Rocket Bomber - article - anime - business - Business is Booming 1: ADV Transitions

I had hoped to get some work done on the much-delayed Graphic Novel & Manga Rankings over the next two days; but, like many a blogger, my plans go out the window as I can’t help being derailed by the business and financial transactions/distractions that have been announced this week. Even though I can be pretty sure I’ve nothing to add to the vast pool of conjecture spreading like a growing slime mold over the interblogs, I can’t help but add my 2 Yen.

[So long as I’m downshifting into full-on business-analysis mode, it may be time to revisit some other points of interest (Borders, last year’s publishing industry and sales stats, digital comics, scanlations and fansubs) — so anyway, my plate is pretty full.]

First up is the most recent, and in it’s own way, smallest news. Those of you camped out on the Comics side of Popular Visual Culture may not even have heard of it yet, and/or may not know enough about the company involved to have an opinion one way or the other.

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There is the lovely title from the official press release (as reprinted by just about every anime blog, and currently the only thing you’ll see at the advfilms.com website)

A.D.VISION, INC. CONCLUDES SERIES OF ASSET TRANSACTIONS

Oooo. Exciting. The all-caps gives me chills. Reprinted here in it’s entirety:

HOUSTON, September 1, 2009 — A.D. VISION, INC. (“ADV” or the “Company”) announced today that June 1, 2009, the Company concluded a series of transactions that are expected to result in seamless delivery of home video products and television programming to customers.

Through an asset purchase agreement, AEsir Holdings, LLC (“Aesir”) acquired a subordinated interest in selected programming from ADV’s film library together with other intellectual property subject to all liens and security interests of the Company’s senior secured lender. The transaction requires Aesir to assume specific obligations and scheduled liabilities of the Company under legacy license agreements associated with the acquired programming.

Concurrently, the Company concluded an asset purchase agreement with SXION 23, LLC, doing business as “Section23 Films,” a home video distribution company, under which it assumes account servicing and distribution operations in connection with the library acquired by Aesir, subject to all liens and security interest of the Company’s senior secured lender.

John Ledford, ADV’s President and CEO, states “We believe the actions we initiated and completed provided the same or more value to the Company’s secured lender and its programming licensors while giving other key stakeholders such as employees and customers some potential value or the reasonable probability of realizing value.”

In a separate transaction, Valkyrie Media Partners, LLC (“Valkyrie”) acquired a 100% equity position in Anime Network, Inc. (“ANI”), formerly ADV’s television unit, pursuant to a stock purchase agreement between ADV and Valkyrie. That transaction includes an assumption by Valkyrie of specific liens and security interests of the Company’s senior secured lender.

In another separate transaction, Seraphim Studios, LLC acquired Amusement Park Media, the production unit of A.D. Vision, Inc.

Further announcements are expected from the respective acquiring entities over the coming days.

RIP ADV:

• The Wikipedia Entry has already been edited (I checked at 9PM) to reflect the press release of this morning
• The Wayback Machine has archives of the ADV site, but nothing more recent than 2007. Here’s the front page, the website site map, and the ‘about us’ page from ADV circa Oct. 2007.
• As linked above, there’s naught but this on the ADV website now.

Anime News Network:
(I hope they don’t get mad at me for linking so extensively and deeply to their site)

• Here’s ANN’s news story on the move.

Also culled from ANN: A partial timeline of what went wrong

• ADV/Sojitz
• ADV loses Newtype, starts PiQ
• ADV closes PiQ
• ADV holds yard sale for ready cash
• FUNimation picks up former ADV/Sojitz titles
• ADV announces the first distro deal for a ‘new’ company, Sentai Filmworks
• Sojitz dissolves the company (one of two companies, actually) that it set up just for the ADV deal
• which doesn’t affect the new deals FUNimation made earlier regarding these titles

After that, things were quiet for about a year. This morning, ANN had the news story, followed in the afternoon by an Editorial

Other news and views:

Anime Vice had two posts with the facts (as we knew them) along with Gia’s attempts to contact someone at ADV for a clarification or comment — and one of the commentors on the first Vice post (scottfrye) gave a helpful pointer to a blog post by Robert of Robert’s Anime Corner Store with the first confirmation and some other inside baseball on the deal.

EDIT 23:20pm: Simon Jones at Icarus Publishing [NSFW, usually; recommended anyway] also has his first thoughts on ADV (plus some additional commentary on the other business news of the week).

And I’m sure every other anime blog will have analysis and commentary (just like this post) by tomorrow morning, or midnight tonight — right now most are just re-printing the official press release (just like I did above).

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I like the phrase from the official announcement, “liens and security interests of the Company’s senior secured lender.” It’s the most telling bit. It was repeated 3 times, verbatim, in the press release. (Yeah, the names of the new companies are nice and all, but this is part of the back-room business — and the only part that is showing)

If ADV were *really* gone, and the bits and pieces put up for auction for whatever the open market would pay for them, that “Senior Secured Lender” is the one who would be paid first and in full. Since ADV isn’t a publicly traded company—with the associated required SEC filings and reports—we have no idea who this mystery creditor is. Maybe ADV had a multi-million dollar line of credit at some bank (or made similar arrangements with a venture capitalist) and the terms of the loan finally came due. Could be.

If I had to make a bet — I think this is still fallout from the Sojitz deal of ’06: Even after that went sour, Sojitz (and their partners Klockworx and the Bank of Japan) still had 20% ownership of ADV, a point Christopher Macdonald brought up in that ANN editorial I linked to above.

Maybe they convinced Sojitz/JCI to convert the 20% into a ‘loan’ — and then made the move to either kick out John Ledford (basically buying the company out from underneath him) or to shrug off other liabilities. Maybe the un-named “Senior” already bought the Sojitz/JCI share (no need to consult with ADV if Sojitz was motivated to sell) and used the ownership stake as leverage to force a deal that they felt would be best — for the future, or for the bottom line.

Here’s my take on it, and something I doubt any of the new units will report in their upcoming ‘introductions’ to the market:

The “transfer of assets” was in fact a buyout, officially sanctioned by (if not initiated by) the Senior Secured Lender.

The split of assets in these four new parts —

• film library & licenses,
• DVD production, sales, and order fulfillment,
• recording studio (+ localization, scripting, and casting),
• and cable TV Anime Network
  
  — is likely designed to isolate each against future losses (or even failure) of one of the other components.

Abandoning the ADV label is necessary as:
a) a way to present a new face to potential Japanese partners & licensors who have been literally burned or otherwise turned off by “ADV”;
b) a legal dodge;
c) the A.D. Vision and ADV names are owned by a party who would not concede to the sale, so it was done as a ‘transfer of assets’ rather than the sale of the company entire;
d) a way to break clean with the past and present something new to the fans (possible; but hard to gauge: I thought most fans liked ADV—or had fond memories from a few years back);

and of course, some or all of the above

In the new schema: Aesir is responsible for lining up new licenses, Seraphim Studios will be responsible for localization and dubs, Section 23 manufactures the discs and ships them out to retailers (possible also with direct sales to fans via the internet — we’ll see) and Valkyrie deals with Aesir to get the licensed properties onto cable TV. Presumably, Section 23 will also be still be working with Sentai Filmworks and Switchblade Films for their DVD releases.

(I’m intentionally ignoring their stupid misspellings and d/b/a’s from the press release — “SXION 23” and “AEsir” are as sure a sign as anything else that someone with an “A.D. Vision d/b/a/ ADV” sensibility is still working behind the scenes here.)

The other up-shot is that Aesir could get Bang Zoom! or Coastal Studios to do a dub, Section 23 could ink a deal with Right Stuf for DVD production, Seraphim could take on translation & dubbing assignments from any licensee (a direct deal with Cartoon Network for new anime, or JDrama releases in English on DVD, anyone?) and most obviously: The Anime Network under new, independent, non-ADV ownership is ideally positioned to actually become an anime network — neh, the anime cable network, with a couple of deals with additional cable providers to extend their reach (perhaps even into basic extended cable packages… Oooo…) and some smart moves with regard to content.

Let me just point out that if AN-as-owned-by-Valkyrie made a deal with Right Stuf/Nozomi to show Aria, Tylor, & Emma (and there are others; a lot of series I love have been picked up by Nozomi, but start with those) and retained the ADV titles (along with the CPM license pickups) then they’d be a damn fine competitor for the FUNimation Channel. It’d be a horse race. Actually, I’d like to see both win.

And while these are separate companies now…

In 2011 or 2012 I wouldn’t be surprised if, say, Asgard Digital Ventures bought up Aesir, Valkyrie, and Section 23 (renamed Bifrost in early 2010) to bring everything back under a single corporate umbrella. but then, I’m a cynical bastard who thinks this whole maneuver is just for show to begin with.