Regional Media Company

The Client

The Company was a family owned and operated multi-platform, multi-location, Regional Media Company. On a weekly basis the Company reaches approximately 1 million +/- consumers in the 18-44 year-old demographic through print, web, radio broadcasting, and mobile and social networks. The Company is made up of 2 primary functional groups – Print and Radio. The Print group consists of 6+ publications including three “alt-weekly” newspapers, a glossy bi-weekly publication focused on fashion and nightlife, a Hispanic focused weekly community newspaper, and a coffee table / yearbook publication serving primarily the sports industry. The Radio group consists of 4 independent FCC licensed radio broadcasting stations reaching a four state geographic footprint. The balance of the Company holdings consist of a printing company, a mobile & social media marketing company, and an independent technology company serving the personals market. Lastly, many of the Company’s entities are supported by a niche capacity to produce extensive promotional events which leverage multiple segments of the Company with several events produced each year drawing crowds ranging from 50 to 50,000 people. Each company mentioned above represents a unique and separate legal entity with a separate set of accounting ledgers, varied closing dates and year end dates. Initially established as a means for efficient tax planning, the current business structure has become extremely complicated, inefficient, and costly to the ownership group.

The Challenge

Upon arriving at the Company it became very clear, very quickly that the collective companies were in an extreme state of chaos and that neither management nor ownership had any real sense of what to do. The Company had been losing millions of dollars each year for the most recent 5-7 year period, and those losses precipitated when with the steep decline of the advertising industry during the early stages of a drastic recessionary economic period. While attempts had been made to adjust the cost structure of the company (and to some success), the cuts were not deep enough and changes were not happening fast enough. Throughout this period of losses, ownership had supported the company by injecting personal funds. This tactic however was no longer viable.

Initial Key Phoenix Observations:

• Current senior management of the Company was lacking in experience and discipline to effectively lead a turnaround
• The overall morale at the Company was very low
• There was no apparent level of accountability with senior management down to the staff employees
• Senior sales leadership was lacking and what was in place was vastly ineffective
• The Company was lacking a clear sales strategy and what was being done appeared to be having a negative impact on sales
• Financial management was at best negligent, and at worst fraudulent.
• Overhead cost structure was unsustainable in its current state
• Very limited control structure provided for an environment of whereby expenses were difficult to manage
• Ad/Edit ratio was out of balance with no clear plan on how to remedy
• Page/spot rates had deteriorated dramatically thus further impacting profitability on a negative basis
• The state of vendor communications and relations was severely strained – two of the Company’s landlords had initiated eviction proceedings and raw material supply chain was very close to being shut down
• Ownership’s continued benevolence towards it’s “sacred cows” would demand a sale of the company in the immediate future, short of a dramatic shift in sentiment and significant improvement in operations
• Overly complicated business structure added unnecessarily to internal as well as external (professional fees) costs.
• Primary business location provided twice as much space as necessary – a function of it being commonly owned by the same owner of the Company

The Solution

Phoenix’s assessment work product concluded with a recommended restructuring plan including (but not limited to) the outline below. In addition to and as part of the overall plan, Phoenix Management was engaged on an interim basis as COO and CFO and as such, led the restructuring process.

Senior Management & Financial

• Led reorganization of senior management team including RIF of COO/CFO, Controller, and Assistant Controller. Phoenix began interim engagement as COO/CFO. 
• Developed budget and established a budget process.  Developed a detailed rolling 13–week cash flow model and forecast. Developed monthly & weekly reporting package (financial and operational).
• Led negotiations with many existing vendors for more favorable terms (pricing and otherwise) as well as A/P settlements and payment plans (Reduced GL Insurance by more than 15% – a $75k annualized savings, reduced ADP processing fees by more than 30% – a $25k annualized savings ”“ also allowed for a reduction in force, reduced tech vendor fees by 50% – a $30k annualized savings)
• Successfully renegotiated several leases including two whereby an eviction process had begun – secured several million dollar bridge financing line of credit.

Sales & Marketing –

• Rebuilt largely the entire sales organization, including new leadership, compensation and strategic focus with emphasis on events, social media, web and mobile components.
• Streamlined sponsorship strategy leading to a more targeted and less costly sponsorship budget.
• Rationalized event programs from a profitability standpoint.

Web & Technical –

• Streamlining the web to print process through specific technology upgrades and process change.
• Rationalized web group which resulted in consolidation of departments and RIF. 
• Implemented new CMS for all company web sites.

Other –

• Restructured editorial department including the change of editorial leadership as well as several RIF’s .
• Shut down foreign subsidiary resulting in approximate $200k of annual savings.

Results

EBITDA in year one of the restructuring experienced a more than $3 million or 50% improvement over the same prior year period. In year two EBITDA is anticipated to be cash neutral reflecting a significant gain over the same prior year period. The results of the overall restructuring and action items highlighted above have reversed a negative trend despite continued economic challenges surrounding the advertising industry. Anecdotally, a very positive morale has returned to the Company with high expectations shared by all as the Company continues to publish significant media product content generating record gross sales.