The Final Days Of Bluetorch: Boom to bust in 24 months, a tale of the bubble economy.

Broadband Interactive Group’s dream of action-sports media domination died September 20 when nearly all of its remaining cadre of approximately 70 employees were given their last paycheck and were shown the door.

In less than 24 months, the company completed the boom-to-bust arc that’s become commonplace in Internet world: from brash upstart able to send most of the surf industry to Tahiti to a cash-strapped husk unable or unwilling to give its employees two-weeks severance pay.

So what happened to this once-promising company, and what — if anything — does B.I.G.’s story tell us about the action-sports marketplace?

In October 1999, B.I.G. launched with huge fanfare, promising to bring the action-sports world a convergence of the Internet, television, print media, and live events. The company was primarily backed by two of the richest men in America — Broadcom’s president and CEO Henry Nicholas and Broadcom Cofounder Henry Samueli — with a combined worth of more than eight-billion dollars.

“It was monopoly money back in those days,” says a former employee. “Every month their net worth seemed to increase by hundreds of millions of dollars.” Indeed, when B.I.G. launched in October 1999 Broadcom’s stock was trading at around 56 dollars. By March 2000 it was at 243 dollars.

The business model reflected those heady times: lavish offices, big overhead, and big plans. “It could have worked as an action-sports television show — there’s definitely a market for that — but there was this belief that Bluetorch B.I.G.’s action-sports brand was going to be so much more than that — that the Internet was going to be a huge source of revenue,” recalls one employee.

By September 2000, the NASDAQ run-up was over and Broadcom’s stock began a precipitous dive from a high of 250 dollars to 84 dollars by the end of that year. “Bluetorch has always been tied to the wealth of two individuals, and when their stock went into the crapper, they really got back involved with the company,” says another former employee.

B.I.G. radically scaled back its Internet site and scrapped its print-media titles altogether. The cost-saving measure resulted in the layoffs of 64 of B.I.G.’s roughly 130 employees.

“But even after the dotcom bubble burst, the company was still built on the premise that it was going to take over media,” says a former employee. “I mean, you don’t need a 30,000-square-foot office to make a television show.”

But as a television show Bluetorch appeared to be gaining some traction. It’s ratings on Fox Sports Net were on the rise and the athletes who once shied away from the controversial brand were now eager to work with it.

But serious challenges remained. Bluetorch lacked the type of senior sales person — an “elephant hunter” — typically needed to land large non-endemic advertisers. During a crucial eight-month period, no senior sales staff was effectively pitching Bluetorch to the types of sponsors it needed to survive.

By April 2001, Nicholas stepped in. Interim CEO C.J. Olivares stepped down to a consultant position and Andrew Coulson, a longtime friend and business associate of Nicholas, was brought in to run the show.

“In hindsight,” says one employee, “that marked the beginning of the end.” According to several former employees, Coulson lacked detailed knowledge of both the action-sports and television worlds. This situation was exacerbated, say former employees, when the person Coulson brought in to head Bluetorch’s sales effort was unable to close any deals with large sponsors.

“The TV show was gaining ratings,” says a former employee, “but it’s just a television show. It can’t support that type of overhead without a salesperson closing major deals.”

TransWorld SURF Business‘ calls to Coulson have gone unanswered at press time.

Others say the downturn in the economy — and not the management team — made these types of non-endemic deals impossible. Regardless, by early summer employees say that payments to Fox Sports Net were falling behind and morale was at an ebb tide.

“It was the ugliest work situation you can imagine,” recalls one former employee. Another describes it as “a living hell.” At one point Nicholas called a company-wide meeting, held up some work, and asked that the people who created it come up to the front of the room. “Most people thought he was going to praise the producer and editor for their work,” recalls one onlooker, “but when they got up front, Nick Nicholas told them that it sucked and that they were idiots.”

Tales of Nicholas’ “billionaire in the moshpit” management excesses at Broadcom are well documented, and middle-of-the-night meetings and two-week-long nonstop stints at the office were the rules of the road for Bluetorch management as well. “You can only motivate by fear for so long,” says one former employee. And quite clearly being called in the middle of the night by a screaming billionaire intimidated some employees.

So why did people stay in such a hostile work environment? Some didn’t and apparently bailed with nice severance packages. Others viewed it as a game. “No one wanted to walk without anything,” says a former employee. “The economy was bad, so everyone played the game and told themselves that they would hold out for the severance package.”

Most agree, however, that the foremost reason people stayed was their commitment to the product and to the rank-and-file team of coworkers putting it together.

But the game ended badly in late September, and it’s difficult to spot many people who view themselves as winners. More than a dozen producers and a variety of vendors have yet to be paid. Expense checks were not cut, and lawsuit rumors are rampant. Sources say that when the company was finally turned over to assignment, it had accumulated more than ten-million dollars in liabilities — primarily to the real-estate firm Bluetorch leased its office from and to Fox Sports Net for air time.

In the end Bluetorch was auctioned off piecemeal on the forty-eighth floor of a law firm in downtown Los Angeles on October 23. The seven Avid editing bays (that cost more than two-million dollars installed) and the Bluetorch brand name, office furniture, and video library sold for a rumored grand total of around 700,000 dollars.

It’s unclear what the new owners — said to be Marvin Winkler and Ian Cairns — have planned for the brand or whether any new iteration of Bluetorch will be welcomed at Fox Sports Net. Calls to Winkler and Cairns have not been returned at this point. It’s unclear how the past few months have damaged goodwill among Bluetorch’s viewers and endemic advertisers. It’s unclear when or even if the people Bluetorch owes money to will be paid.

Finally, it’s unclear when this new deal will close. According to the auction’s public notice, payment for all successful bids was to have been received by October 30. But according to Prentice O’Leary, an attorney at Sheppard, Mullin, Richter and Hampton, the law firm in Los Angeles that’s handling the liquidation of Bluetorch assets, “We gave them the successful bidders until next week the week of November 5,” adding that a more specific deadline has not been put forth at this point.

TransWorld SURF Business will update this story as it develops.