New Frontier Media Breached Grand Tourisme Deal, Suit Says

Sep 6, 2012 10:45 AM PST

BOULDER, Colo. — Another breach-of-contract lawsuit against New Frontier Media has surfaced.

In the latest case, Grand Tourisme Audiovisuel, a Luxembourg-based operator of adult transactional TV channels, has filed claims against New Frontier Media, alleging it stopped making payments less than halfway into a licensing agreement.

The suit, filed at Boulder District Court in Colorado, seeks compensatory damages of at least $780,000.

New Frontier Media entered into a five-year deal in July 2010, where Grand Tourisme Audiovisuel granted it the exclusive license to market and distribute content on its channels, according to the complaint. Grand Tourisme Audiovisuel provided only the technical management of the channels.

The deal guaranteed $20,000 a month in revenue to Grand Tourisme Audiovisuel for the first channel and $10,000 a month for each subsequent channel that New Frontier Media distributed and marketed content, the suit said. New Frontier Media began broadcasting on the first channel in November 2010 with its XTSY channel.

But in January, Grand Tourisme Audiovisuel contends, New Frontier Media stopped paying its bills and both sides met to discuss the problem. At the meeting, Private officials said they were disappointed with the financial performance of the XTSY channel on Grand Tourisme Audiovisuel's network.

As months passed by, New Frontier Media later approached the company to pay off delinquent payments but only if it terminated the licensing deal. Grand Tourisme Audiovisuel, without any options, took the deal, but only if New Frontier Media would negotiate to purchase some French-language adult content from the company, among other covenants, the suit said.

But Grand Tourisme Audiovisuel said in the suit that New Frontier Media breached the original licensing deal and a termination deal after it later said it wasn't interested in the French content.

The breach-of-contract suit is the second in recent months against Boulder, Colo.-based New Frontier Media, whose offerings include Penthouse TV premium channel and The Erotic Networks, which include XTSY, Juicy and VaVoom.

XBIZ reported on Wednesday that Private Media Group has lodged a complaint in New York federal court, alleging that New Frontier Media ceased payments in the middle of its deal. Private seeks $1 million in that complaint.

While Private’s CEO, Charles Prast, declined comment on any specific aspects of Private’s complaint, when asked about Grand Tourisme Audiovisuel’s lawsuit Prast suggested that New Frontier Media would need to address all outstanding material litigation if it expected to be able to sell or merge the company. A special committee of New Frontier Media's board of directors is currently evaluating bids for the company.

“No one is going to offer full value with these type of large open-ended cases hanging around [New Frontier Media]’s neck,” Prast told XBIZ.

New Frontier Media CFO Grant Williams did not respond to XBIZ queries over the suits; officials from Grand Tourisme Audiovisuel were unable to be reached at post time.

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