Reader’s Digest Files for Chapter 11 Bankruptcy
August 17, 2009
Clearly print media is hurting, really hurting.. and in this case Reader’s Digest is the latest to take the bankruptcy route. The company announced that it is filing for Chapter 11 and it is going to enter bankruptcy to hold off creditors.
Chapter 11 is now a very popular term when discussing print media organizations. Many newspapers have already gone that route, and many more will continue to go that route.
There are rumblings in Washington about a “print media bailout” which is a horrific idea to start off with as these print organizations are not going bankrupt due to recession / depression . They are going bankrupt due to the fact that the news stories in their print comes out 3-4 days after it was already discussed and is ‘old news’ on Twitter, Facebook, Blogs, forums and was linked to from the Drudge Report and the main page of Digg.
In essence bailing them out is akin to bailing out a candle-maker company because someone invented electric lights.
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Reader’s Digest Association Inc [RPPLER.UL], publisher of the widely-read Reader’s Digest magazine, said on Monday it would likely file for Chapter 11 bankruptcy for its U.S. businesses to cut its debt load.
The media company, known worldwide for its family-friendly namesake magazine, been trying to slash costs and boost growth since it was taken private in 2007 by an investor group led by Ripplewood Holdings LLC.
The bankruptcy would take the form of a so-called pre-arranged filing, Reader’s Digest said in a statement. A pre-arranged filing comes after a company has already reached deals with its lenders to cut its debt. Full Story here
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It’s just not worth fixing.
Publicis Groupe ‘only owed’ $12.8 million from GM bankruptcy
July 22, 2009
Maybe now Publicis will be thrown off Creditwatch in light of the new reports. The amount that General Motors owes Publicis is far lower than initially stated, to the tune of less than 10% of what was initially mentioned in the media.
Publicis Groupe SA’s (OTC:PUBGY) damage from General Motors Corp.’s Chapter 11 filing won’t be as bad as
originally estimated. The Paris-based advertising agency now says it’s owed $12.8 million by GM following its bankruptcy. That’s a large decrease from numbers that floated around in June when GM said it owed Publicis and its media agency subsidiary Starcom MediaVest Group $148 million while the French company said at the time the number was closer to $78 million. TheDeal.Com is reporting
Crocs Responds to Bankruptcy rumors
July 16, 2009
Crocs has responded via a wordpress blog to the Crocs bankruptcy rumors floating online. CEO John Duerden stated the following:
As the article correctly points out, we face challenges resulting from rapid growth. We’ve taken action to address those challenges, including aligning our production capacity to meet demand, reducing our overhead expenses and the size of our workforce, and paying down debt.
This is the key part of the story, basically the last word… Debt.
We are living in a time where bank financing is difficult to come by and this is what led the NPR and others to report that the chances are very low that they can get the finanical aid they need. Let’s face it, Crocs isn’t “too big to fail”.
They are not going to get a bailout package. period. All the luck to them to get the proper financing, or have someone save them via a purchase… but the chances are that any potential buyer will find a better deal in bankruptcy court.
Is Twitter a failed business?
July 9, 2009
Bankruptcy, failed business, poor execution, dead startup, these are not the terms commonly used to describe Twitter, but the fact is that Twitter has zero revenue and has no valid plans to make money, hence the organization, like all other businesses have no way to continue unless they generate some cash to pay the bills. You cannot live on Venture Capital for the next 20 years, something has to give.
Twitter earlier this year raised an additional 35 million in venture capital. Not a bad sum, but most likely all goes into webhosting for this beast. Unless some revenue is found, eventually that venture capital will dry up and twitter will be face with some hard decisions.
We noted prior that everyone but Twitter is making money from Twitter.
Even stock twits, a company that is nothing more than a souped up blog attached to twitter got nearly a million in seed money.
10 years ago this happened. There is even a movie called startup.com that that showed the disaster of how a well funded startup lost their shirt and went under due to lack of revenue model. Most of the mid to late 1990’s were filled with Twitter clones, sites that got hugely popular and then shut down due to lack of revenue. Wikipedia has a good outline showing some of the firms that went bust..
* Boo.com, spent $188 million in just six months[19] in an attempt create a global online fashion store. Went bankrupt in May 2000.
* Broadcast.com was a web radio company founded as “AudioNet” in September 1995. The organization hugely capitalized on the Dot-com bubble. Broadcast.com was acquired by Yahoo! for $5.9 billion in Yahoo! stock. Yahoo! split the services into separate services and discontinued its functionality. As of May, 2009, | broadcast.com simply redirects to yahoo.com.
* e.Digital Corporation (EDIG): Long term unprofitable OTCBB traded company founded in 1988 previously named Norris Communications. Changed its name to e.Digital in January 1999 when stock was at $0.06 level. The stock rose rapidly in 1999 and went from closing price of $2.91 on 12/31/99 to intraday high of $24.50 on 1/24/00. It quickly retraced and has traded between $0.08 and $0.20 in 2008 and 2009.
* eToys: share price went from the $80 reached during its IPO in May 1999 to less than $1 when it declared bankruptcy in February 2001.
* Freeinternet.com – Filed for bankruptcy in October 2000, soon after cancelling its IPO. At the time Freeinternet.com was the fifth largest ISP in the United States, with 3.2 million users. Famous for its mascot Baby Bob, the company lost $19 million in 1999 on revenues of less than $1 million.
* GeoCities, purchased by Yahoo! for $3.57 billion in January 1999. Expected to shut down in late 2009.
* theGlobe.com – Was a social networking service, that went live in April 1995 and made headlines by going public on November 1998 and posting the largest first day gain of any IPO in history up to that date. The CEO became in 1999 a visible symbol of the excesses of dot-com millionaires.
* GovWorks.com – the doomed dot-com featured in the documentary film Startup.com
* Hotmail – founder Sabeer Bhatia sold the company to Microsoft for $400 million; at that time Hotmail had 9 million members.
* InfoSpace – In March 2000 this stock reached a price $1,305 per share, but by April 2001 its price had crashed down to $22 a share.
* The Learning Company, bought by Mattel in 1999 for $3.5 billion, sold for $27.3 million in 2000
* Think Tools AG, one of the most extreme symptoms of the bubble in Europe: market valuation of CHF 2.5 billion in March 2000, no prospects of having a substantial product (investor deception), followed by a collapse.
* Xcelera.com, a Swedish investor in start-up technology firms.
This list goes on forever, and it’s filled with Twitters …. dozens of them….
Twitter’s office in 2 years if they don’t find revenue fast, nothing but empty desks..
Varnson group “shutting down” says Google searchers
June 3, 2009
Ever Wonder if you can predict the news with Google Search Volume? Within the past several hours, there has been no news on Varnson Group within any of the trade mags or blogs, however the Google search volume has increased dramatically over the past 3 hours. In April we published a report on the on-going lawsuit between Varnson Group and Steak n Shake. Evidently the search keywords to that page include , shutting down. shuddering, closing , out of business , bankrupt and bankruptcy and a host of other “negative” terms associated with their name.
We have no other story on this yet other than the facts presented above (regarding the lawsuit and the rapid increase in searches). It’s also worth noting that within the past few hours their website went “blank”
If anyone has any information on this please post a comment or let us know.
Clearly this is highly speculative, but one does wonder where the rapid increase in search traffic has come from?
Screenshot from their site at time of report
Deutsch creates GM Advertising post bankruptcy
June 1, 2009
Evidently Deutsch is taking the advertising agency lead post-bankruptcy for General Motors Corporation. The ad basically says that we paid too much in the past, had too many brands… and we’re downsizing… (well bankruptcy judge approved downsizing).
Since Deutsch is doing this post-bankruptcy, the chances are they will get paid as compared to the financial nightmare that Publicis is currently facing to the tune of $150 million dollars in unpaid GM bills.
Here’s the ad… enjoy.
GM owes Publicis Groupe $150 Million
June 1, 2009
Publicis is owed a total of $146,825,783 from General Motors, and the bankruptcy documents clearly state 2 listings for Publicis, not just one.
$25,282,766 to Publicis Groupe Proper
$121,543,017 to Publicis Owned Starcom Mediavest
For a grand total of nearly $150,000,000 to Publicis alone..
Worth noting that Interpublic got nailed about 15 million in the documents as well, hit hard… but nothing like the monster that hit Publicis…
This is staggering amount listed under “Unsecured Creditors” and questions immediately were raised if Publicis will have to write off a good part of that. The Obama Administration cut the Chrysler advertising agency budget in half, we suspect in the case of General Motors “half” would be best case.
Click to enlarge the documents…
This is a problem for Publicis, a big problem. If you want to read the whole bankruptcy document, B|Net posted it.
Foxnews blames Obama for Chrysler Bankruptcy
April 23, 2009
This is the screenshot of the century… Notice how everyone else says “US” … but of course Foxnews says “Obama” … regarding the Chrysler Bankruptcy of course… because Chrysler was in tip top shape 100 days ago when it was flying into Washington asking for a bailout.
Chrysler to declare Chapter 11 bankruptcy – BREAKING
April 23, 2009
The New York Times is reporting that The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that may show up as early as Tuesday…. and this may have dire results for Omnicom Group Inc
Already many other manufacturers are looking for other suppliers to get off those suppliers that have a large share of their business from Chrysler… fearing a wave of bankruptcies. “I can’t trust some of my suppliers, 40% of their business comes from Chrysler.. if it folds, so do a bunch of my suppliers” said one unnamed source.
Last we understood BBDO, owned by Omnicom Group Inc was their advertising of record, we can only state that this will be bad for both BBDO and Omnicom Group Inc if Chrysler will go into Chapter 11 bankruptcy. At one point in December Chrysler owed Omnicom 80 million dollars, and a bankruptcy will further expand those problems.
Would you put a year long salary into this?
$1.3 Billion in debt – $34 million in cash – bailout rumors
April 22, 2009
The New York Times is running into an extreme problem, they have $1,300,000,000 in debt and only $34 million in cash. Already in congress there is discussion of a New York Times bailout, and there are rumors of bankruptcy… though the latter has not been verified.
Our problem with the bailout is that the reason the New York Times is in big financial trouble isn’t because of the recession, it’s because we get our news from something other than dead trees, wasted ink and a carbon footprint the size of Texas. That newspaper is run like a big traditional advertising agency, and is suffering from the same problems. They don’t get the internet, and never will.
The sooner congress understand this basic principle the better, the New York Times.. like all news papers.. are being replaced by technology. This is akin to bailing out the wagon makers because automobiles are becoming popular and “stealing revenue” from the wagon makers.
99% of the United States wouldn’t notice if the New York Times shut down, and the 1% that would notice would simply go to another news website… or if they are really old school will pay to have the New York Post delivered.
It’s really game over for the news paper, and it’s a clear sign of what to expect from traditional ad agencies… remember.. a large percentage of the news paper revenue was gained from ad agencies… you don’t think this is a clear sign of what is to come?
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