Activst Vs. Broadcasting Inc.

Social video entertainment and networking over the Internet isn’t working so well for Broadcaster Inc., a Chatsworth, Calif.-based company.

At least that’s what activist hedge fund Baytree Capital Associates LLC believes. According to letter attached to an activist Securities and Exchange Commission filing on Friday, Baytree Capital director Michael Gardner believes the company is in a “dire situation” and he charged that Broadcaster has “failed to adhere” to board directives. “The board identified one specific merger candidate with which it instructed management to execute a letter of intent,” Gardner wrote. “Management executed the letter of intent but cancelled it the following day without any explanation or notice to the board.”

Gardner also charged in the SEC filing that Broadcaster’s board directed management to cut employees from 50 to 12, but that management did not “terminate” the employees. The letter was addressed to Broadcaster Chief Operating Officer Nolan Quan. The $8 million stock market capitalization company operates broadcaster.com, an Internet entertainment network.-- Ron Orol