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Viggle Founder Lends $25 Million More to TV App Startup

Second-screen startup Viggle, which offers users prizes like Starbucks and Best Buy gift cards for watching TV shows, is continuing to rapidly burn through cash -- posting a $12.4 million net loss on revenue of $3.9 million for the fourth quarter of 2012 -- and with the company in need of additional capital, founder and CEO Robert F.X. Sillerman has extended a second line of credit of up to $25 million.

Sillerman Investment Company II provided a second line of credit to Viggle of up to $25 million on Feb. 11, according to a regulatory filing by the company. The prior $20 million line of credit has been fully drawn, Viggle said. The $25 million, combined with an additional $2 million already drawn from the first line, will provide the funds necessary to cover Viggle’s fixed expenses and capital needs for the next 12 months, the company said.

“We believe revenue will continue to improve over the next 12 months as we contract to sell more advertising within the application,” Viggle said in the 10-Q filing Thursday. “Additionally, we believe that as our user base grows we may be able to introduce specific brand offers, additional sweepstakes, and virtual rewards into our rewards catalog to help reduce cash required to fund rewards. In addition, as our app becomes more popular we plan to increase the number of points needed to redeem certain rewards, which in turn should reduce the cash required to fund rewards.”

Last fall, in a bid to grow its user base, Viggle announced plans to buy GetGlue for up to $59 million in cash and stock but the deal fell apart last month after Viggle failed to raise convertible debt financing to fund the acquisition. Viggle paid GetGlue (officially incorporated as AdaptiveBlue Inc.) a $500,000 breakup fee.

As of Dec. 31, 2012, Viggle had 1.62 million registered users, with 746,899 of those active (meaning they earned points within the preceding 90 days). Last year users checked in to 133.3 million TV programs and spent an average of 75 minutes of active time within the Viggle app per session, according to the company.

Since launching in January 2012, Viggle’s users have redeemed a total of 1.33 million rewards. In Q4, the company spent $1.57 million on “watchpoints” and engagement points; the company had $4.59 million worth of reward points payable as of the end of 2012.

Viggle uses third-party cloud computing services from Amazon Web Services. The company says it uses proprietary automatic content recognition (ACR) technology to let its app automatically identify programming on approximately 170 English- and Spanish-language TV channels in the United States.