Wednesday, May 31, 2006

GTXC's lost revenue source, DishTV Now

Back in 04, as the PrimeTV debacle was really becoming critical. Employees asked to take a 2 month 20% deferrment of salary (which was to be repaid with interest, "promissory notes" to that effect and David still never accrued for it and never paid it back).. lay offs throughout the Gatelinx empire, the closing of the Cary call center, selling off the leased equipment... all of that, they were actively soliciting investments and sales of the company.
Ad's were posted on "4 sale" web sites for the AI, for the Gatelinx technology, for DishTV Now, everything. And, a number of documents were produced to support these efforts.
NOTE: at least 5 deals were offered, 3 signed LOI's, all of which either David backed out of, or couldn't/wouldn't produce the kind of financial information and disclosures that would allow anyone to buy the company.
One interesting document was a history of DishTV Now and the Satellite sales business. Some interestings quotes from this document include:
"Prime Television Corporation was established in 1997 for the express purpose of marketing satellite TV equipment and services to U.S. consumers. The objective was to target market the 67 million cable TV subscribers, offering these consumers a one-stop shop for ordering satellite TV service. David and Annette Hagen, respectively CEO and General Manager, have had over 20 years experience in marketing and direct sales. They have utilized their expertise in television, direct mail, radio, print and co-op advertising to generate over 10 million inbound customer inquiries regarding satellite TV over seven years. Their management team consists of leaders in direct marketing and sales. Rigorous training and motivation of the sales staff has resulted in superior sales performance. The company sold over 850,000 customers satellite TV equipment and service. The company was the top ranked dealer for PRIMESTAR until it was purchased by DIRECTV. Since this acquisition in 1999, the company remained the top ranked dealer for DIRECTV until the April of 2004 when it lost its dealership with DIRECTV.
In 2003, the Hagen’s formed Dish TV Now, Inc., for marketing and selling Dish Network satellite TV systems and services. Dish TV Now began marketing nationally through several methods proven effective through Prime Television. These methods included direct mail targeted to consumers who have indicated a desire to purchase a satellite TV system within the next 30 days and families currently in the transition of moving, and direct response TV (DRTV) commercials. The initial DRTV commercial was the "Cablesnake" (click on www.calldishtv.com for flash example of the TV commercial), which combines humor and shock, while demonizing cable, and advertising the Dish Network FREE DISH promotion as an exciting, value-packed limited offer. Through the marketing mix, Dish TV Now has generated in excess of 140,000 new subscribers for Dish Network. www.dishtvnow.com
Through their experience with high customer call volume and scripted sales and customer service, the Hagen’s recognized the need to allow consumers and business to communicate with live agents through websites, kiosks and home televisions. The Hagen’s formed Gatelinx Corporation in early 2000 to first develop a proprietary Internet transport application to ride on top of TCI/IP that would be both firewall friendly and sufficiently robust to allow the best in live direct sales and service over any device connected to the Internet. Once the core technology was developed, the next objective was to develop applications to work with this revolutionary Internet protocol application. To meet these objectives, the company recruited and employed top computer scientists specializing in the fields of secure network communication, multimedia streaming, VoIP, collaboration applications, compression technology and Video over IP. After three years, these experts in their respective fields have developed a significant number of patent-pending breakthrough technologies. Utilizing these technologies, consumers and businesses can now directly communicate through any device that can make a connection to the Internet. Through the Gatelinx applications, sales agents and customer service representatives can present their products and demonstrate services using rich multimedia graphic applications. The solutions were further designed to help eliminate the problem of shopping cart abandonment concerning any business attempting to conduct business over the Internet. Gatelinx has combined the most advanced features of business PBX telephone system have with video and the Internet to allow for seamless and rich communication and collaboration. www.gatelinx.com"
Pretty straight ahead (if not completely fluffly) stuff. Left out all kinds of information, like the $3M Pegasus receivable (whcih they also tried to sell, called "factoring" at least twice, at pennies on the dollar to stay afloat.. oh, lookie, and that $3M is on their books as a receivable still), they missed the DirecTV lawsuits and how much they claimed is owed, and yet no one has seen, or will see, a penny of that.. al the insiders know all this.
What's interesting is the things communciated at the end of the document, and throughout the process. They, the Hagen's, claimed and held onto the hope that the call center was a "machine" that if primed with advertising dollars could return to its glory days. This quote says it all...
"Carrying the overhead of Gatelinx exclusively by Dish TV Now in absence of Prime Television has drained the satellite TV business from a $2 million a week business to its current $200,000 per week. A $100,000 per week investment in marketing for 4 to 6 weeks would double plus sales bringing Dish TV Now back to annual sales that would well exceed $25 million. "
Really? wow... if this was so easy, and they had all this demand and investment/licensing/marketing arrangements which clearly could have spit out a measly $100K per week, then why did they sell off the whole thing for $500K? Just another fishy story from the Hagen's. Folks, not one thing about these guys are as they say... it's a scam.

12 Comments:

Anonymous Anonymous said...

I wonder if david's little yoga instructor girlfriend is still around? Back a couple of months ago Annette met with David, then left. She came back and the little chippy was in David's office and they got into a huge fight. The girlfriend kicked Annette's butt.

6:56 PM  
Anonymous carl said...

Gee, I bet that Hagen somehow made that Annette/Yoga Instructor fight feed his big ego.

Only one thing I wanted to add. I think you've covered it before, but just to catch up the folks that are coming late to this little party. PrimeTV, the money engine that funded the development at Gatelinx, has been investigated as a scam as well. In fact, Hagen ended settling with the State Of North Carolina. ( http://www.businessnc.com/archives/2004/09/satellite_wars.html )
Basically, they would hook you in offering you a "free" satellite receiver. Then you would get charged for the hardware, shipping and handling and installation. Then, like many offers, you would receive a rebate form to fill out.

The problem is that they would either delay the rebate or never send it to you. Customers were of course a little miffed, and on a regular basis I and the other developers would answer a phone call from an irate customer.

And just to show how sensitive these folks are, some of the "best" voice mails would be replayed for the employees for entertainment. Yup, if you called up PrimeTV to complain, there was a chance that they made fun of you behind my back. That might seem mildly amusing, right? How about if the call is from a single mom who needs that money to pay rent? You can question her budgeting skills, but is that a reason to laugh at her? And what about the kid, should the kid suffer because its Mother doesn't know how to handle money or smell a scam?

And then there were stories of periodic bomb threats. I don't recall any while I was there, but I heard a number of stories of these things happening.

At the time, I don't think any of us understood what was going on. The Hagens and Stefanik assured us these customers had filled the paperwork out incorrectly and that they had been told so. However, running "PrimeTV David Hagen" through google brings up a different story.

I think most of us sensed that the story was not entirely honest, but we wanted to believe what we were being told. Who wants to work for a scammer? And we really believed we were changing the way the world communicated.

Back to the point, during my tenure there, the installer network that they used dropped them due to customer complaints, and they then formed PrimeInstalls so they could stay afloat. Then, DirecTV forced them to use a third party to oversee the rebate program. Suddenly, after they did that money became much tighter for some reason....

Most of this I found out after my tenure was over at Gatelinx from public sources, but there were plenty of hints the whole time I was there. If I'd found out earlier, I would have left. The article I referenced was written before the big layoff, but we were called into a meeting and told that the Hagens were going to sue the paper and that it was all a pack of lies. Of course, by that point, we'd been hearing so many different stories from the Hagens and around the company, that we knew that at least parts of it were likely true.

I guess the real question is, who uses a scam to fund a legitimate business?

3:23 AM  
Anonymous Anonymous said...

Hi,
I owned one of the installation companies that Prime used. They went under on us in one day and still owe us over $100,000.00. It may not be alot to some people but to me it was everything. I am still recovering. We were a small company that worked out of our house.
We are part of a class action lawsuit with a lawyer in NC but I never hear anything and dont even know what is going on.
Any news would help.
Thanks

9:56 AM  
Anonymous carl said...

Interesting, I posted 2 comments today and neither of them seem to have been approved. One was a completely innocent response to a question one thread down. The other was to this thread and gave a quick review of PrimeTV's history.

Comments have been approved since then, but not mine. I wonder why.

11:47 AM  
Anonymous Anonymous said...

Annettes a slut! MMbong!

12:24 PM  
Anonymous Anonymous said...

Annette is a slut mmmbong!

12:25 PM  
Blogger ex-GTX said...

"Carl"

No conspiracy here. your comments, appreciated, are posted as they arrive. Keep them coming...

1:02 PM  
Anonymous carl said...

"Carl"

No conspiracy here. your comments, appreciated, are posted as they arrive. Keep them coming...


Didn't mean to imply a conspiracy, although it does read that way. Being a developer, I just assumed it was a tech issue.

2:21 PM  
Anonymous Anonymous said...

Chuck is in Dubai,
He got screwed by David and Annette(literally).He will have nothing more to do with them.As far as I know,he is living it up with his "new bitch..."
will keep you informed of any more info...
Euromole

11:18 AM  
Blogger posterity101 said...

alongside with this phenomenon is the emergence of direct response marketing. i learned a lot from your views guys. cable companies should read your inputs. :)

10:48 AM  
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2:02 AM  
Anonymous Anonymous said...

seems to me that the person who wrote the huge article failed to mentioned one thing, we all knew it was a scam, and didn't say anything until the money stopped flowing to the employees. In retrospect your just as guilty as they were, cause everyone knew that if you worked for the Hagen's you got paid better than most lawyers in town did. So if you didn't save your money then your just as bad as the mother who bought a sat. instead of paying her bills. Yeah it was a scam, but no one wanted to blow the horn on it cause we all benefited from it.

1:01 AM  

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