The already hostile takeover fight for New Frontier Media, the publicly traded owner of nine adult-themed pay-per-view networks, has expanded to include a pair of Hollywood power players – one of whom is also a former video game executive.
Longkloof Limited, which launched the bidding in early March, recently announced its intention to nominate four new board members at New Frontier's annual meeting in an apparent attempt to push its $19 million offer through. (Porn giant Manwin has made a competing $24 million offer for the company.)
Longkloof is New Frontier's largest stockholder, but does not control the six-seat board. To rectify that, it has recruited Eric Doctorow, former executive vice president at Miramax and president of worldwide video for Paramount (as well as chief operating officer of video game company THQ and Barbara Wall, former EVP of Television for Lion's Gate,to fill two of the seats.
Also backing Longkloof are a pair of executives from Sabido Investments, a company owned by Hosken Consolidated Investments – Longkloof's parent firm.
New Frontier has decried the move, calling it "a transparent attempt to take control of" the company.
"It is unfortunate that rather than choosing to engage constructively with the Special Committee’s financial advisor, Hosken has chosen to launch a potentially costly and distracting proxy contest," said Alan L. Isaacman, chairman of New Frontier Media’s special committee designed to evaluate the Longkloof and Manwin bids, in a statement.
Both bids for New Frontier, which also produces many of the films that air late at night on Cinemax and Showtime, were unsolicited. On March 9, Longkloof offered $1.35 per share, a figure that was quickly trumped by Manwin's $1.50 offer.
While many observers expected Longkloof to revise its bid, it has yet to do so – and New Frontier says the company has been less than cooperative as it has explored the offers.
"To date, … the Hosken affiliate, while acknowledging receipt of the information request, has not provided any of the information requested or otherwise engaged in discussions with the Special Committee’s financial advisor," the company said. "In addition, Hosken has given no indication to New Frontier Media that it is prepared to increase its proposed offer price in light of Manwin’s publicly disclosed higher competing proposal."
Shares of New Frontier Media have hovered under $2 per share for more than a year. In its initial letter to the company announcing its offer, Longkloof expressed concerns about the company's current Board of Directors and indicated it was very unhappy with the company's financial performance of late.
"We do not believe the current Board is capable or willing to undertake the actions necessary to enable NOOF to compete in the future, as the track record established by the current Board over the past several years has been dismal," it wrote. "Unfortunately, we believe the current Board is more focused on maintaining its excessive director fees and engaging in related party transactions, rather than running the Company in the best interest of the stockholders."
Manwin, which entered the fight 16 days later, expressed its support for the board and called the company undervalued. The porn conglomerate (which includes many of the major online porn sites - like Brazzers and Twisty's) already has strong ties in the television world, with the oversight of Playboy's television and online operations among its many holdings.
Some industry insiders have theorized Manwin's bid might be a roundabout way for the company to go public without the bother of an IPO . Others, though, believe the company simply hopes to leverage New Frontier's position with cable networks (and broadcasters) to provide additional outlets for its existing content – something Manwin managing partner Fabian Thylmann hinted at earlier this year.
"With Playboy TV, we also got … a way to get into the door of Google Samsung's TV group, and Netflix ," he said. "With Brazzers, when we knock on the door, they tell us to leave, because they're afraid of the content. They're not afraid of Playboy, though. At least they can be convinced to talk to us about [airing] it. Later on, I can try to push other content into the mix."