"As far as I'm concerned, Bonnie did a phenomenal job in the first three years," said David J. Pecker, chairman-CEO, in an interview this morning. "In 2006, the competition got a lot more fierce, especially when OK took the trim size down and converted the price to 1.99." So just because Star -- the American Media title which Ms. Fuller converted from a newsprint tabloid to a glossy celebrity weekly -- suffered some softer sales this year did not mean she should leave, he said.
$1.5 million salary
Ms. Fuller's original three-year deal, reached as she defected from Wenner Media's Us Weekly and set to expire at the end of this month, paid her $1.5 million annually plus bonuses. The new contract signed June 23 pays the same annual salary but guarantees annual bonuses of at least $500,000, better than the average $275,000 bonus she collected under the old deal. The new agreement was reported this morning in The New York Times.
As negotiations to renew Ms. Fuller's contract dragged on, rumors emerged that she would be edged out. But the outlook seemed brighter day-by-day last week, with insiders saying that Ms. Fuller was positively giddy in a way that hadn't been seen in a while.
"I'm thrilled because I love my job. I love working at American Media on Star with Joe Dolce, and I love doing the transformation and working with him to lead it forward, and I really enjoy working with Dave," Ms. Fuller said in an interview. "We've so many plans and initiatives in the works."
In February 2003, Ms. Fuller and Us Weekly publisher Wenner Media told reporters that they had completed a deal to keep her at the company for three years, but she defected to American Media just four months later. Asked whether there was a chance something similar could still break her and the company apart, Ms. Fuller said, "No, absolutely not."
If she had left, the spotlight on American Media would have honed in Mr. Pecker alone. He himself has been the subject of persistent rumors that equity backers like Thomas H. Lee Partners and Evercore Partners were seeking executives to replace him. Their plan to take American Media public within by 2003 or 2004 has been shelved indefinitely, although they still harbor hopes for a public offering.
Flunking the fiscal restraint test?
And the company's restive bondholders may be happy to hear that Ms. Fuller would stay without receiving an enormous pay jump, but the increase in her bonuses will be another cost to test the company's recently found fiscal restraint.
It has closed three magazines and put five more on the block this year, for example, declaring a new focus on its celebrity weeklies and "active lifestyle" titles. The bondholders -- who own some $550 million of company debt -- have been pressing Mr. Pecker to straighten out and shore up its finances. And after the company didn't file third-quarter results as required, citing an ongoing audit, the bondholders forced it into a deal of their own with incentives to lower its leverage. Most recently, the company said it would not be able to meet its June 28 target to file restatements.
"I had some hurdles with the company to overcome," Mr. Pecker acknowledged. But with Celebrity Living shut down, some non-core titles on the blocks and now Ms. Fuller committed to stay through 2009, the company can look ahead, he said. Its website relaunches soon with new video capabilities. Its financial restatements, however, remain incomplete.