American Media 2006 Restatements: The Highlights and Lowlights (posted 3/29)
American Media Inc. last Friday filed its long-awaited 2006 financial restatements with the Securities and Exchange Commission. The lengthy filing, in addition to highlighting the finances of the company and its magazines, also shows that revenue and operating income for the company declined between 2004 and 2006, and offers details on the status of the company’s planned sale of several "non-core" publications and a Securities and Exchange Commission probe of the company.
The company says in the filing that its financial statements for fiscal years 2004, 2005, and 2006 contained errors and that the SEC is conducting an investigation of its operations. The company said it had to subtract $16.6 million in revenue from its 2004 earnings for the improper crediting of newsstand rack costs, and had to subtract another $19.3 million from its 2005 earnings for incorrect circulation revenue.
The SEC documents also revealed:
- Since Star’s transformation from a tabloid newspaper to a glossy magazine format in 2005, the publication has increased subscription units by 36.4 percent, but newsstand revenues have decreased 4.4 percent to 848,000, while ad revenues are up 42.3 percent.
- The National Enquirer’s single copy sales fell from 1.2 million in 2004 to 802,000 in 2006.
- American Media has been unable to move forward with plans to sell Muscle & Fitness, Muscle & Fitness Hers, Flex, Country Weekly and Mira! because it has not been able to provide financial statements for the titles due to its long-delayed restatement efforts. American Media says the titles have total revenues of $67.6 million and operating incomes of $24.9 million.
- The company’s total annual revenues increased from $486.1 million in 2004 to $496.1 in 2006. But it’s operating income fell from $100.9 million in 2004 to a loss of $108.7 million in 2006.