|Photo: Darryl Estrine|
Count the directors, for example. There are nine today, up from seven, because of a March 15 decision to add another representative from Thomas H. Lee Partners, one of the company’s chief equity backers, and another from Evercore Partners, its other big investor.
“The reason we expanded the board is we just hired Rich Bressler,” cautioned Anthony J. DiNovi, co-president, Thomas H. Lee. “He has a lot of knowledge in the space.” Evercore then required another seat to keep things balanced, Mr. DiNovi said. Through a spokesman, Mr. Pecker declined to comment.
But adding Richard J. Bressler, who was senior VP-chief financial officer at Viacom before that company split, undeniably lands another hand on deck at American Media, publisher of Star, National Enquirer and Shape. The company has turned in disappointing results and is performing an internal audit that will inform its eventual restatement of 18 months’ worth of results.
It isn’t just the new directors. The company recently recruited help for Mr. Pecker by hiring John J. Miller as president-chief operating officer, Carlos A. Abaunza as senior VP-CFO and David W. Leckey as exec VP-consumer marketing. “David was getting stretched pretty thin,” Mr. DiNovi said.
And don’t forget the bondholders, who hold some $550 million in debt from American Media. After the company didn’t file its third-quarter results as required, a result of the ongoing audit, they forced the company into a March 17 deal with incentives to lower its leverage.
“The bondholders want the company to improve its balance sheet,” said an investment manager with American Media bonds. “The idea was not to let the company sit out there. We don’t want them rolling the dice and trying to hit a home run and getting everyone in trouble.”
A newly conservative attitude has already shown its presence. American Media recently scaled back its ambitions for Celebrity Living Weekly, the lifestyle magazine introduced in April 2005, by deciding not to secure additional checkout-aisle pockets for the title. New pockets mean new opportunities for consumers to pick up a magazine, but the company decided that soft-selling Celebrity Living wouldn’t return the investment.
Today’s meeting isn’t likely to produce fireworks -- company insiders flatly deny outsiders’ rumors that Mr. Pecker’s job is directly on the line. But its tone is easy to imagine; just picture any gathering of unhappy investors and under-the-gun executives. In the days and months that follow, all eyes will be scouting for new good news.
Mr. DiNovi said the company was only suffering the same problems afflicting other magazine publishers. “We have great assets and great content,” he said. “Our objectives going forward include taking that content and those assets and finding alternate ways to maximize it.”
The bondholder said he believed the additional executives and board members could only help. “I don’t think anyone’s happy with the way the company’s progressed over the last couple years,” he said. “We’re happy with the equity partners giving them their full attention now.”