GEOCAST SHUTS DOWN, CITES ‘ADVERSE ECONOMIC CONDITIONS’
Facing “market environment that was simply not conducive to our efforts” to secure additional funding, Geocast Network Systems announced Thurs. that it was ceasing operations, effective immediately. In e-mail to investors and employees late Wed., Chmn.-CEO Joseph Horowitz cited “adverse economic conditions” as reason for closure (CD March 1 p9). He said Geocast would “retain only a small skeleton staff to conduct a sale of our assets.”
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Large TV station groups and manufacturers were among Geocast partners -- who invested up to $10 million each -- in company set up to develop nonbroadcast uses for portion of digital spectrum. “Geocast had a tremendous vision and the talent to build to that vision,” Horowitz said. He told investors “we are… deeply saddened to disappoint you with this outcome.” Some of Geocast investors told us demise of Geocast wasn’t expected to slow down their planning for future nonbroadcast use of digital spectrum. Jerald Fritz of Allbritton Communications said “extraordinary time and effort” had been extended in searching for ways to “monetize” spectrum usage. “We're now reviewing other options, including program distribution, data applications and broadband, high-speed, last-mile Internet providing,” he said.
Hearst-Argyle’s David Barrett said “we'll wait and see what other opportunities are out there. There’s no urgency to act now… We still strongly believe that our digital spectrum has real value for the future.” With hq in Menlo Park, Cal., Geocast said it had built new platform “that enables the efficient delivery of personalized broadband services to the PC and television.” However, Horowitz said company needed additional funding, which wasn’t available, to deliver “a truly revolutionary new technology platform.”
Washington observer said he wasn’t surprised by Geocast’s failure, saying it was relying on “totally new proprietary technology and to do that you have to have deep pockets.” Company also had “a very high overhead operation… with too many employees,” we were told by executive who decided not to invest in Geocast. It had acquired much of technology developed by Datacast Inc. (principal backer of which was LIN TV), which had failed several years ago and was formed for purposes similar to Geocast. Datacast executive John Abel, a former NAB exec. vp, also had gone to Geocast, whose COO was Charles Jablonski. Anita Wallgren, former FCC official and onetime member of NAB TV board, reportedly was individual left at Geocast to sell off its assets.
Other new technology companies recently formed by broadcasters in business of planning for TV stations’ use of digital spectrum include iBlast -- funded by several large groups, including Cox, Gannett, Media General, Meredith, N.Y. Times Co., Post-Newsweek, Scripps, Tribune Co. -- and Bcstrs.’ Digital Cooperative, whose partners are mostly TV groups, such as Benedek Bcstg. and Granite Bcstg., with stations in smaller markets. Big 4 TV networks are making their own plans, as yet unannounced, and are urging affiliates not to tie up their spectrum in advance to entities such as Geocast and iBlast.