Dissident shareholder Edward Bonn's quest to oust New Frontier Media Inc.'s management — and elect a new slate of directors — was squashed last week, as shareholders overwhelmingly voted down his attempted coup.
Bonn — the largest individual shareholder in the company, with about 17.6 percent of outstanding shares — has been battling New Frontier CEO Mark Kreloff for months in an effort to gain control of the company. New Frontier owns adult cable channel The Erotic Network.
Bonn and Kreloff have each accused the other of wrongdoing and mismanagement of the company. New Frontier also has a lawsuit pending against Bonn, claiming he lied about the value of the adult Internet site he sold it for $27 million three years ago.
Most recently, Bonn expressed disappointment over New Frontier's poor second-quarter subscriber growth, which he called management's fault.
On a year-over-year basis, New Frontier's total addressable subscribers declined by 6.5 percent, or 2.2 million customers. Revenue from subscription and pay-per-view services came in flat at $7 million.
In contrast, Bonn said, New Frontier's top competitor, Playboy Enterprises Inc., grew its revenue by more than 18 percent in the period. "These results speak to the inability of current management to deliver growth in their 'core,' highly-touted revenue-generating division," Bonn said in a prepared statement.
Bonn became New Frontier president after that sale, but left last June. He has been taking shots at Kreloff practically ever since, blaming the CEO for the precipitous decline in the company's stock price.
New Frontier closed at $1.95 on Aug. 21, unchanged. But the stock is down 41 percent from its 52-week high of $3.28.
With the shareholder vote last week, Kreloff apparently has the upper hand for now.
In a statement, Kreloff said Bonn's proposal — supported by his former business partner and former board member Bradley Weber — failed to win one-third of the votes needed.
"Given that Mr. Bonn and Mr. Weber, who together commenced the proxy fight, own most of the shares that voted for Mr. Bonn's slate, it is clear that the company's shareholders support current management and our plans for the future direction of the company," Kreloff said. "It is a shame that the company was forced to devote so much time and money in response to Mr. Bonn's personal campaign."
But according to press reports, Bonn vowed at the company's annual meeting in Boulder, Colo., last week that New Frontier won't have heard the last from him, if Kreloff fails to turn the company around.