(Nov. 25, 2003) Vanguarde Media, Inc., the nation's fourth largest black-owned magazine publishing firm, announced this afternoon that it was suspending publication of Savoy, Honey and Heart&Soul magazines immediately and filing for bankruptcy protection from its creditors.
The unexpected decision came following a meeting of the company's board on Tuesday in which majority shareholder, Provender Capital, voted to take the suspension action.
Keith Clinkscales, (above) chairman and CEO, told Target Market News that his search for additional investment had come up short. "I was trying to enhance our cash position," he said. "We were doing fine financially, but growth takes cash."
The Chapter 11 bankruptcy filing will, presumably, allow Vanguarde to retain certain assets while selling others and put a re-structuring plan in place. A skeletal staff will stay on board to handle administrative duties, like account receivables.
"As we were heading into 2004, getting the money we needed was going to be a daunting task," said Clinkscales. "I didn't see where we were going to get it from."
When asked if the closure was based on a specific deadline, Clinkscales said "Deadlines are fungible depending on who your partners are. Provender decided to take the company into bankruptcy. They are the majority shareholders. They weren't bad people for shutting it down. I don't want to give that kind of impression. We were trying to make is work up until the last minute."
The closing of Vanguarde is all the more ironic given its performance this past year. According to figures VMI reported to the Publishers Information Bureau, its three titles more than $32.2 million in advertising revenues for the first ten months of this year. The magazines had growth between 26% - 46% in revenue over the same period in 2002. This at a time when magazine in general are recording only 9% growth in revenues.
The lost of the magazines, and the one million readers that they delivered, is going to pose a challenge for advertisers. "They are special properties, the writing was top notch and they were truly engaging," said one advertising agency executive who asked not to be identified.
"We were viewing them as a long term partnership, but you could see the potential. We felt it was important to get in on the ground floor."
As far as the budgets that had been committed to the Vanguarde titles, she said "We're not going to do anything immediately. It will be a headache, but we will adjust. It might make sense to shift those dollars to broadcast. It's all about making up the [gross rating points]."
Savoy, Honey and Hear&Soul each have one more issue "in the can," said Clinkscales, and he not sure yet what's going to happen. Asked if he would try to acquire the company after the filing, he replied, "I'm trying to deal with the human factors right now. I haven't begun to deal with the business."
Vanguarde employed a staff of just under 100 people, and in its four years of operation it paved the way for many black editors, writers and production workers to get a foot in the magazine industry. Earlier this year, Amy Barnett left as head of Heart & Soul to become managing editor of Teen People.
"We were changing the way media was talking to the African-American market," said one staffer. "I'm just heart broken."