AMI SLIPS ANOTHER NOOSE
February 19, 2007 -- American Media Inc., publisher of Star, National Enquirer and Shape, has dodged another bullet. It has once again gotten bondholders to agree to extend the filing deadline for its long overdue fiscal results stretched out over portions of three fiscal years.
Bondholders are willing to let the company skate again - but for a price in terms of incentive payments of $625,000 for each new deadline that is missed. It marks at least the fifth blown deadline for AMI.
In the latest extension, reached last week with bankers and bondholders, the company can now extend the deadline to provide restated 2005 quarterly and full year 2006 results to April 16, 2007. The company is also allowed to extend the deadline to provide the company's 10-Q for the first, second and third quarters of fiscal 2007 from March 15, 2007 to May 15, 2007.
American Media CEO David Pecker had to promise to wring out more than $19 million in cost savings that include "production efficiencies" and further job cuts when he spoke to bondholders on Feb. 13. Some of the cost cutting was already apparent to insiders late last week. Country Weekly is going to be reduced from tabloid size to a standard magazine size and Men's Fitness is reducing its trim size.
Shape, which recently made a big play about its move to recycled paper, is also rumored to be switching to a lighter paper stock, but a company spokesman insisted it was going to stay on the recycled paper. Pecker said Star magazine had stumbled throughout the second half of 2006 and tumbled to an all-time low of around 560,000 copies sold on newsstands in December before he moved the National Enquirer's top editor in charge of covers and Hollywood coverage to Star.
Pecker told the bondholders that newsstand sales have improved since bottoming out in December and climbed back into the 720,00 range during the Jan. 9 to Feb. 19 period.
Dolce Leaves Star, as Trunzo's Is Rising
Joe Dolce is leaving Star Magazine after three years as editor in chief as of April 1st, to be replaced by Candace Trunzo, previously the editor in chief of Globe and senior executive editor of the National Enquirer, both owned by Star's parent company American Media Inc. Trunzo led editorial teams that covered big celebrity stories at both publications, including controversial coverage of the Kobe Bryant rape case and Paula Abdul's indiscretions with a male contestant on American Idol.
Trunzo will report to Bonnie Fuller, resuming a long professional relationship. In an email to AMI employees, corporate boss David Pecker thanked Dolce "for all his efforts and contributions towards Star's successful transition from tabloid to glossy magazine over the past three years." Pecker also touted Trunzo's "long record of accomplishments across AMI."
The announcement follows a hard year for Star, which is facing off with cookie-cutter tabloid-style mags on the newsstand including Bauer Publishing's In Touch and Life & Style. In 2006 Star's ad pages increased 4.6% compared to 2005 according to PIB--but that pales in comparison to In Touch, which jumped 35.8%, as well as Life & Style, which grew 17.5%. Star's overall rate-card revenue figures still beat both Bauer titles combined--but it's unclear whether these figures correspond to actual financial results, as magazines sometimes sell pages at a discount.
David Pecker Has a Big ... Ego
From our friends at the Smoking Gun comes news that a lawsuit filed by AMI chief David Pecker against a
www.davidpecker.com -- which houses porn ads -- has been dismissed. Pecker apparently thought that since the site has the word "pecker" in it, he was entitled to the domain. HA! More interesting, though, are the documents from the decision that TSG dug up--particularly the way Pecker describes himself.
According to the complaint, Pecker:
is "a famous and highly respected businessperson in the publishing industry with a 25-year career"
has "completed more than 3.6 billion dollars in magazine transactions"
"is known nationally and internationally by the name David Pecker and his high profile name is linked inextricably with AMI and is cited frequently by the media"
"Mr. Pecker's name has been indelibly etched in the public mind with AMI. Mr. Pecker's name is constantly being used to promote AMI. Considerable good will has attached to Mr. Pecker's name and damage to his name would be irreparable."
"David Pecker's personal fame and reputation have caused his name, as a leader in the publishing industry and as Chairman and CEO of AMI, to acquire a secondary meaning in the industry. Complainant's name is used to promote AMI and the public understands his name as referring to AMI."
So surprising that the suit wasn't resolved in his favor, is it not?
