In less than two months, activist investors Sidus Investment Management LLC and BLR Partners LP have completely overhauled the board at Newport Beach-based patent licensing and technology investment firm Acacia Research Corp. and pushed out its management team.
The final salvo was fired last week when the company announced that President Robert Stewart; Edward Treska, executive vice president and general counsel; and Clayton Haynes, chief financial officer, senior vice president of finance and treasurer, were leaving immediately.
They were joined by board directors Joseph Davis, Fred deBoom and James Sanders, all of whom resigned, leaving what was an eight-member board early this year with three directors.
On July 31, Acacia announced that directors William S. Anderson and Paul Falzone resigned amid board infighting and the makeover.
Anderson, executive chairman of Topa Equities Ltd. in Los Angeles, joined the board in 2007. Falzone was appointed in April, much to the dismay of New York hedge fund manager Sidus and Houston-based BLR, which own a combined 4.6% of outstanding Acacia (Nasdaq: ACTG) shares.
They won a crucial proxy fight in June when their nominees, Clifford Press and Al Tobia, replaced Acacia Chairman G. Louis Graziadio and Director Frank Walsh, both of whom joined the board in 2016.
Shareholders approved Press and Tobia by a more than 4 to 1 margin, charting a new path for Acacia, which had shifted its strategy and business model under Graziadio to focus on investing in emerging technologies, such as artificial intelligence, robotics and blockchain applications. The moves further distanced the company from its core business of monetizing patents primarily through litigation.
Sidus and BLR declined to comment for this column.
The disclosures were delivered in the company’s second-quarter earnings report.
Acacia posted revenue of $6.4 million, down 61% year-over-year, though topping Yahoo Finance analysts’ $5 million forecast.
Its operating loss was about $5 million, down from a $7.2 million loss a year earlier but missing analysts’ consensus of a $4.1 million loss.
The results included a gain of $11.3 million on its equity investment in Costa Mesa-based Veritone Inc., which is trying to crack into the booming artificial intelligence segment. Veritone’s stock has swung wildly since its initial public offering last year.
Last week, Acacia also announced that C. Allen Bradley will join the board as an independent director. He’s former executive chairman of Amerisafe Inc.
The company also said Marc Booth rejoined as chief intellectual property officer. He served as an executive vice president over the patent portfolio before leaving last year.
“Operating expenses have been reduced significantly, decreasing Acacia’s general and administrative run rate from $13 million per year to approximately $4.5 million per year,” Tobia and Press said in a press release. “We are carefully evaluating the patent business to ensure we are making decisions that are in the best interests of stockholders.”
League Makes Splash
The first season of Blizzard Entertainment Inc.’s esports league ended in grand fashion late last month, selling out Barclays Center in Brooklyn, while capturing the attention of fans around the world.
The Overwatch League’s Grand Finals, ending with London Spitfire beating Philadelphia Fusion for the vast share of a $1.4 million prize purse, drew an average of 861,200 fans per minute who tuned in from traditional broadcasts and streaming services.
The league is based on the Irvine publisher’s hit first-person shooter game “Overwatch.”
By comparison, the women’s Wimbledon final on July 14 between Garbiñe Muguruza and Venus Williams pulled in 2 million domestic viewers, and the men’s title match a day later between Roger Federer and Marin Cilic drew 2.3 million.
The Overwatch finale, held July 27 to 28, was streamed on Twitch.tv and Major League Gaming. In China it aired on ZhanQi TV, NetEase CC and Panda TV. Domestic viewers took in the action on ABC, ESPN, ESPN2, ESPN3 and Disney XD.
The ESPNÂ broadcast marked the first time it aired a competitive gaming tournament in prime time, and the ABC programming was the first of its sort on its network.
On July 11, Blizzard announced that ESPN, Disney XD and its family of networks will broadcast Overwatch matches.
The company recently announced the league will expand to Atlanta and Guangzhou, China, next season.
New owners include Cox Enterprises, which partnered with Nevada-based Province Inc. to form Atlanta Esports Ventures; and Nenking Group, a financial and entertainment conglomerate that owns the Guangzhou Long-Lions of the Chinese Basketball Association.
The original owners of the 12-team league reportedly paid $20 million each to establish franchises in Los Angeles, Boston, London, Miami-Orlando, New York, San Francisco, Seoul and Shanghai.
