The second quarter was another difficult one for MediaBay, as the company tries to reposition its business to rely less on direct mail for selling its spoken-word products and more on digital delivery. And just after the close of the quarter, the company announced that it had named a new chairman to replace Carl Wolff, who resigned in May.
In the quarter, sales plunged 49%, to $4.8 million, and the company reported an operating loss of $251,000, compared to operating earnings of $366,000 in last year's second quarter. The declines were due to a dramatic reduction in advertising expenditures to acquire new members. Sales at Audio Book Club fell to $3.3 million from $7.3 million. Lower marketing spending also cut sales at MediaBay's Radio Spirits division, to $1.4 million from $2.1 million. Sales rose at the company's online unit, MediaBay.com, to $54,000 from $35,000.
CEO Jeffrey Dittus made it clear that MediaBay's future is tied to its ability to move to a digital delivery platform. Noting MediaBay's stated objective of generating 50% of its sales from the Internet compared to the current level of 15%, Dittus said, "If achieved, the positive impact of this change on our business would be enormous."
The highlight of the second quarter was the restructuring of MediaBay's balance sheet. The debt restructuring, Dittus, noted, "gives us the needed time to restructure our operations and hopefully make the company profitable."
Aiding that drive toward profitability will be Joseph Rosetti, who was appointed chairman last week. Rosetti, a MediaBay director for several years, is president of SafirRosetti, an investigative and security firm. Rosetti succeeds John Levy, who had been acting chairman since Wolf's May departure. Levy, MediaBay's CFO, has been named vice-chairman.
