DMX Music Files for Bankruptcy

DMX Music Inc., whose digital library of tunes can be tapped by travelers at 30,000 feet, said Monday that it filed for bankruptcy protection as part of its plan to be acquired by a private investment partnership.

DMX, a majority-owned unit of Liberty Media Corp.’s Liberty Digital, supplies commercial-free music on the ground via cable and satellite and is one of the biggest providers of airlines’ in-flight music and videos.

The Los Angeles-based company will be bought for an undisclosed amount by THP Capstar Inc., a partnership between Texas-based private equity firms Capstar Partners and Trinity Hunt Partners.

DMX said that it would continue to operate as usual, and that only its U.S. operations were involved in the bankruptcy filing, submitted to the U.S. District Court in Wilmington, Del.

The music company, which has secured $10 million in debtor-in-possession financing, also requested that bidding procedures be put in place to allow for better offers. It expected a sale of the company to be completed within 60 to 90 days.

Capstar is led by Steve Hicks, brother of fellow investor Thomas Hicks and a former vice chairman of AMFM Inc., an owner and operator of radio stations that was bought by Clear Channel Communications Inc. in 2000.

Trinity Hunt, a regional firm that specializes in lower-middle-market deals in the Southwest, is backed by an affiliate of the Lamar Hunt family and by private equity firm Capital Z Investment Partners.

DMX Music, which also provides music for retail chains including the Limited and Macy’s, was purchased by Liberty in 1997.