Much of the secured debt is owed to Pulser Media, which provided the bulk of the company's financing since its inception in 2008 and is now a majority owner. As for unsecured creditors, digital media set-top box manufacturer Roku is tops with a $2.7 million claim. Sony Music is next at $2.4 million. Online ticket platform AXS Digital ranks third at $1.25 million, Shazam comes in at fourth at nearly $1.2 million, while Warner Music Group rounds out the top five at more than $613,000.
Rdio currently owes more for ads placed on Facebook (nearly $500,000) than to Universal Music Group ($294,000) or Merlin BV ($134,960), which represents independent record labels.
According to a declaration by Rdio general counsel Elliot Peters, the streaming company was bleeding money at a quick rate.
The bulk of Rdio's revenue came from its $9.99 per month subscriptions. The company took in $1.5 million per month there. Advertising only accounted for $100,000-$150,000 per month.That was dwarfed by the nearly $4 million in monthly operating expenses, including payroll for 140 employees, royalty payments to rights owners and service maintenance costs.
That meant that Rdio was losing anywhere between $1.85 to $2.4 million each month, and Peters reports Rdio "no longer has the economic means of funding such significant operating cash flow shortfall."
By late 2014, Rdio had hired Moelis & Company, an investment bank, in an attempt to raise new equity capital, but ultimately realized it wouldn't be possible. Rdio also reports looking for a buyer or merger partner, and ultimately decided that Pandora was making the best offer — $75 million for tech assets, but one that was contingent on a Chapter 11 filing, an auction process where overbids might result, and eventually court approval.
In the meantime, Rdio has secured $3 million debtor-in-possession financing to supplement a $2.5 million payment from Pandora, which will fund operations through the next eight weeks.
This article originally appeared on The Hollywood Reporter