The Hollywood Stock Exchange on Tuesday said it plans to merge with online sports gaming venture Predict It, a move that gives it a much-needed $10 million in additional funding.
Andrew Kaplan will voluntarily step down as chairman-CEO of HSX once the merger is completed to pursue other endeavors.
His tenure at the online entertainment stock market venture, where Netizens trade fake stocks, lasted a mere four months (Daily Variety, April 19). During that time he has overseen daily operations and the site’s 80 staffers.
The former Columbia TriStar Television Group exec’s early mandates included raiding his Rolodex to create strategic partnerships with major studios and other new-media companies to expand the mostly film and music-oriented venture into television.
“Since I came on board it has been my charge to make Hollywood Stock Exchange a strong company, and the merger with Predict It, which I helped put together, is a result of my dedication to HSX’s success,” Kaplan said in a statement.
The combined companies, to operate under the HSX moniker, will have a user base of more than 1 million unique registered users worldwide. HSX had roughly half a million.
While Predict It expands HSX into the lucrative sports market, the former becomes a stronger entertainment player on the Web through the merger. Predict It operates both an online service that rewards users based on their ability to predict the outcome of future sporting events as well as VirtualStockExchange.com.
“Through HSX, we will now be able to deliver highly interactive consumer entertainment and related business information services across the categories of film, music, sports and finance,” said Andrew Merkatz, CEO of Predict It.
The new round of financing rescues HSX, which industryites say was only weeks away from running out of cash and closing its doors.
The $10 million round is coming from SBS Broadcasting, Citigroup Investments, Dawntreader Fund, Robert H. Lessin, Verus Intl., Keystone Venture Capital, Commonwealth Associates, Genesys Angelbridge and HSX co-founders Michael Burns and Max Keiser.
New investor group will receive 24% of the new company.
“Our operating strategy is to move aggressively to reduce the combined company’s costs and to take advantage of the improved operating leverage created by this transaction,” said HSX’s Burns. “Our goal is to reach positive cash flow quickly and to selectively expand the business.”
The transaction is still subject to customary shareholder and regulatory approvals.