TV data provider Sorenson Media filed for Chapter 11 bankruptcy Thursday, seeking to extricate itself from a costly deal with Sinclair Broadcasting.
Sorenson provides technology so local affiliate networks owned by Sinclair or Hearst can dynamically insert targeted ads at the household level. It has a similar relationship with Samsung Ads.
Sorenson’s Chapter 11 filings show that the company signed a contract with the broadcast giant on the premise Sorenson would provide data for addressable TV advertising on Sinclair stations and sell ad impressions. However, in exchange for selling Sinclair impressions through its addressable ad platform, Sorenson must make minimum guaranteed payments to Sinclair – an amount unspecified in the filings.
“However, the impressions provided through the Sinclair Agreement can only provide a fraction of the revenue needed to meet the minimum payments specified creating a significant drain on the Debtor’s business – in excess of $100 million over the life of the Sinclair Agreement,” the filing states.
Because of this contract, Sorenson argues that it cannot raise the funds it needs to continue operating and therefore must rid itself of the Sinclair contract.
Sorenson has between $10 million to $50 million in assets and $100 million to $500 million in liabilities.
Both Sinclair and Samsung are named as creditors in the court documents, owed $22.5 million and $10.5 million, respectively. Both are among Sorenson’s top three creditors. Vizio, another creditor, is owed about $735,000.
“With such a large broadcast network, Sinclair would be a natural customer for the services and technologies developed by [Sorenson],” one of the documents reads. “But unfortunately, [Sorenson’s] business has not commercialized as originally anticipated, and thus the Sinclair Agreement is burdensome and rejection is appropriate.”
Chapter 11 works like a Band-Aid for bankrupt companies. It allows the debtor to reorganize its assets and liabilities without falling apart. By declaring bankruptcy, Sorenson gets a reprieve – but is not totally excused – from paying its debt.
An attorney for Sorenson Media did not immediately return AdExchanger’s request for comment.
