PROFILE–Internet Company Forced to Completely Reinvent Itself

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A few months ago, Load Media Network was one of the scores of companies written off as investors turned a cold shoulder to Internet content providers.

It took a new chief executive, a completely revised business plan, the elimination of half the staff, and several months of meetings for Load Media to convince investors to give the company another chance. Now it expects to soon close its third round of funding.

Because of the turbulent market, investors have become much more skeptical of firms like Load Media, going over their business plans with a fine-tooth comb before agreeing to dole out funding.

“A lot of the companies that have gotten financing in the last couple of years, they’re trying to go for another round but are having trouble getting it,” said Michael Leventhal, technology and music attorney at Squadron, Ellenoff, Plesent & Sheinfeld LLP. “They’re trying desperately to get cash before they flame out.”

Many have already vanished; after months of turbulent operations, content provider Digital Entertainment Network folded in May. Because it also offered free original content, Load Media was lumped in with the likes of the ill-fated DEN.

A whole new business plan

What makes Load different, according to Jack Kennedy, the company’s recently appointed CEO, is that it has been developing an infrastructure to help deliver content. This infrastructure involves storing and organizing news and entertainment programming for other companies, such as Internet service providers, as well as for original content providers or even regular corporations, so that end users can call up custom-tailored content.

This system, once just one element of Load Media’s operation, has become the primary focus. Load Media no longer produces original content. The changes, plus a new team of seasoned executives, are helping the company make headway with potential investors.

Kennedy has a well-rounded business background he formerly worked at a venture capital firm that didn’t invest in Internet companies because the principals were skeptical of weak business plans. He has also worked at a broadband satellite company and in various telecommunications posts.

When he arrived at Load Media three months ago, the company was developing original content for its Web site at www.loadtv.com, while also building a system to enable end users to choose online programs that would be automatically sent to their computers on a regular basis.

Meanwhile, Load Media executives were searching for additional funding to supplement the $14 million raised in previous rounds. Then the market tumbled, and “content” became a stigma.

Kennedy decided to eliminate the company’s content department, laying off 42 of Load Media’s 97 employees and placing a priority on developing infrastructure that other content companies could use to transmit their programming. The 36-year-old brought in other executives with strong business backgrounds and experience in networking and Internet services.

Then, Kennedy began meeting with investors, many of whom had already decided not to put money into content companies.

“Were there people that were scared of it because it’s a company based in Hollywood dealing with the entertainment and content world? There were,” he conceded. But once Kennedy explained the changes underway, investors began responding more favorably.

Long, uphill struggle

Though it’s clear Kennedy is taking great pains to establish Load Media as a company with a viable business model, industry observers note the company still faces many hurdles.

“It’s really a very fundamental challenge, and I don’t know of a company that has reinvented itself to become a tech company from a content company,” said Rohit Shukla, president and chief executive of the Los Angeles Regional Technology Alliance. “It’s a difficult proposition at best.”

Challenges include convincing reputable investors that the business can build market share quickly enough to block competitors.

Plus, it will be difficult for the firm to shake its image as a content company, considering that so many such outfits are grasping at straws to survive.

“There’s a couple of common themes that Load embodies,” Leventhal said. “First, this whole concept that the prospects for dot-coms are tightening up, reality is setting in, and companies are going to be asked to perform. The second thing is this perception of the failure, and I say the perception and not the reality, of content to generate a viable business model and the subsequent move from content to infrastructure.”

As far as making money is concerned, Load Media executives say that will come later. Right now, the company is concentrating on building a large client base.

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