Source Interlink, the parent company for numerous action sports publications, filed for Chapter 11 bankruptcy yesterday, keeping the companies alive but screwing investors and creditors out of stocks and money owed to them. The bankruptcy is further proof that print media is in serious trouble.
Source Interlink publishes a total of 75 magazines and 90 websites. The company announced that by filing for Chapter 11, they will remain open for “business as usual” and blamed their financial troubles on debt acquired in their business acquisition of Prime Media. “My take on it all, I’ll be very open, I’ve been hoping this would happen for a very long time, to get us out from under the debt the company assumed when Prime Media sold to Source,” said Senior Vice President Al Crolius. “ It’s been a very difficult couple of years, with everything going to service a couple billion dollars of debt.”
The company was over a billion dollars in debt. Source Interlink Chairman and Chief Executive Officer Greg Mays was quoted as saying, "We couldn't be more pleased, this restructuring will materially reduce our interest expense and debt levels, substantially improve free cash flow and allow us to capitalize on several operational opportunities to further improve and grow our business."
Stock holders of the company are completely screwed, as the company's common stock will be canceled. While blame is being placed primarily on the acquired debt from Prime Media coupled with poor advertising sales, yet again we fail to see blame being placed on poor management and, more importantly, a poor product. Like anything, if a product is good people will buy it. For years now we've seen the top brass of media companies care more about dollar bills than the quality of the work, and once again we see more magazines producing poor product fail. With management blaming the economy and not weak stories and a lack of journalistic integrity, the rebound of media groups will continue to be delayed until we see a change of the guard at the top.