January 22, 2008 -- Gossip mag publisher American Media found itself roiled again yesterday following the sudden ouster of Chief Financial Officer John Craven.
Craven will be replaced by Dean Durbin, former CEO and CFO of Vertis, a company that, like AMI, has a sizable financial stake controlled by private equity firm Thomas H. Lee Partners.
Durbin is AMI's sixth CFO in less than four years. Craven will stay on as a consultant.
On the job 14 months, Craven is credited with cleaning up AMI's financial reporting and bringing the publisher of Star and National Enquirer into compliance with the Securities and Exchange Commission.
However, there was behind-the-scenes tension between Craven and AMI CEO David Pecker, who blamed the finance chief for delays in making the company compliant and thus slowed down AMI's ability to complete a merger with Ron Burkle's Source Interlink Cos.
The big push now will be for AMI to jump-start its stalled deal with Burkle. The billionaire, who controls Source Interlink through his investment firm Yucaipa Cos., last year paid $1.2 billion for magazine publisher Primedia, whose assets include Motor Trend and Soap Opera Digest. Burkle is believed to be particularly interested in AMI's Distribution Services Inc. unit, which services supermarket magazine racks.
As first disclosed by The Post, the two companies have been talking since March 2006 but couldn't close a deal until AMI's financial records were up to date.
Tossing Craven overboard would seem to strengthen Pecker's chances to emerge as the new CEO once Source and AMI merge. But the clock is ticking: Pecker's current five-year contract expires on April 17 and neither Pecker nor the board is moving to renew his pact until the deal plays out.
In the interim, things could get tougher for the relationship between AMI and its bondholders
Said one bondholder yesterday, "Bondholders respected Craven, on a relative basis. [At Vertis] Durbin was notorious for his very terse comments to bondholders on conference calls."
