SharkJumping

Continuing the trend of following small, public digital media companies (see earlier posts on Handheld/ZVue and Digital Music Group), I stumbled across TubeMusic this week. Tube’s () concept is pretty cool, which is to provide a music video service using the emerging multicast spectrum available from local television stations as they begin to broadcast in digital form. It uses spectrum given to the stations by Congress to offer more targeted programming, and new digital televisions and cable boxes should be able to receive the broadcasts. For more information, see www.multicasting.com. Local stations are hungry for more ways to reach their user base, and this potentially offers up interactive programming opportunities for a wide range of programmers, and better yet, it may fall under the broadcast “must-carry” rule, making sure any multicast programming is also carried by cable and satellite programmers. In addition, Tube is headed up by experienced music video executive Les Garland, who was a co-founder of MTV, so the team certainly knows music video.

However, as usual in these types of reverse-merger companies, the financial structure is a complete mess (see filings), and the valuation is probably way too high at $75M, given the early stage of the company and the missteps so far. Tube’s attempt to buy and build a large music studio have turned out badly outside of what appears to be a gain on the real estate itself, and there is almost no money in the bank, plus a lawsuit and other financial defaults.

So why is it interesting? Because the company has signed distribution agreements with 3 good-sized television groups in the last couple of months, giving it a potentially compelling footprint for a launch later this year. Yes, they paid dearly in stock for those deals, we're not sure when the technology will roll out in large quantitites, and no one knows the exact deal terms.  However, we’ve seen that music video programming is a very popular format, and everyone is looking for options beyond MTV, so I think it's worth  keeping Tube on the radar to see if  they can dig themselves out  of the current hole - but still too risky to invest in them.