Two months after second-screen app startup Viggle announced plans to buy GetGlue for $25 million plus stock, GetGlue has decided to call it off, CEO Alex Iskold wrote in a blog post Sunday.
“Today we’ve decided that GetGlue will not be merging with Viggle. The two companies remain friendly and think highly of each other,” Iskold wrote. “We are moving forward as an independent company, and all of us at GetGlue are excited about growing our social network and the leadership position on the second screen.”
Update: In a statement Monday morning, Viggle said the termination of the acquisition agreement was "cordial." “We wish GetGlue and Alex all the best,” Viggle CEO Robert F.X. Sillerman said.
Iskold, in an email, declined to provide additional information about why GetGlue walked away from the Viggle deal.
New York-based GetGlue’s investors include Rho Ventures, Time Warner Inc., RRE Ventures and Union Square Ventures.
Viggle in November announced plans to acquire GetGlue for $25 million in cash plus 48.3 million shares of stock (now worth about $53 million). But the deal was contingent upon Viggle raising convertible debt financing equal of at least $60 million, a Viggle representative said at the time.
Viggle has been burning substantial amounts of money as it tries to get traction for its TV loyalty app, which rewards users for tuning in to their favorite shows. The company, whose stock is traded over-the-counter, reported revenue of $2.05 million and a net loss of $19.5 million for the quarter ended Sept. 30, 2012, according to a filing with the Securities and Exchange Commission.
To date, Viggle has been kept afloat by Sillerman, who previously founded and ran CKX, which among other properties acquired American Idol producer 19 Entertainment.
On Jan. 10, Viggle’s board approved an increase in the line of credit from Sillerman’s investment company from $15 million to $20 million, with Sillerman granting a further advance of $1 million, the company disclosed in a filing last week.
"During the time we started talking to GetGlue about an acquisition and since the merger agreement was signed in November, we have seen impressive growth in our business,” Sillerman said in a statement Monday.
GetGlue, founded in 2007, now has more than 3.5 million fans who use the service “to discuss the content they love and discover new content to watch,” Iskold wrote in the blog. “Over 75 major networks and studios are routinely promoting their content to our fans, and major brands like Coca-Cola, Pepsi, Intel, Gap and Mercedes have sponsored advertising campaigns on our service.”
Viggle, which launched its app in January 2012, grants “watchpoints” to users when they tune into TV programs on more than 170 networks verified by audio-recognition technology. Those points may be redeemed for gift cards, credits and other rewards from partners including Best Buy, Amazon, Comcast’s Fandango, Hulu Plus and iTunes.
Allen & Co. had represented GetGlue in the transaction, while Viggle handled the deal internally.