Founders of Graphix Zone Give Up Control of Company

By GREG MILLER

Nov. 6, 1996 12 AM PT

TIMES STAFF WRITER

IRVINE —

The husband-wife founders of Graphix Zone Inc. resigned their management positions with the company on Tuesday, giving up control of a firm known for producing CD-ROMs featuring Bob Dylan and other famous entertainers, while losing millions of dollars in recent years.

Charles R. Cortright and Angela Aber, who started the Irvine-based company in 1989, gave up their respective positions as chief executive and executive vice president. The two said they will continue to serve as consultants to Graphix Zone but will leave day-to-day management to executives who joined the company as part of its merger earlier this year with StarPress, another multimedia firm.

Graphix Zone Chairman Ronald S. Posner, who has held executive positions with numerous high-tech companies including StarPress, said he will take over responsibilities as chief executive. The company also said that Norm Block, a longtime business associate of Posner, has been named president, chief operating officer and a member of the board of directors.

Posner said the transition had been discussed since Graphix Zone and StarPress merged. Cortright and Aber “were great at starting this company and getting it to the point where professional management can come in,” Posner said. “They have asked to take a less active role.”

In a written statement, Cortright said he and Aber “could not have made this decision unless we were completely confident in Graphix Zone’s future.” In an interview, he said, “It’s been an exciting seven years, but we kind of want to rest now.”

Graphix Zone is best known for producing CD-ROMs that feature music and stories about such recording stars as Dylan, Willie Nelson and the singer formerly known as Prince. The company has recently reported modest quarterly profits after losing a combined $31 million on sales of $16 million the past two years.

Posner acknowledged that the company still wouldn’t be profitable if it weren’t for several CD-ROM titles that Graphix Zone acquired in its merger with StarPress. Some of the titles include CD-ROMs based on television game shows such as “Wheel of Fortune” and “Jeopardy.”

But he said that Graphix Zone’s strength is product development, and that “by getting good executives like Block in there to focus on operational details, we’ve started making money.”

Graphix Zone also recently acquired a Wilma, an Internet site that lists concert dates around the nation. Executives said they hope to begin selling Graphix Zone’s CD-ROMs through the Wilma Web site.

In other executive changes at Graphix Zone, the company said Chief Financial Officer Frank Murnane, who joined the company just two months ago, “resigned to attend to personal matters.” Derrick Morton, previously a producer with the company, was promoted to vice president of development.

Graphix Zone’s stock closed at $3.50 per share on Tuesday, unchanged in trading on the Nasdaq market.

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Graphix Zone at a Glance

Headquarters: Irvine

Chairman: Ronald S. Posner

President: Norm Block

Business: Technical and entertainment CD-ROMs

Founded: 1989

Employees: 70

Exchange: Nasdaq

Titles: Bob Dylan’s “Highway 61 Interactive”; Oliver Stone’s “Nixon”; Herbie Hancock’s “The History of Jazz” and “The Crow--The Complete Interactive Collection,” based on “The Crow--City of Angels” films.

Improved Earnings

Graphix Zone has reported two consecutive profitable quarters since merging with StarPress Inc. in June. Combined sales and net income, fiscal 1996 and 1997, in millions:

Sales

Fiscal 1996

1st qtr.: $1.6

2nd qtr.: 1.4

3rd qtr.: 2.5

4th qtr.: 3.7

Fiscal 1997

1st qtr.: 3.5

Net income

Fiscal 1996

1st qtr.: $-1.9

2nd qtr.: -7.2