The latest round in the battle between NewStar Media and Michael Viner and Deborah Raffin Viner took the form of a ruling by Los Angeles Superior Court Judge Ronald Sohigian that the noncompete clause NewStar obtained from the Viners upon their departure from the company is valid.

The ruling confirms a previous arbitration award that found the non-competition clause enjoined the Viners from engaging in the audio book business until June 10, 2001. The Viners were the cofounders of Dove Entertainment, which was taken over by new investors and renamed NewStar Media last summer (News, June 16, 1997). The Viners now operate New Millennium Entertainment, and Michael Viner is expected to appeal Judge Sohigian's ruling.

For the third quarter ended September 30, 1998, NewStar reported net income of $505,000 compared to a loss of $1.5 million in the same period in 1997. Sales in the quarter fell to $3.7 million from $6.2 million. NewStar attributed the improvement in earnings in the quarter to higher publishing gross margins as well as a gain of $1.7 million from the sale of the company's office building and land. Sales in the publishing division in the quarter rose to $1.9 million from $1.7 million because of a higher volume of new audio titles. For the nine-month period, total company sales rose 11% to $14 million, while the net loss was cut to $1.7 million from $9.8 million. NewStar said the reduced loss was primarily due to the inclusion in 1997 of the writedown of certain publishing assets as well as $1.6 million in employee separation costs. Sales in the publishing division were essentially flat at $5.4 million.

While NewStar has had generally lackluster results, it is making progress in avoiding being delisted from the Nasdaq market. The company showed net tangible assets of $2,703,000 as of September 30, a figure that meets the Nasdaq minimum requirement of $2.7 million. In addition, the company's stock price closed at 1 5/8 on November 30; the company's stock price must sell for at least $1 per share for 10 days to meet Nasdaq regulations.