AMERICAN MEDIA, PUBLISHER OF ‘STAR,’ REPORTS LOSS

Off $10.9 Million, Cites Katrina for Soft Newsstand Sales

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NEW YORK (AdAge.com) -- American Media, publisher of titles from Star to Men’s Fitness to Shape, today reported a net loss of $10.9 million for the quarter ended Sept. 30, an unhappy turnaround from net income of $2.7 million during the comparable quarter last year.Its earnings before interest, taxes, depreciation and amortization (known as EBITDA) totaled about $28 million.
Edited by Bonnie Fuller, 'Star' still lags behind its competitors in metrics like household income but is gaining.

Delayed IPO
The company made headlines this year for its cozy relationship with California Gov. Arnold Schwarzenegger and several abrupt exits by key employees. But its financial results are what matter most to plans by David J. Pecker, the chairman and president-CEO, to take the company public. Those plans have already been delayed; Mr. Pecker now anticipates an initial public offering may take place two years from now.

Ad revenue increased 2.7% from the quarter last year to $43.5 million, while circulation revenue declined 3.7% to $83.7 million.

Revenue down
Newsstand revenue fell $2.3 million, or 3.2%, primarily because the company published 13 issues of its weekly magazines during the quarter rather than 14 in the quarter last year. But Hurricane Katrina also cut into newsstand sales during the last four weeks of the quarter, slicing $1.7 million from revenue, according company estimates.

The National Enquirer and Star are experiencing improved newsstand sales in the beginning of the third quarter of the current fiscal year,” the company said in its filing to the Securities and Exchange Commission.

American Media has poured resources into remaking and revitalizing Star, which had been a newsprint tabloid before Bonnie Fuller was hired to lead it into the promised land of celebrity weeklies. The fall 2005 report from Mediamark Research Inc., released this week, shows that Star still lags its competitors in metrics like household income -- but is making gains.

Improvement
Star readers’ household income, for example, rose to $48,130 in the most recent report from $44,916 in the report one year ago. Its readers’ median age declined to 36.5 from 39.7, which is a good thing in advertisers’ eyes. And Mediamark estimated its total audience at nearly 9.5 million, up 15.2% from 8.2 million the year before.

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