Idle Media Inc (IDLM)

[wadirum1]

I wondered about why Frasier only sold Datpiff and not the entire public company. Maybe the buyer didn't want a public company? Or, maybe the reason is that selling the entire company would have benefitted the shareholders as well as him -- and maybe that is not the way Marcus wanted this to turn out.

Let me explain. He apparently sold Datpiff in exchange for a bunch of cash that went to IDLM. Maybe $30M? (Remember that Datpiff owns the copyright on all of that music...) So, once the cash was in the company, Marcus could simply give himself a $30M bonus and he'd have the money in his own bank account. He'd face a big tax bill, but the money would be his and he'd leave us with nothing.

OR, what if he persuaded the company that bought Datpiff to buy the entire IDLM? For that same $30M purchase price, the folks that bought Datpiff could have paid 50 per share in a tender offer. Marcus has a controlling interest in the stock, so he'd accept the tender offer. The buyer would end up with Datpiff plus the public company. Marcus and all the shareholders would get 50c per share.

The problem with the second strategy is that Marcus would only get $20M, instead of the full $30M, with the other $10M going to shareholders. I think that is why he didn't sell the whole company. If not selling the whole company ends up being a legal liability in some way -- and Marcus does seems to have a history of taking shortcuts that cost him more than he was going to save through the shortcut -- then he might live to regret not getting rid of the public comp.