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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the
fiscal year ended December 31, 2004
Commission
File Number 0-21989
Medialink
Worldwide Incorporated
(Exact
name of registrant as specified in its charter)
|
Delaware |
52-1481284 |
|
(State
or other jurisdiction of |
(I.R.S.
Employer |
|
incorporation
or organization) |
Identification
Number) |
708
Third Avenue, New York, New York 10017
(Address
of principal executive offices) (Zip Code)
(212)
682-8300
(Registrant's
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class |
Name
of each exchange on which registered |
|
Common
Stock-$.01 par value |
National
Market System of NASDAQ |
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). Yes o No x
The
aggregate market value of the voting stock held by non-affiliates of the
registrant amounted to $18,371,723, computed by reference to the price at which
the voting common stock was last sold as of the last business day of the
registrant’s most recently completed second quarter.
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the close of business on March 26, 2005: Common Stock -
6,022,702.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of the Registrant’s Definitive Proxy Statement for the 2005 Annual Meeting of
Stockholders, to be held on June 9, 2005, to be filed pursuant to Regulation 14A
within 120 days after the Registrant’s fiscal year ended December 31, 2004 are
incorporated by reference in Part II, Item 5 and Part III of this
report.
MEDIALINK
WORLDWIDE INCORPORATED
FORM
10-K
YEAR
ENDED DECEMBER 31, 2004
TABLE OF
CONTENTS
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Page |
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PART
I |
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Item
1. |
Business |
2 |
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Item
2. |
Properties |
9 |
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Item
3. |
Legal
Proceedings |
9 |
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Item
4. |
Submission
of Matters to a Vote of Security Holders |
9 |
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PART
II |
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Item
5. |
Market
for the Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities |
10 |
|
Item
6. |
Selected
Financial Data |
11 |
|
Item
7. |
Management's
Discussion and Analysis of Financial Condition
and Results of Operations |
12 |
|
Item
7A. |
Quantitative
and Qualitative Disclosures About Market Risk |
23 |
|
Item
8. |
Financial
Statements and Supplementary Data |
24 |
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Item
9. |
Changes
in and Disagreements With Accountants On
Accounting and Financial Disclosure |
25 |
|
Item
9A. |
Controls
and Procedures |
25 |
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Item
9B. |
Other
Information |
25 |
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PART
III |
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Item
10. |
Directors
and Executive Officers of the Registrant |
25 |
|
Item
11. |
Executive
Compensation |
25 |
|
Item
12. |
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters |
25 |
|
Item
13. |
Certain
Relationships and Related Transactions |
26 |
|
Item
14. |
Principal
Accounting Fees and Services |
26 |
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PART
IV |
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Item
15. |
Exhibits
and Financial Statement Schedules |
26 |
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SIGNATURES |
Chief
Executive Officer, President and Chief Financial Officer |
29 |
| |
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|
| |
Directors |
29 |
| |
|
|
| Report
of Independent Registered Public Accounting
Firm |
F-1 |
| |
|
|
| Financial
Statements |
F-2 |
FORWARD
LOOKING STATEMENTS
With the
exception of the historical information contained in this Form 10-K, the matters
described herein contain certain “forward-looking statements” that are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements in this Form 10-K are not
promises or guarantees and are subject to risks and uncertainties that could
cause our actual results to differ materially from those anticipated. These
statements are based on management’s current expectations and are naturally
subject to uncertainty and changes in circumstances. We caution you not to place
undue reliance upon any such forward-looking statements, which speak only as of
the date made. Actual results may vary materially from those expressed or
implied by the statements herein. Such statements may relate, among other
things, to our ability to respond to economic changes and improve operational
efficiency, the benefits of our products to be realized by our customers, or our
plans, objectives, and expected financial and operating results. Forward-looking
statements may also include, without limitation, any statement relating to
future events, conditions or circumstances or using words such as: will,
believe, anticipate, expect, could, may, estimate, project, plan, predict,
intend or similar expressions that involve risk or uncertainty. These risks and
uncertainties include, among other things, our recent history of losses; our
ability to achieve or maintain profitability; worldwide economic weakness;
geopolitical conditions and continued threats of terrorism; effectiveness of our
cost reduction programs; the receptiveness of the media to our services; changes
in our marketplace which could limit or reduce the perceived value of our
services to our clients; our ability to develop new services and market
acceptance of such services, such as Teletrax™; the volume and importance of
breaking news which can have the effect of crowding out the content we produce
and deliver to broadcast outlets on behalf of our clients; our ability to
develop new products and services that keep pace with technology; our ability to
develop and maintain successful relationships with critical vendors; the
potential negative effects of our international operations on the Company;
future acquisitions or divestitures may adversely affect our operations and
financial results; the absence of long term contracts with customers and
vendors; and increased competition may have an adverse effect on pricing,
revenues, gross margins and our customer base. More detailed information about
these risk factors is set forth in filings by Medialink Worldwide Incorporated
with the Securities and Exchange Commission, including the Company's
registration statement, most recent quarterly report on Form 10-Q, and other
publicly available information regarding the Company. Medialink Worldwide
Incorporated is under no obligation to (and expressly disclaims any such
obligation to) update or alter its forward-looking statements whether as a
result of new information, future events or otherwise.
ITEM
1. BUSINESS.
GENERAL
Medialink
Worldwide Incorporated (“Medialink”) is a leading global provider of creative
and distribution services to corporations and other organizations seeking to
communicate with the public through broadcast, print and Internet media.
Medialink is based in New York, with offices in the United States and an
international hub in London. The Company uniquely blends its creative and
production expertise with established news media credibility, proprietary
databases, an electronic distribution infrastructure and its unique Teletrax™
service, the first truly global electronic video tracking solution, to provide
its clients with the ability to create, distribute and measure their
communications. Medialink is a publicly traded company (Nasdaq:
MDLK).
In the
fourth quarter of 2004 Medialink secured a $5 million convertible debentures
financing and sold its Media Research Services division (“Delahaye”) for
approximately $8 million, recording a pre-tax gain of approximately $5 million.
These transactions will enable Medialink to focus on its primary mission: to
offer the counsel, skills and infrastructure to reach television viewers, radio
listeners, newspaper readers and Internet users via editorial coverage and
marketing-oriented media placements on behalf its clients. The sale also
provided capital to further accelerate the growth of Teletrax™, the centerpiece
of the Company’s monitoring services that track the impact of client
communications across all major media.
The
Company’s core services help corporations and organizations inform and educate
target audiences with maximum impact on television, radio, print, and the
Internet. Medialink’s clients, ranging from General Motors to General Mills,
Siemens to Symbol Technologies, rely on Medialink to generate, monitor and
report on media exposure for their new products, innovations, mergers,
acquisitions and other corporate initiatives.
For
example, when the European Space Agency (ESA) wanted to raise public awareness
of its Mars Express space mission prior to the projected Christmas Day arrival
on the planet, Medialink created and distributed a video news “package” that
captured worldwide attention in dozens of countries throughout Europe, China,
the Middle East and the United States.
In
addition, Medialink assisted DaimlerChrysler with its litigation communications
strategy by scheduling and producing broadcast interviews featuring its senior
legal expert speaking out on national and local television and radio newscasts
in support of tort reform in the United States. To help extend DaimlerChrysler’s
message against lawsuit abuse, Medialink also produced and distributed taped
video to TV stations that explained a particular case involving an alleged bogus
lawsuit against the automotive manufacturer.
In
another example, Morgan Stanley employed Medialink’s radio production and
distribution service as a means to educate listeners regarding personal finance
issues on a weekly basis. Organizations and government agencies, such as the
National Association of Realtors and the U.S. Department of Energy, commonly
rely on Medialink’s U.S. Newswire division to provide electronic distribution of
press releases and related materials to the news media.
By
leveraging relationships with news organizations, Medialink rapidly alerts and
disseminates clients’ news to every major newsroom in the United States.
Similarly, international distribution relationships enable Medialink to reach
virtually any audience, in any country, through any news medium. Each
year, Medialink generates tens of thousands of broadcast news airings worldwide
reaching billions of viewers, listeners and readers on media as diverse as CNN,
The New York Times, ABC, Sky News, The Washington Post, BBC, Bloomberg Radio,
AOL, Yahoo! and China Central Television, the national television station of the
People’s Republic of China.
Medialink
has also broadened its media offering for clients by establishing key marketing
relationships with leading U.S. cable television programmers. These programming
outlets provide wider exposure and precisely targeted placements for
informational video segments, which reach additional viewers in the clients’
desired demographic segments.
The
Company’s success is apparent in its rich and diverse client base, which
includes Anheuser-Busch, The American Association for Retired Persons, Bayer,
DIAGEO, Disney, European Space Agency, Ford, GE Financial, General Motors,
International Olympic Committee, Intel, Jaguar, Microsoft, Miramax, McDonald’s,
Morgan Stanley, National Association of Realtors, Neiman Marcus, Omega, Royal
Philips Electronics, Siemens and Visa International. Clients also include
virtually every major PR firm in the United States and the United
Kingdom.
Teletrax™,
Medialink’s subsidiary that offers the broadcast industry’s first
global digital video watermarking and tracking solution, presents potential new
revenue sources outside of the Company’s core broadcast services. Video content
providers such as news organizations, television syndicators, motion picture
studios, TV sports programmers and major TV advertisers are interested in
Teletrax™’s powerful applications for media asset management, verification of
airings for network and syndicated programming, advertising
proof-of-performance, sponsorship evaluation, and intellectual property rights
management.
During
the year, clients ranging from ABC Television Network and Buena Vista
Entertainment to the BBC in the United Kingdom, entered into multi-year
contracts to utilize this unique content asset management tool to track and
monitor the usage of their video content. In 2004, Teletrax™ reached additional
agreements with Tribune Entertainment, NBC Universal Domestic Television, Media
Review International and Internet Broadcasting Systems, adding to clients
including Reuters Television and NBC News Channel. Medialink also uses the
Teletrax™ system to track and monitor the worldwide usage of its client video
distributed by the Company.
In 2004,
the Company further expanded Teletrax™’s monitoring network into more than 100
of the top-ranking U.S. television markets and Latin America, bringing its
worldwide capacity to more than 700 television stations in the United States and
an international network that monitors more than 200 channels being broadcast
from nearly 50 nations in Europe, Asia, Australia, the Middle East and Latin
America.
STRATEGY
From its
inception, the Company has been at the vanguard as public relations has evolved
from being print-focused to embracing video, audio and the Internet. Medialink’s
strategy is to enable its clients to effectively and efficiently communicate
news to audiences through all mediums. The Company achieves this by: (i)
creating and producing compelling content; (ii) distributing content through the
Company’s unmatched infrastructure;
and (iii) monitoring distribution effectiveness.
The
Company believes it is the market share leader in each of its primary service
offerings. In 2004, Medialink sold its research unit, Delahaye, in order to
provide more resources to and increase management focus on its faster growing
media communications and video watermarking businesses. Medialink has identified
several avenues that should further support the Company’s growth, including: (i)
leveraging client relationships through
cross-marketing; (ii) developing new products and services; and (iii) broadening
the sales force and client base.
OPERATIONAL
OVERVIEW
Medialink
offers its comprehensive range of services through the following divisions:
Media
Communications Services
Broadcast
Services Group
(“BSG”)—Through
BSG, the Company provides its content creation, production, distribution and
electronic broadcast monitoring services. BSG’s principal products and services
include video news releases and short-form promotional videos, live event
broadcasts (including satellite media tours, videoconferences and webcasting),
audio news releases and radio media tours, in formats that are suitable for all
broadcast news media, as well as other types of programming. BSG distributes its
clients’ news stories directly to targeted television and radio, through its
comprehensive distribution platform, and on-line media outlets worldwide,
through Newstream.com. BSG also monitors and statistically analyzes the extent
to which content is aired, thereby providing valuable feedback to the client.
BSG utilizes a variety of methods to track and monitor video usage, including
its exclusive offering of Teletrax™, providing it with the only truly global
electronic video tracking solution.
U.S.
Newswire (“USN”)—USN is a
leading press release wire service for domestic governmental, public affairs and
non-profit organization news sources. Its clients rely on it to provide
immediate and simultaneous electronic distribution of their news releases, media
advisories and press statements to the media and on-line services worldwide. The
division distributes news releases via a direct wire service feed, as well as
through e-mail, satellite, the Internet and broadcast fax. USN also provides
still photography services.
Video
Watermarking Services
Teletrax™
—Teletrax™
is the broadcast
industry’s first
global electronic video watermarking and tracking solution. Using Teletrax™,
owners of video content - the motion picture industry, news organizations,
advertising agencies, and program syndicators to name a few - “embed” an
imperceptible and indelible digital watermark into their material whenever it is
edited, broadcast or duplicated. A global network of decoders, or “detectors,”
then captures every broadcast incident of the embedded video whether via
satellite, cable or terrestrially. The Teletrax™ service then generates tracking
reports for the original content owners. The system provides proof of
performance reports and alerts copyright owners in near-real time to violations.
As a key asset management tool for content owners seeking to protect and
leverage their video property, Teletrax™ will help drive the financial
performance of its clients, enabling them to efficiently and effectively
leverage their video content. Teletrax™ is built upon Medialink’s extensive
monitoring network and technology developed by Royal Philips Electronics.
A summary
of the Company’s operations by major geographic location are as follows for the
years ended December 31,
| |
|
2004 |
|
|
|
2002 |
|
| |
|
US |
|
UK |
|
US |
|
UK |
|
US |
|
UK |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
clients |
|
$ |
31,009,733 |
|
$ |
5,853,015 |
|
$ |
30,924,642 |
|
$ |
4,458,800 |
|
$ |
31,139,309 |
|
$ |
6,963,981 |
|
|
Inter-segment |
|
|
336,000 |
|
|
144,000
|
|
|
192,000 |
|
|
249,000 |
|
|
365,000 |
|
|
212,000 |
|
Total
revenues on continuing operations |
|
$ |
31,345,733 |
|
$ |
5,997,015 |
|
$ |
31,116,642 |
|
$ |
4,707,800 |
|
$ |
31,504,309 |
|
$ |
7,175,981 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets of continuing operations |
|
$ |
35,352,404 |
|
$ |
3,420,137 |
|
$ |
29,311,177 |
|
$ |
3,601,155 |
|
$ |
33,819,098 |
|
$ |
3,441,878 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERVICE
OFFERING
Medialink
offers clients a unique combination of creative content production, global media
distribution and video watermarking, which enables clients to communicate their
news efficiently and effectively. Through its BSG division, the Company
provides
a complete range of customized production and distribution services to
corporations and other organizations to help them build public recognition,
launch new products, manage crisis situations and meet other communications
objectives.
Utilizing its electronic monitoring capabilities, BSG also measures distribution
reach and evaluates results. Through USN, the Company provides news release
distribution for governmental, public affairs and non-profit organizations.
Through Teletrax™, Medialink offers the only truly global video tracking
solution available to the broadcast, advertising and entertainment industries.
Medialink’s
ability to offer the comprehensive services that its clients demand makes it the
partner of choice for leading corporations, organizations and PR firms
worldwide.
|
Production
and
Live
Broadcast |
Distribution
|
Internet
|
Monitoring |
|
· Video & Audio News
Release
Production:
Domestic
Internationa |
· Video & Audio News
Release
Distribution & Monitoring:
Domestic
International |
· Newstream.com |
· Teletrax™:
Digital
Asset
Management
Tracking
of TV
Show
Promotions
Proof
of Advertising
Performance
Intellectual
Property
Rights
Management
|
|
· Live Broadcasts:
Satellite
Media Tours
Radio
Media Tours
Special
Event Broadcasts
Video
Conferences
Audio
Conferences |
· Press Release Distribution
|
· Webcasting |
|
· Electronic Press Kits |
· Still Photography & Digital
Distribution |
· Web Releases |
|
· Public Service Announcements |
· Digital Photo Distribution |
|
· Corporate Videos |
· Cyber Media Tours |
|
|
CLIENTS
The
Company provides its services to more than 3,000 clients. The Company’s clients
include corporations such as Anheuser-Busch, AT&T, Bayer, DIAGEO, Disney,
Ford, GE Financial, General Motors, GlaxoSmithKline, Intel, Jaguar, Microsoft,
Miramax, McDonald’s, Morgan Stanley, NBC Universal, Omega, Royal Philips
Electronics, Siemens and Visa International; organizations such as the American
Association of Retired Persons, the European Space Agency, the International
Olympic Committee and National Association of Realtors; and the world's largest
marketing communications firms such as Burson-Marsteller, Hill & Knowlton,
Ketchum Communications, Edelman Public Relations Worldwide and Weber Shandwick
Worldwide.
DISTRIBUTION
AGREEMENTS
The
Company has long-standing distribution alliances and powerful relationships with
major news organizations that provide clients unparalleled access to newsroom
decision-makers. Through an agreement with the Associated Press for the use of
its AP Express newswire, Medialink can quickly alert more than 700 television
and 400 radio newsrooms to clients’ impending video and audio news. The
Company’s strong relationships with ABC, CBS and FOX, among others, provide it
access to their network affiliates through their dedicated and highly
cost-effective satellite “news” feeds. Medialink continues to expand its
distribution infrastructure through strategic distribution agreements with
high-profile media companies such as AOL and Yahoo!. The Company also has
developed a delivery mechanism for multi-media content to more than 11,000
on-line, or Internet, newsrooms. Due to the Company’s extensive usage of both
satellite distribution and electronic broadcast monitoring services, the Company
is able to obtain preferential pricing from its key suppliers. Medialink’s
extensive relationships and its reputation as a producer of newsworthy,
broadcast-quality content ensure that clients’ video and audio news productions
capture the attention of newsroom decision-makers and thus their intended
audiences.
BACKGROUND
The
Company, founded in 1986 with the mission of developing the world’s first
distribution system for video news releases and other video public relations
material to television stations, began offering production - in addition to
distribution - of video news releases in 1994 and has since developed a full
range of video, audio, Internet, still photography and print services which it
now provides on a global basis. Medialink enables its clients to reach more than
11,000 newsrooms at television and radio networks, local stations, cable
channels, direct broadcast satellite systems and online multimedia newsrooms.
The
Company’s expanded service offerings have evolved from its core business - the
satellite distribution of video news releases (“VNR”) and the electronic
monitoring of their broadcasts on television. A VNR is a television news story
that communicates an entity’s public relations or corporate message. It is paid
for by the corporation or organization seeking to announce news and is delivered
without charge to the media. Ultimately, a VNR is the television equivalent of a
printed press release, transforming the printed word into the sound and pictures
television newsrooms can use in programming. Produced in broadcast news style,
VNRs relay the news of a product launch, medical discovery, corporate merger
event, timely feature or breaking news directly to television news
decision-makers who may use the video and audio material in full or edited form.
Most major television stations in the world now use VNRs, some on a regular
basis. The Company offers VNR and Audio News Release (“ANR”) production services
worldwide. Working closely with clients, Medialink’s team of highly experienced
broadcast and network radio professionals instantly translates clients’ messages
into effective video or audio news stories. All aspects of production, including
scripting, editing, narration and sound bites of the news story, are
custom-built and designed to reach specifically targeted audiences.
The
Company also produces and coordinates live broadcast services include Satellite
Media Tours (“SMT”), Radio Media Tours (“RMT”), audio and video news conferences
and special-event broadcasts. SMTs consist of a sequence of one-on-one satellite
interviews with a series of pre-booked television reporters across the country
or around the world. Typical SMT applications include, among others, an
interview with an author, performer, executive or other spokesperson promoting
an upcoming event, product, movie or book release. SMTs generally are conducted
from a studio but can originate from remote locations and may be aired live by
the television station or recorded for a later airing. Similar to SMTs,
Medialink offers RMTs targeted to radio stations across the country or around
the world.
Widespread
adoption of Internet-based communications continues as companies leverage the
opportunity by creating content-rich Web destinations while controlling costs.
In 1999, Medialink created Newstream.com, an Internet portal that delivers
multimedia assets to more than 11,000 online news and information Web sites that
increasingly need streaming video, audio, presentations, and graphics to be
competitive. During its fifth year of operations, Newstream.com’s overall
membership - including journalists, professional communicators, financial
analysts and members of the general public - stands at more than 75,000.
In late
1999, the Company acquired U.S. Newswire LLC. U.S. Newswire, founded in 1986, is
a leader in providing wire service, Internet and online distribution of
full-text and multimedia news for government and public policy news sources to
news media and online services - locally, nationally and worldwide. Clients
include Cabinet agencies and the majority of political campaigns, advocacy
groups, trade associations, “think tanks”, public affairs firms and other
similar organizations.
In 2002,
the Company launched Teletrax™, providing
Medialink with a unique selling proposition complementary to its core broadcast
service business by offering a content management tool with the distinctive
ability to track video content whenever and wherever it is broadcast. Teletrax™
is expected to unlock new revenue streams for Medialink outside of its
traditional business. Teletrax™
fulfills the needs of a variety of industries, including
advertising, sports, music, film and television syndication. The network of
detectors currently monitors more than 800 television stations in nearly 50
countries, including more than 100 top-ranking markets in the United
States.
The
Company has many competitors in different aspects of its businesses, although no
one competitor competes in all of the Company’s businesses. Some of these
competitors or their parent companies may have assets substantially greater than
those of the Company.
EMPLOYEES
As of
December 31, 2004, the Company had 164 employees including 68 in client
services, 57 in sales and marketing and 39 in corporate and administration.
Included in corporate and administration were executives totaling 6. None of the
Company’s employees is represented by a labor union. Management believes that
its employee relations are good. The Company also engages on a part-time,
project-by-project basis, independent production crews at various locations
worldwide. These crews have the skills, training and experience that the Company
requires for its production services.
The
Company, a Delaware corporation, was incorporated in 1986. Medialink’s website
is http://www.medialink.com. The Company makes available free of charge, on or
through its Web site, its annual, quarterly and current reports, and any
amendments to those reports, as soon as reasonably practicable after
electronically filing such reports with the Securities and Exchange Commission
(“SEC”). Such reports are also available on the SEC’s website,
http://www.sec.gov.