Once more, we’re proud to introduce Neopia’s leading financial analysts. In addition to bringing you all the latest news from the floor of the exchange, Neil and Maria will also be joined by Roe Hilton, former Director of Operations for Neopian TV Channel One. Roe will be here to discuss the events of the past week, and the embattled last days of NTV1. And now, here are our hosts…
KAUVUTO: Hello and thank you for joining us at The Neo-Market Report. I’m your host Neil Kauvuto, and as always it brings me great pleasure to introduce my co-host, the lovely and talented Maria Blumaroono, who’s at the News Desk with all of today’s headlines. Maria, it sounds like things haven’t been going so well…
BLUMAROONO: That’s an understatement, Neil. After a month of steady progress, in which the Neodaq index had almost reached the one thousand-point mark, the Neopian economy came crashing down on Monday. The collapse was caused by a coalition of powerful companies, led by BOOM! Boom Boxes, who voted to eliminate the Neodaq’s “safety provision.”
Created as a way of keeping Neodaq companies from going bankrupt, the “safety provision” worked something like this: whenever a company joined “The Big Board,” they agreed to make a monthly contribution to a “safety fund,” which was then used to keep struggling companies from going bankrupt. However, on Monday morning, by a vote of 31 to 13, with five companies abstaining, the members of the Neodaq decided to discontinue the safety provision. Ezra Lupino, President of BOOM! Boom Boxes, explained that companies like his were, “sick and tired of carrying losers like Silly Squirrel on our backs every month. At some point, they either have to pull their own weight, or get out of the market. I guarantee that, once we’ve eliminated the weaker companies like Techrobatics, those companies who ARE self-sufficient will be more profitable than ever.”
KAUVUTO: However, as soon as the Neodaq’s struggling companies had their “safety funding” withdrawn, a number of them were immediately thrown into peril. One such company was Bob’s Big Bonus Bingo, who had just spent the past six months working on the costly renovation of their bingo parlours. With the loss of millions in safety funding, Bob the Blumaroo was no longer able to pay his remodeling bills. When asked to comment on his company’s demise, Bob the Blumaroo said, “We were relying on that money to pay for the bulk of our renovations. But now, without our cut of the safety fund, we’ve had no choice but to file for bankruptcy.”
In a turn of events that has surprised nobody, many investors have placed the blame on BOOM! Boom Boxes. With the threat of boycotts and legal action looming, BOOM’s investors frantically sold their shares, which caused the company’s value to tumble more than sixty points in less than a single day.
BLUMAROONO: Another company that fell victim to this week’s collapse is that of our next guest. When he took over as Director of Operations at NTV1, their profits had reached an all time low, with no relief in sight. However, in a matter of months, Roe Hilton came in and turned the company around, returning NTV1 to profitability while simultaneously establishing himself as visionary in the field of mass entertainment. But now, it appears as if Hilton’s hard work was all for nothing. With many companies losing their safety funding, NTV was forced to close their doors on Wednesday. Roe, I know this is a tough time for you; thanks for joining us…
ROE: Thanks for giving me a chance to tell my side of the story, Maria.
BLUMAROONO: Now, from what I understand, NTV1 was actually a profitable company. If that’s the case, then why did you guys have to shut down?
ROE: That’s correct, Maria. During the past quarter, NTV1 actually made a profit of eight million NP. But when the Neodaq members voted to discontinue the safety provision, a number of our biggest advertisers went under. You see, at the time Techrobatics filed for bankruptcy, they owed us millions for ads that we’d run over the past few months. Along with the debt for those ads, we also lost the revenue for all the ads they’d be running in the months to come. So then, when you figure that we lost somewhere between 10 to 15 million NP for each client who went bankrupt, it’s easy to see why we were unable to withstand all these companies going broke at once.
KAUVUTO: Couldn’t you have made up for the lost revenue by raising the rates for other advertisers, and selling them the slots that companies like Techrobatics were scheduled to use in the months to come?
ROE: Not really. You see, we’re contractually obligated to those ad rates, which were determined months ago when the spots were sold. So there’s no way for us to raise the rates. As for your second suggestion, of selling the unused ads to new companies, that’s not really an option, either. You see, since we’re coming to them at the last minute, we’re in no position to negotiate; we basically have to take whatever the clients are willing to give us, which in this case isn’t very much.
BLUMAROONO: Well, it seems like such a shame.
ROE: Absolutely. I mean, I could see us going under if it was our fault, if WE were the ones losing money. But in this case, we were actually turning a profit. It’s our advertisers who weren’t able to keep up their end of the bargain. In the end, that’s what got us…
KAUVUTO: That’s all the time that we have this week. For Maria Blumaroono and Roe Hilton, this is Neil Kauvuto saying thank you and so long….