Jennifer Lopez-owned millennial and Gen Z entertainment media brand Fuse Media has filed for bankruptcy on Monday (April 22) in a bid to cut approximately US$200 million in secured debt.
More specifically, the company filed for voluntary pre-packaged Chapter 11 protection, as well as filing a series of motions, known as “First Day Motions,” with the Bankruptcy Court. These would give Fuse authority to pay its employees as usual and honor its go-forward operating expenses.
Fuse expects to emerge from Chapter 11 protection during the second quarter of 2019. The purpose of the move is to significantly improve Fuse’s balance sheet while minimizing disruption to the company’s ongoing business activities.
More than 80% of Fuse’s shareholders supported the plan, which has yet to be completed, subject to the voting process and approval by the Bankruptcy Court.
The move comes after Michael Schwimmer stepped down as Fuse CEO earlier this month. Fuse was also dropped by Comcast earlier this year and has challenged DirecTV in court, which claims Fuse breached its affiliate agreement by failing to offer an early right to terminate its affiliate agreement.
Fuse’s unscripted slate includes T-Pain’s School of Business (pictured), Fuse Docs, Big Boy’s Neighborhood, That White People Shit, Fluffy’s Food Adventures and Future History, among others.
“Unlike many other companies in our industry, Fuse has been experiencing growth across platforms, but we have been unable to realize the full benefits of this progress because of the significant amount of debt on our balance sheet,” said Fuse Media CFO and interim CEO Mike Roggero in a statement. “The Chapter 11 process provides a proven framework to efficiently address these challenges in order to position our business for long-term success. It is a logical next step toward ensuring that we are able to provide entertainment content to a traditionally underserved audience for many years to come.”
In court documents, Roggero also pointed to the current SVOD boom as a contributing factor to Fuse’s current troubles. “There have been rapid changes in the media marketplace adversely affecting the pay-TV industry, which in turn adversely affected the company’s revenues and precluded the company from refinancing its current debt,” he said in his declaration in support of first day motions.
“The overall pay-TV industry is in a period of substantial transformation as the result of the introduction into the marketplace in recent years of high quality and relatively inexpensive and consumer friendly content alternatives (e.g., Netflix, Hulu and others).”