American Media Again Blames Star for Its Financial Woes
Tabloid publisher American Media Inc. once again blamed its financial woes on Star, saying soft newsstand sales for the tabloid was the primary reason its EBITDA declined in the fourth quarter of last year to $21.5 million, down from $23.9 million in the same period a year earlier.
In a filing made Friday with the Securities and Exchange Commission, the company, which has struggled for almost a year to meet financial restatement deadlines set by its note holders, also said it may not be able "to generate sufficient cash flow" to meet its obligations under the terms of its senior credit facility and bond indentures. AMI is currently carrying about $1 billion in long-term debt.
According to the filing, the company had $56 million in cash on its balance sheet and a fully drawn revolver of $60 million as of December. AMI says it developed an action to plan, to be implemented this quarter, that will enhance cash flow and allow the company to make all of its required interest payments. It says the plan should help the company realize $19.4 million in cost savings and $17.2 million in revenue enhancements this year.
AMI last released complete financial statements in November 2005. The company has had its bond rating lowered by Moody’s Investor Services due to its high debt-load and its failure to show a return on the investments it’s made in the past three years in the revamping of Star magazine, and its 2003, $350 million purchase of the Weider Fitness publications.
To help with its new focus on its core magazines, which also included the National Enquirer, AMI said last year it would sell three of its Weider titles, Muscle & Fitness, Muscle & Fitness Hers and Flex, as well as music title, Country Weekly and Latin publication Mira! Although bids were expected to close on the publications in the third quarter of last year, the company has yet to broker a deal. An American Media employee told Folio: Alert the company has been mum as to whether a sale will take actually place on the publications.