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In Reply to: RE: Source Interlink files Bankruptcy posted by roxymott on April 28, 2009 at 05:49:03
>Stereophile is one of Source Interlink's magazines (along with Motor
>Trend, etc). Is there any impact?
No. It is business as usual and perhaps better than usual as with the
parent company's debt burden significantly reduced, there may well now be
increased investment in its properties, like Stereophile.See the press release at the link below
John Atkinson
Editor, Stereophile
Edits: 04/28/09Follow Ups:
though I've been critical of your magazine in the past-I'd hate to see it no longer exist. Hope it all works out well for you, your staff, and the Stereophile brand. Think I'll order me up a subscription right now....seriously.
I'll also take this opportunity to comment on how gracious you've always been on this blog, even in the face of sometimes withering critiques, or simply assinine commentary. Thanks for that, and...
vaya con dios
"dammit"
The linked article says that the lenders wrote off $1 billion in debt and agreed to provide another $100 million in cash. So what do the lenders get out of the deal?
In short - they get paid.
In more detail: The creditors (e.g. banks) think they can get more money if the company continues to operate. It needs more money to continue operating.
> The linked article says that the lenders wrote off $1 billion in debt and
> agreed to provide another $100 million in cash. So what do the lenders get
> out of the deal?
Ownership. By the end of May, Stereophile and all the other magazines in
Source Interlink Media's portfolio will be owned by a consortium of banks.
Why would banks rather have ownership than continued interest payments?
Because SIM's debt-to-revenue ratio was too high for continued healthy
operation and this way they get all the profits.
John Atkinson
Editor, Stereophile
So the shareholders get nothing. And the banks get all the money. I wonder how big of a bonus the CEO got this year?
Yes, "bend over share holders" is a common theme these days, the corellary to which is "you took the risk, too bad, you lost". Still, the staunchest defenders of unrestrained capitalism seem to be the people who will lose the most as a result of it.
That is what I call effective marketing.
"Live free or die"
Lenders get a fixed return and, unlike equity holders, do not share in the upside of a successful venture if its valuation increases. In exchange, they get more protections in the event of insolvency. Equity holders take the risk of losing their invested capital, but get all the upside if the venture goes gang busters. What is wrong with that? It's just logical to me.
.
The worst thing in 1954 was the bikini; see the girl on the TV dressed in a bikini; she wouldn't think so, but she's dressed for the H-Bomb!
Honestly, you have all lost me. I was responding to one particular comment about the supposed unfairness of how stockholders are treated relative to creditors. That's it. That is all I was responding to.
...when banks lose all their money as a result of poor investing and excessive leverage, they get all their debts paid off by somebody else. Or hadn't you noticed?
big j
"...only a very few individuals understand as yet that personal salvation is a contradiction in terms ."
But that is not what we are talking about here, or hadn't you noticed?
Also, the bank bailouts are not intended to protect the stockholders, even if that is an incidental result. Like it or not, the government sometimes bails out businesses that are perceived as so important to the economy generally, or to certain sectors of the economy, that they should not be allowed to fail. Municipalities get bailed out too (NYC during the late 1970s, for example).
NT
"Live free or die"
What, exactly, did you mean?
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