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DEN Is Done

The troubled Digital Entertainment Network (DEN) has closed up shop. Nearly one week after its relaunch, DEN execs laid off 150 employees stating that the low money flow could no longer support the company in its present form. The employees were informed of the news at 5:30 pm on Wednesday, May 17, 2000. The final straw that broke the camels back was this weeks decline from a key investor to supply additional funding. The Netcaster has been plagued with problems from the start. The promise of big time investors like Microsoft and Dell Computer were dashed when initial reports had some exec salaries as high as US$1 million a year. In addition to reports of top-level sex scandals, the intended public offering was scratched due to a management shuffle in June. Former Capital Records CEO Gary Gersh and Gold Mountain Management chief John Silva were brought in as co-presidents and later Gersh also took the CEO spot. Subsequently, DEN Music will be sold to Grand Royal Records. Rumors had earlier surfaced that Imagine-Dreamworks POP.com was in the market to purchase the company. A recent tremor of earthquakes to come came in early May when Morgan Wandell, VP of programming at DEN, left his post due to his unhappiness over DENs move to acquire programming instead of developing original content. With such a high profile broadcaster like DEN going under, other Web programmers focus on the future may have to change. Brad Foxhoven, CEO of Eruptor.com, told AWN, that he feels this will force companies to nail down revenues for investors. Foxhoven said, "To have the plug pulled when they [DEN] where just getting some momentum going, its unfortunate for them and unfortunate for all of us. I think it will draw much more criticism from the press, investment community and other businesses." Foxhoven stated that he feels that investors will now focus on content, not just what big execs a company has or what their lofty goals are. "There will be much more scrutiny. Investors will look at the brands. . .the overall bar will be raised from financing to profit margins to success of the shows and how they will be taken to other capacities like merchandising and licensing." Looks like the Internet may be growing up!

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Rick DeMott
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