The original investor behind USDTV is trying to rescue the broadcast wireless cable company from bankruptcy and keep the business going.
USDTV’s management and original “angel” investor NextGen Telecom are laying plans to buy the company’s assets out of bankruptcy and resume their plan to offer a cheap package of cable-TV networks over the air, using spectrum from TV stations.
NextGen is controlled by Denver-based investor Charles McNeil, a longtime mining engineer whose NextGen Resources has investments in variety of companies, primarily mining and coal-based gas and oil operations. McNeil was the initial investor behind USDTV, and court documents show that he has lent more money to the company to keep the lights on while it moves through bankruptcy court.
“That’s the present plan,” says John Carroll III, a lawyer representing Alfred Guiliano, the federal bankruptcy court trustee in Delaware, where USDTV filed its bankruptcy petition. “There are other people who are doing due diligence, but we’ll see what the bidding process brings.”
He notes that the assets will be put up for auction in September and other potential investors looking at the company may step up. However, NextGen has been lending USDTV money to keep operations going temporarily and is the only suitor committed to bidding.
Court documents say that USDTV CEO Steve Lindsley is in discussions to take a position at the reborn company. Lindsley did not return a call seeking comment.
USDTV tumbled into Chapter 7 bankruptcy protection in July after two years of operation and $14 million in debt.
A digital broadcast station has capacity for one full HDTV signal, plus three or four additional channels at lower-definition. USDTV’s plan called for pooling the spare digital spectrum of three or four broadcast stations in a market to air a package of “cable” networks to compete with cable and satellite-TV operators.
Major broadcasters including Fox Television Stations, Hearst-Argyle and LIN TV invested $26 million in equity last September, but USDTV quickly burned through all that cash.
Minimum bid will be $2.3 million. Of that, $1.3 million will go to key suppliers needed to keep USDTV going, notably cable networks. (ESPN alone will collect $600,000.) The remaining $1 million. will be divided among other creditors, suppliers and former employees.