedy on Disney+.
With the so called “debt” settled, VidAngel could freely transfer the “filtering” assets to the Skip Foundation and emerge from bankruptcy. “Filtering” would survive as “skipping”, regardless of VidAngel’s future fate. And Disney could profit from both the skip data and Dry Bar Comedy.
This proposal would settle the judgement, respect Disney’s IP, and grow Disney profit. VidAngel would be free to focus on The Chosen, VidAngel Studios, and generating profits for its own investors, while enjoying the benefits of the Skip Foundation.
I won’t hold my breath for your response and we are already preparing our appeal, but it doesn’t hurt to ask. The IMP and Sony Betamax cases changed the industry, but they dragged on for almost a decade. Change is coming. You can fight it or profit from it. What do you say? Are you open to meeting?
We find today’s ruling unfortunate, but it has not lessened our resolve to save filtering for families. VidAngel plans to appeal the District Court ruling, and explore options in the bankruptcy court. Our court system has checks and balances, and we are pursing options on that front as well.
2:18 PM MST UPDATE: About 2pm LA Time – Jury sent a request for an exhibit that contains the Family Movie Act. Both sides argued as to the better exhibit to give to the Jury. The Judge decided to send two exhibits back to the Jury room. Both sides got to review the document before it was sent back to the bailiff, who then gives it to the Jury.
There is a very meticulous process for receiving and sending information to the Jury room.