Source Interlink Reports $296M Net Loss, Folds Three Titles
Publisher cites "economic downturn," "related effects" on advertising.
Distributor and enthusiast magazine publisher Source Interlink recently reported a net loss of $296.7 million for the six month period ending July 31, compared to a $4 million net income for the same period last year. Net revenue for the period was $1.1 billion, up from $909 million during the period last year.
The company reported a net loss of $15.9 million for the fiscal second quarter 2009, compared to a net income of $2.2 million during the same period during fiscal 2008. Net revenue for the period was $576.6 million, up from $434.1 million during the same period last year.
As part of the conference call announcing the fiscal 2009 first half figures, Source Interlink chairman Michael Duckworth, citing declines in advertising and circulation revenues in its media division, indicated that the company merged three “underperforming” titles with other titles within its portfolio during the period. The folded titles, according to a company spokesperson, are Car Audio and Electronics, Stock Car Racing and Mini Rider. The spokesperson declined to say into what magazines the shuttered titles were folded into, or when exactly the action took place.
The media division reported adjusted revenue of $249.5 million for the six-month period ending July 31, down from $278.2 million during the same period last year. During the second quarter, revenue for the division was down $18.3 million, or 12.8 percent compared to the same period last year.
‘Continued Economic Downturn’
During the first half, Source incurred a non-cash impairment charge of $270.8 million for “goodwill and indefinite-lived trade names related to certain reporting units” of the media division. “This determination was based largely on management’s projections regarding the revenues and profitability of the media segment as well as the effects of the recent credit market changes, the continued economic downturn and the related effects on advertising and consumer discretionary spending,” Source said in a statement.
Duckworth said the company will continue to “exploit opportunities to improve efficiency at the newsstand, where we expect to reduce draw by 11.1 million copies this year. And, we have successfully raised cover prices on approximately half of our titles with positive impact on EBITDA.”
In August 2007, Source Interlink acquired Primedia Enthusiast Media in a stock purchase of approximately $1.2 billion. Today, Source publishes more than 75 magazines—including Motor Trend, Automobile and Power & Motoryacht—and distributes DVDs, CDs and books.