The bitter, eight-month legal battle involving Focus Media, its former clients and some of the nation's largest media sellers has spilled over onto yet another front. NBC, ABC and Pax TV on Oct. 6 filed an involuntary bankruptcy proceeding against the Santa Monica, Calif.-based media agency in U.S. Bankruptcy Court for the Central District of California.
The three networks claim that the action they are taking is due to unpaid media bills owed to them by Focus. NBC alleges Focus owes it $2.1 million, ABC maintains Focus is in arrears for $1.5 million, and PAX TV claims unpaid bills of $302,000.
"Until we see the petition, we have no ability to evaluate its merits," said Joe Eisenberg, special counsel retained by Focus to defend against the proceeding. Eisenberg added that "Focus intends to vigorously dispute [the action]."
Representatives at the filing networks were not available for comment.
In March of this year, Focus' flagship client Sears, Roebuck & Co. fired the agency and filed suit alleging breach of contract and constructive fraud, claiming the media shop was holding onto as much as $50 million Sears had given it to buy media.
A week later, Focus counter-attacked, filing a cross-complaint against the retailer that maintained Sears was trying to force Focus out of business and asked for $100 million in damages.
Meanwhile, two other Focus clients, Dreamworks SKG and Universal Studios, claimed the agency placed but did not pay for an estimated $3 million in media.
In April, the media themselves, none of whom had been paid for months, weighed in. Turner Broadcasting Corp. and NBC each filed suit against Focus, also alleging non-payment of media bills.
The current attempt to force Focus into Chapter 7 bankruptcy "dropped out of the sky," said Tom Rubin, chairman of Focus. "We are trying to figure out right now how consistent it is with the Sears action."