One of our major magazine distributors, Source Interlink, has filed for bankruptcy. I first reported about the problems of Source Interlink and the magazine distribution industry in general in my blog post of Feb. 5. I’m not sure how the bankruptcy will affect the distribution of our current issue (May/June 2009 – Issue No. 117) to major bookstores such as Barnes&Noble. About 4800 copies of the issue are affected.
The magazine distribution business is a dying industry. We’ve been slowly distancing ourselves from it for years, and we did take preventive measures to limit our damage from this new bankruptcy of a major player in that industry. We got our copy of the bankruptcy fling today, but it has been in the news at foliomag.com website.
So if you can’t find our current issue at your favorite bookstore this month, this may be the reason. You are better off becoming a subscriber, anyway, and so are we. We get paid for the issues, not have them rot on a dock awaiting a bankruptcy settlement.
Here’s a few interesting tidbits from this story:
– Source Interlink will eliminate approximately $1 billion dollars of existing debt through the bankruptcy.
– Source stock was trading at 16 cents per share, down from $10 per share a year ago.
– How’s this for corporateez spin: Source Interlink CEO Greg Mays boasted after the bankruptcy filing, “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.”
– And here’s a real gem, as reported on www.5ones.com: “Citigroup, the same consortium that we the tax payers have bailed out, is going to do the same for Source Interlink to the tune of 900 million dollars. Giving them an 80% controlling share of the company after its 35 day restructuring and privatization. So here we have one group that was bailed out only to step forward and bail out another group. One would think that Citigroup would only look at the amount of debt they have and the amount of assets they have and revenue they generate to say, “I don’t think this is a good idea”. Unfortunately for us they don’t see it as that.”
What a world we live in! Big companies go bankrupt, hurting a lot of small companies, and the big company CEO not only boasts about how great it is, but he gets a big loan from a big bank that has itself just gotten bailed out by hundreds of billions of taxpayer dollars. We must live in some sort of cruel Disneyland where poor slobs like me have to continue to bust my butt to support this outrageous behavior.
But we’ve been developing our plan to counteract this implosion of the print and distribution industries. We won’t be badly hurt by this latest distributor to go bust. And we’re developing our own way to reach the BHM audience without having to depend much longer on these antiquated distribution companies who are all doomed to going broke. Soon, at our website, we’ll reveal our way of going forward into this new internet age.