KidStar, the Seattle-based children’s interactive media network, discontinued operations in February after negotiations to merge with a major publishing firm collapsed.
The deal would have given KidStar the capital required to operate until the company reached profitability, which was projected to occur in another 14 to 15 months. At the time it went off the air, the service was available in six of the top 10 markets, with a seventh under contract.
According to KidStar president Jodell Seagrave, when the deal fell through, KidStar found itself against the wall. ‘We didn’t have the cushion to weather a setback of that magnitude because it meant continuing to operate while we revised all of our business plans to remove the merger.’
The company studied alternative strategies that might have allowed it to operate on a reduced level, but determined that its most realistic option was to sell the company’s primary asset, its Seattle-based radio station. It is also considering offers for the intellectual property it developed for both radio and the Internet.
KidStar was incorporated in 1992 and, by 1997, comprised several integrated media outlets: KidStar Radio, KidStar Magazine, PhoneZone and an Internet presence. It operated radio outlets in San Francisco, San Diego, Houston, Detroit and other markets.
Seagrave believes KidStar’s demise came about because of a lack of investor understanding about building a business around convergent media. ‘The evaluation of our business model fell victim to the fact that there wasn’t a peer group to compare it to,’ she says. ‘We conceived the business on the idea of converging media that had not been fully exploited for the children’s market. While many investors talk about supporting convergent media, in the end, they were more comfortable with the more traditional mind-set of radio or print.’
Seagrave calls KidStar her labor of love, and describes her experience as a once-in-a-lifetime opportunity that turned into a once-in-a-lifetime nightmare when she saw her dream shatter.
‘From an entrepreneurial point of view, none of us have any regrets about building the business,’ she says. ‘We can tell from the amazing amount of feedback we’ve received that kids and parents had really bonded with KidStar.
‘It’s very clear to me that there’s still an opportunity there that can be capitalized on by someone who has more sufficient resources to develop the opportunity.’