Frontier -- Keeping Score
Most entrepreneurs still cling to the lesson they learned in the schoolyard: Make friends with the big kids, and they won't pick on you.
But playing up to giants offers no guarantees--as the now-defunct Children's Broadcasting Corp. learned the hard way. In 1995, five-year-old Children's inked a $25,000-per-month deal with ABC Radio Networks, which was to recruit affiliates and sell advertising for Children Broadcasting's syrupy, kids-only radio format. With ABC's clout, Children's, which at its peak employed 200 people, hoped to expand its 32-station network into a Nickelodeon of radio.
But Walt Disney Co., which bought ABC while it was talking with Children's, soon developed similar plans of its own. It backed out of the contract 10 months after it was signed and launched Radio Disney, a kids' network that pursued the same advertisers.
Children's sued, claiming Disney had stolen trade secrets and broken its contract, driving the young network out of business. Last October, a Minneapolis jury agreed, awarding Children's $20 million. Sweet victory? Not quite. In January, a federal judge threw out the verdict, ruling the facts couldn't support it. Children's appeal is pending, but for now it has remade itself as a TV-commercial production house where Goliaths are welcome only as clients.By Dennis Berman