Alkiviades “Alki” David is one of those really rich guys who likes to tick people off.
He’s offered $1 million to anyone who streaked in front of President Barack Obama and $250,000 if someone did the same to Chicago Mayor Rahm Emanuel. Unlike other billionaires, his Twitter feed eschews aphorisms and pithy observations for a stream of barely suitable-for-work pictures, many of which appear to come from his bedroom.
But what he really likes doing is getting under the skin of the major broadcast networks, with which he has been locked in a years-long battle over his desire to stream their programs on the Internet. His online TV-streaming service FilmOn X last month asked a federal judge in Los Angeles to deem it a cable service provider, which would qualify it for a special license to legally retransmit live TV on any computer or mobile device in the United States.
“Life is meant to be enjoyed and work is meant to be enjoyed,” David said. “The culture in a corporation would be of no use to me if it was like working in a morgue.”
If the latest gambit is successful, FilmOn X could cut into the legacy networks’ exclusive rights to broadcast their programming over the Internet. That’s why competitors Fox Television Stations Inc.; NBCUniversal Inc.; CBS Broadcasting Inc.; and Disney Enterprises Inc., parent of ABC, have found themselves on the same side as they seek to block David and FilmOn X’s application.
The broadcasters fought a similar battle against Aereo Inc., a now-defunct online streaming service. That fight finally ended last year when the U.S. Supreme Court ruled Aereo violated copyright law by retransmitting live TV programing without authorization.
David insists FilmOn X is different.
“They were taking (TV programming) without wanting to pay any license fee,” he said. “Virtually all of the content FilmOn offers is owned or licensed and paid for. The Aereo business model is meaningless to FilmOn.”
The networks have argued in court that, licensed or not, FilmOn X’s model represents a threat to their core business because it would harm their leverage in distribution negotiations and would make it tougher for them to expand into new markets.
Deep pockets
Born into a Greek Cypriot family in Nigeria in 1968, David is heir to his family’s overseas Coca-Cola Co. bottling franchise fortune and is said to have a net worth of more than $1 billion.
But while his resources are great, they don’t match those of the major broadcast networks he’s taken on.
Still, the stakes are big enough that he’s willing – even eager – to keep his battle going to disrupt the TV industry. FilmOn X’s war in court has cost “many millions,” David said, but every dime has been well worth it.
“Put it this way, the times that this type of innovation in business and technology really works for me is when I get messages from consumers, like when Hurricane Sandy hit New York,” he said. “I had countless messages from people saying thank you for the service because it was the only way they had access to the news.”
In fact, David said his decision to keep fighting doesn’t make much business sense. Instead, he argues it’s a matter of principle.
FilmOn X once offered programming from the legacy networks (such as during Hurricane Sandy), but has stopped, instead filling some 700 channels with content it either creates itself or licenses from willing partners. There is, for instance, an Associated Press breaking-news channel. The company also announced last month that it had struck a deal with the Arena Football League to stream games beginning in October.
Michael Paxton, a senior analyst who follows FilmOn X at corporate research firm SNL Kagan in Scottsdale, Ariz., said David’s company is among the most well-known players in the online TV-streaming industry.
“This is still a relatively small company in terms of not only revenue but also end users,” he said. “Having said that, it’s a successful company both operationally and financially that’s operating right now in a niche market.”
Indeed, Paxton said a lot of people in the industry are well aware of FilmOn X, especially because of the attention David brings to the company.
Mad method
With an international pedigree and homes in Switzerland and Greece, David spends much of his time now in a $35 million mansion in Beverly Hills next to the famed Pickfair estate once owned by film stars Mary Pickford and Douglas Fairbanks.
He started FilmOn X, based in Beverly Hills, in 2006, but before long shifted his focus to expand his media content offerings. He now owns Anakando Media Group, the holding company for FilmOn X and Hologram USA, a company now famous for bringing rapper Tupac Shakur “back to life” as a hologram at the Coachella Valley Music and Arts Annual Festival in 2012.
The attention he gets for his Twitter feed (217,000 followers) and streaker bounties appears thus far to be greater than the attention paid to his entertainment business – outside of court, anyway.
FilmOn X had $22 million in earnings before interest, taxes and amortization last year, he said, and is Anakando’s biggest money-maker. Overall, the holding company is on pace to generate $32 million in EBITA this year.
David said there were more than 71 million individual viewers worldwide last month for FilmOn X, about 22 million of which came from North America. (For comparison’s sake, Culver City digital media company Maker Studios Inc., the largest multichannel network in terms of roster of creators, attracted 42 million individual viewers in May, according to comScore Inc.)
One big factor behind David’s success stems from the massive attention he generates from pulling pranks. Last month’s announcement that he would pay someone to streak in front of Chicago’s mayor mirrored a similar stunt he pulled in 2010 when he offered $1 million to anyone who would bare it all in front of the president. (A streaker did attempt it, but didn’t get close to Obama; David paid only a portion of the money.)
“There is a madness to the method,” David said. “We always have fun, engaging, noisy, pop culture type of content. That stuff is in my DNA and it works. We see the numbers and we always see a spike in traffic.”
Despite the fun David has at work, the TV networks have refused to play ball.
More hurdles
The broadcasters filed copyright infringement claims against FilmOn X in 2012, eventually leading to a court order prohibiting David’s company from retransmitting their programming beginning the following year.
Multiple federal judges around the country have already determined that FilmOn X and other similar companies cannot provide consumers with access to live TV without permission from each individual owner of the content.
But David has pursued another way to access the programming, applying to the U.S. Copyright Office for a “compulsory copyright license,” which is traditionally awarded to cable service providers.
Ryan Baker, outside counsel for FilmOn X, said he has already filed an application with the Copyright Office, but the process stalled due to the pending litigation. That’s why FilmOn X asked for the court’s blessing last month that could ultimately deem it a cable provider despite the fact it operates online.
If FilmOn X manages to land the compulsory copyright license and stream live network broadcasts on the Internet, it would still have to negotiate individual deals with each broadcaster that would likely require FilmOn X to pay a monthly per-user fee, Baker said.
While FilmOn X has said it’s willing to pay for the content, Baker said the networks are very reluctant to give up control of their programming.
And they have fired back in court, arguing that the federal law governing such licenses is not meant to be interpreted as broadly as FilmOn X contends that it should.
“Under FilmOn X’s interpretation of (the law), anyone who retransmits broadcast signals to subscribers is a ‘cable system’ entitled to the … compulsory license – including the ‘kid in the dorm room’ with just a TV set and an Internet connection,” the networks said in a court filing. “That is not what Congress contemplated when it enacted (the law).”
None of the attorneys for the TV networks responded to requests for comment.
Meantime, the Federal Communications Commission is mulling a significant rule change that could allow Internet companies to provide live TV broadcasts online.
Baker said proposed amendments, published late last year, would give FilmOn X a significant boost.
“Big company control over access to programming should not keep programs from being available on the Internet,” FCC Chairman Tom Wheeler wrote in the proposal published in December. “Today, we propose to break that bottleneck.”
Wheeler reportedly said last month that he expects the proposed changes to go before a vote this fall.
“It is a critical endorsement of the model and it’s recognition that our service is good for the public,” Baker said. “The FCC is looking out for the public. They want content out there.”
