Sony Music Entertainment Sues Former Rdio Executives For Fraud
April 6, 2016 at 11:29 AM (PT)
SONY MUSIC ENTERTAINMENT has filed suit against RDIO's former CEO ANTHONY BAY, VP/General Counsel ELLIOTT PETERS, and SVP JIM RONDINELLI in U.S. District Court in the Southern District of NEW YORK, alleging that the defendants defrauded SME in 2014-15 by arranging RDIO's bankruptcy and sale of assets to PANDORA, with BAY's PULSER MEDIA first in line for the proceeds and SME left with pennies on the dollar as an unsecured creditor.
SME's suit notes the importance of its music catalog to RDIO's business, which it says was "not sustainable" without SONY content, and says that if they had known RDIO was talking to PANDORA at the time, they would have demanded immediate payment of the $5.5 million owed to the label by RDIO and would have cut off access to its music, which SME alleges RDIO knew and led the defendants to keep the talks secret.
SME also alleges that the day before it signed an extension to the content agreement on SEPTEMBER 30th, 2015, RDIO had, without disclosing the fact to SME, signed a letter of intent with PANDORA that would mean it would not fulfill its commitments under the SME extension. In addition, since the renewal required a $2 million payment the day after the deal was done, SME alleges that the defendants got SME to extend the due date for payment so that the PANDORA deal would not be jeopardized; SME says that BAY and RONDINELLI told it that they were in the process of raising capital to pay the $2 million.