National Enquirer owner files for bankruptcy protection | Media | guardian.co.uk
The owner of supermarket tabloid the National Enquirer is to file for bankruptcy protection in the US.
American Media, the country's biggest owner of celebrity magazines, publishes more than a dozen titles with a combined circulation of 6.8m as well as the National Enquirer.
The privately owned company has been trying to refinance its debt and said today that it will enter into a Chapter 11 agreement to negotiate a debt-for-equity swap with bondholders.
David Pecker, American Media's president, insisted in a statement it would be "business as usual" at the publisher, whose other titles include Men's Fitness and gossip weekly Star, while talks with creditors take place.
American Media is effectively owned by its bondholders after agreeing last year to hand them 95% of its shares as it sought to prevent bankruptcy.
An executive at a rival publishing group which operates in the same market said: "It is a bad time for their celebrity magazines and Star in particular has posted some of its worst ever sales figures recently. I know they have an older and more downmarket demographic which means they suffer more than normal in a tough market."
Many of its titles are popular with "blue collar" US readers who have been hit hard by the recession. The circulation of its flagship title the National Enquirer has fallen from a peak of over 6m to about 1m.
The company was bought by two private equity groups, Thomas H Lee Partners and Evercore Partners, for $850m in 1999 and paid $350m for Weider Publications, a major publisher of health titles including Shape and Men's Fitness, in 2003.
By the time the recession hit in 2008, the company was saddled with debts of more than $1bn. This figure has been gradually reduced through a series of debt-for-equity swaps which have left bondholders in control of the group. Earlier this year, following the latest deal with creditors, American Media's debts fell to $600m.
The company said about 80% of bondholders have agreed to back the latest restructuring plan. They include Angelo Gordon & Co, a New York-based investment company that specialises in "distressed debt". Avenue Capital, another investment firm that takes stakes in struggling companies, is American Media's other major owner.
Pecker said the refinancing will take 60 days to complete once the company has filed for Chapter 11. It is expected to do so in the next fortnight.
The Chapter 11 arrangement allows US companies a set period in which to conduct restructuring talks without the threat of debts being called in by creditors. They are effectively run by the courts until they can reach an agreement with banks.
Sales of the Enquirer, American Media's flagship title, fell below the 1m mark several years ago following an ill-fated relaunch which saw it move from its traditional home in Florida to an office in New York.
American Media hired former Sun and Daily Mail journalist Paul Field in 2005 to mastermind the relaunch and he recruited a team of more than 20 British tabloid journalists. The majority of the team were fired, along with Field, less than a year later. Field felt the company had failed to keep promises about investment in the title.
The title subsequently moved back to Florida and it began to recover sales, aided by a string of scoops about former Democratic presidential candidate John Edwards, from 2008 onwards.
It was nominated for a Pulitzer prize, the most prestigious award in US journalism, last year for the Edwards revelations, the first time a tabloid has ever been put forward for the award.
