Showcasing the tidal shift in guest preferences for hotel in-room entertainment, LodgeNet Interactive Corp. ended 2012 by declaring it plans to enter bankruptcy.
LodgeNet Interactive Corp. announced on Monday that it will be entering an expedited Chapter 11 bankruptcy process, after which an affiliate of Colony Capital, Santa Monica, California, will provide US$60 million of new capital and become the controlling stockholder.
Hotel in-room entertainment vendor LodgeNet Interactive Corp., Sioux Falls, South Dakota, said that current hospitality customers will continue to receive LodgeNet’s entertainment and connectivity services, as well as ongoing maintenance and support, without interruption.
LodgeNet has turned a profit in only three of the last 15 quarters and in September hired a new CEO, Richard Battista after longtime CEO Scott Peterson resigned in June. The company has recently seen high-profile investors such as Mark Cuban reduce their stakes in the company via share sales.
The company’s revenue has been hurt by the decline in guest purchases of pay-per-view movies and adult content and its stock value has plummeted this year.
Under the terms of these agreements, the Colony Capital affiliate Colony Syndicate will receive new common stock representing 100% ownership of LodgeNet. As part of the deal LodgeNet received support from a steering committee of its lenders holding its debt for a multi-year extension of its existing US$346 million secured credit facility. Home Box Office Inc. and DirecTV agreed to extend forbearance agreements of a US$26 million debt LodgeNet owes them.
LodgeNet also announced that it signed a memorandum of understanding with DirecTV to provide to include DirecTV branding, programming and content, advertising, and support across all facets of its operations, infrastructure and technology.