Mykalai Kontilai, whose NBR Worldwide this month purchased Nightly Business Report, a staple of public TV carried five nights a week on 250 stations, talks about how his years as an instructional television distributor gave him a strong sense of public broadcasting values.
He talks about how he’ll use that background to develop an educational outreach using the show to teach real-world financial responsibility. He talks of his plans to bring NBR to international audiences.
What he doesn’t want to discuss are more than 20 lawsuits from 1999 through 2010 filed in San Diego County Superior Court against him or his companies — including five alleging breach of contract.
“I’m not going to talk about lawsuits,” Kontilai told Current. “I was told this interview would be about NBR and I’d like to focus on that.” He added that as an entrepreneur, “you do have a failure from time to time and hopefully use the experience to grow and hopefully be more successful.”
Kontilai later sent Current this statement through a spokesperson: ”No company for which I have a current executive management or directorship role is involved in any type of litigation. Nearly 100 percent of the past lawsuits that have been referred to are attributed to a one-time business closing almost 10 years ago. The suits were ‘collection-related’ in nature following the company’s closing.” Current could not independently verify those facts before press time.
Rick Schneider, president of WPBT, the producing station that sold Nightly Business Report to Kontilai, said both sides completed the customary due diligence process before inking the contract Aug. 13.
Was Schneider aware of the lawsuits before the deal was signed? “I am not commenting,” he said.
Kontilai was the plaintiff in a 2009 federal civil suit in Nevada that describes the business plan for another public TV project of his. On Collector’s Café, everyday folks would show off their collectibles to experts and receive value estimates. According to the suit, Kontilai’s business model is to use a “national — and shortly thereafter, global — primetime public television program called Collector’s Café” to brand a chain of coffeehouses and “an auction-based collectibles sales operation.”
“Through his years of involvement with public broadcasting and programming,” the document explains, “Kontilai recognized the opportunity to ‘brand’ a retail business through a television series aired on the public broadcast system.”
The mission of Collector’s Café, Kontilai told Current is “to educate the public on how to spot fakes and frauds” in the collectibles market.
American Public Television execs were shown a pilot for Collector’s Café and gave Kontilai a letter expressing interest in distributing the series, said APT spokesperson Jamie Haines. Kontilai said the show “has been picked up for distribution by APT,” and he hopes to have funding ready soon.
A brand to “propagate”
Kontilai’s partner in the for-profit NBR Worldwide — as well as in Public Media LLC, his advertising, marketing and production firm and home of Collector’s Café — is Gary Ferrell, former president of KERA in Dallas, c.f.o. of KCET, Los Angeles, and founder of the long-closed public TV retail chain Store of Knowledge. Ferrell could not be reached for comment.
Neither the buyer nor the seller will reveal the sale price of Nightly Business Review or how Kontilai’s company will finance it. Kontiali said NBR Worldwide acquired the brand in full.
The show will not change in format or staff, he said, and he does not anticipate layoffs. WPBT, which launched the show in 1979, will remain the show’s home.
NBR was not for sale when Ferrell and Kontilai approached Schneider late last year to ask whether the station would consider parting with it.
“I identified the brand as a production that could be propagated and taken to a new level,” Kontilai said. “I wanted to create a business model that was sustainable and could be expanded.” Negotiations took place this spring.
Schneider was comfortable with the partners. Ferrell had executive experience at both KCET and KERA; Kontilai valued education and knew distribution. And Schneider realized that while the station maintained NBR’s status quo, the newscast needed to grow into the future. “Funding for national programs has been a major issue for the system,” Schneider said. “NBR is no exception. It’s been an ongoing struggle.” Franklin Templeton Investments has underwritten the show for years, but new blood was also needed.
“This deal is a win-win for the station,” Schneider said. “We get to maintain the relationship with the program as its presenting station and production home. And viewers won’t see anything different, except improvements.”
Kontilai sees many opportunities for NBR. He envisions outreach in schools, using the show to craft financial education programs for junior and senior high schools or the military. “Basic financial education that can provide average Americans and students basic skills they can take to the next level or, if they don’t continue with schooling, they have information they can apply to their daily lives.” He said NBR Worldwide “is in conversations with a number of different entities, governmental and otherwise” for those plans but declined to reveal details. “We’d certainly like to start implementing this in the early part of 2011,” he said.
Kontilai also wants to expand viewership into other countries. “Whether you are a citizen of the United States or a foreign country, there’s a need for nightly business news,” he said. Distribution could be through partnerships with overseas networks, or a single international distribution company, or syndication. All that would be done on a for-profit model.
As Schneider said, “Mykalai is a big ideas guy. He has grand aspirations for the show.”
He also has big hopes for Collector’s Café. The Nevada suit describes the project as “his long-intended business model.” Since he conceived the show several years ago, Kontilai “has devoted the vast majority of his time and financial resources into the establishment, launch and success of that business,” the document said.
Millions change hands
Kontilai’s filing in U.S. District Court in Nevada attempts to settle a conflict remaining from a failed earlier deal that would have raised money to make Collector’s Café.
He dropped the suit in May 2010, but it provides a glimpse of the difficulties in an entrepreneur’s life.
That earlier business deal involved a energy drink company started by a felon after serving time in federal prison.
In January 2006, Nevada businessman Russell Pike was launching Xyience, a company to market the Xenergy drink to athletes in the Ultimate Fighting Championship (UFC) league. Kontilai himself is a martial artist and helped negotiate several fighters’ contracts in UFC, he said.
Pike had been out of prison for about four years at that point. Pike’s previous company, Advanced Cart Technology, which manufactured drink carts for casinos, had declared bankruptcy in 1996; Pike had been indicted on charges of bank fraud, money laundering and aiding and abetting in connection with the company, according to a California Department of Corporations document. He pleaded guilty to money laundering in 1999 and was sentenced to 59 months in federal prison, three years of supervised release and ordered to pay restitution of $2.4 million, the document said.
Pike asked Kontilai to help raise money for the Xyience startup, Kontilai’s suit said. So early in 2006, Kontilai pitched Xyience to a principal at a private equity firm in Chicago, which is not identified in the court filing. That firm invested around $23 million in exchange for shares in Xyience. Kontilai received 2 million Xyience shares “in consideration of his efforts,” the lawsuit said, and he formed Marvee LLC to hold the shares. The suit does not estimate a monetary value.
Shortly after, the lawsuit said, Kontilai “engaged in the formation and development of his long-intended business model” — Collector’s Coffee Inc. (CCI), doing business as Collector’s Café. Kontilai was president, Ferrell was chairman. CCI had two other board members and 30 shareholders. Its executive team included a past COO of the country’s “second-largest coffee company” and a “former baseball star,” according to the filing. Kontilai declined to identify any of those individuals to Current last week.
Marketing the planned coffeehouse chain and the “auction-based collectibles sales operation” through the show is a “central distinguishing component of the CCI business plan,” Kontilai’s lawsuit said.
“Under duress” after bankruptcy
To raise money for Collector’s Coffee Inc., the suit said, Kontilai sold portions of Marvee — the proceeds from his assistance in securing financing for the sports drink company. Between October 2006 and July 2007, he sold 60 percent of Marvee to 58 investors and put “the vast majority” of the proceeds into his pubTV show and related commercial venture.
By late 2007, news reports were saying that Xyience was in financial trouble. In January 2008 it filed for reorganization under Chapter 11 bankruptcy. Kontilai lost his own remaining interest in Marvee, in excess of 800,000 shares, the suit said.
One of the 58 investors whose stake in Marvee fell in value along with Xyience was AJB, a father-and-son Chicago investment firm. In December 2006, AJB had paid $1.1 million for 9.33 percent membership interest in Marvee, according to the suit. Now the company wanted its money back.
Kontilai offered to replace AJB’s interest in Xyience with an interest in Collector’s Café. AJB declined and again demanded refund of the full investment.
“Under duress,” the suit said, Kontilai agreed to several repayments to AJB and made the first, for $306,532, in April 2008. But as another payment loomed that August, Kontilai’s attorney told AJB that it was “unlikely” that Kontilai “would have funds available to timely make this second payment.” Attorneys for Kontilai and AJB then undertook “extensive negotiation” that failed to settle the dispute.
Kontilai’s suit asked the court to vacate his payment agreement with AJB, return his April payment, and order the defendants to refrain from disparaging him, anyone affiliated with CCI or Public Media LLC, and pay his attorney’s fees and court costs.
Kontilai voluntarily dropped the suit on May 17, 2010. No reason was given.
By then Kontilai and Ferrell were in talks about another big idea involving Nightly Business Report.
Gary Ferrell says his partner is ‘a man of the highest integrity’ abused by ‘sensationalism’
A statement to Current, Aug. 26, 2010
“As a former senior executive of several public broadcasting companies and long-time advocate for public broadcasting, I am dismayed by the apparent witch hunt and attempted character assassination you seem to have undertaken against Mykalai Kontilai. The new ownership team of NBR is extremely disappointed and appalled at the mischaracterization and sensationalism contained in your story, which we will address shortly in a separate e-mail.
“I have been Mykalai’s partner for six years. I know him as a man of the highest integrity and commitment to the mission of public broadcasting. I believe in him and his vision for public television and Nightly Business Report. I am proud to be his partner.
“With great change comes great resistance. It’s unfortunate that Current has chosen this occasion to distort and misrepresent Mykalai’s background and experience for the sake of sensational journalism. Ultimately, when the full truth is known, he will emerged unscathed. I hope that the iconic brand of NBR is not damaged in the process.”
Schneider comments on sale
WPBT President Rick Schneider left this comment on the Poynter Institute’s Romenesko journalism blog after a link to this story was posted there Aug. 23:
“… I am confident that Mykalai Kontilai and his team at [NBR Worldwide] will continue the high standards for objective, unbiased news coverage at Nightly Business Report. Beyond his own assurances, WPBT remains as the presenting station and production home, the editorial team remains in place, and PBS is still the distributor. The public voice of NBR is well protected.”
Louis Rukeyser’s Wall Street Week had higher ratings in the 1990s, with his weekly broadcast on Friday evenings, but NBR’s audience for the week was larger.
NBR news release on the sale.
Nightly Business Report began as a 15-minute newscast in January 1979. Now it has more than 2 million weekly viewers nationwide.
Public Media LLC is Kontilai’s marketing, advertising and production firm, in partnership with Gary Ferrell, past president of KERA in Dallas. The website says the company’s “new PBS series, Collector’s Café,will premiere in spring of 2008.”
Kontilai’s bio says he has managed fighters in the mixed martial arts league, including Tito Ortiz, “the Huntington Beach Bad Boy” (pictured in his “Punish Your Enemies” t-shirt, $20) and David “The Crow” Loiseau. Interviewed by the New York Times after buying a national news program on PBS, Kontilai downplayed that work, calling it “a hobby of mine for a short period of time.” His website calls him c.e.o. of Champions of the World LLC., a Nevada-based sports management firm.
Kontilai helped secure $23 million in startup money for Xyience and its Xenergy sports drink. In return he received 2 million shares, which he planned to invest in Collector’s Cafe — before Xyience went into bankruptcy.
When Kontilai sold membership interest in his Xyience stock, one of the buying parties, AJB Investments demanded its money back. Kontilai settled with the company, then went to federal court in Las Vegas in July 2009 with a complaint seeking to overturn the settlement and get an injunction forbidding AJB from bad-mouthing him to his own companies. (Above: U.S. government photo of federal courthouse in Las Vegas.)