Frontiers Media LLC, the financially troubled publisher of Southern California’s oldest gay magazine, is attempting to negotiate a deal with an outside investor that would prevent the company from closing.
Frontiers, which filed for Chapter 11 bankruptcy protection in March, has been negotiating since then with Wells Fargo Bank, its largest single creditor, which it owes $1.6 million. Other creditors, including printers and suppliers, are owed an additional $1.58 million. Frontiers had been expected to present a reorganization plan to the bankruptcy court in June. Such a plan details how a company plans to cut its spending and increase its revenue to allow it to continue to operate or presents an offer from a prospective buyer. It also typically includes a request that the court reduce the debt the company owes its creditors. A bankruptcy judge usually takes into account the opinion of a company’s largest creditors in deciding whether to grant such a request. Frontiers asked the court in June to delay the deadline for filing its reorganization plan until Sept. 25. It then asked for an additional delay to Dec. 31, which the bankruptcy court granted yesterday.
In a filing with the bankruptcy court, David Stern, publisher and owner of Frontiers, said the company had been unable to negotiate a plan with Wells Fargo to reduce the amount it owes the bank. The discussions, Stern said, “did not consummate.”
In a letter asking for the additional 90-day extension, Stern said: “Fortunately … the Debtor now has received a Letter of Intent from Noble Media Ventures LLC , which in essence, pays the debtor’s secured claims via an expected compromise, and leaves approximately $160,000 in cash to fund a chapter 11 plan.” Stern said Noble and Frontiers need the additional time to negotiate with one another and Wells Fargo.
“Frontiers Media is a community institution, and it, as is all media is evolving,” Stern said to WEHOville. “I too am constantly evolving and am a survivor. We will both come thru this stronger than ever. Our current focus is on the LA Lesbian and Gay Wedding Expo we are producing at the downtown LA Athletic Club on Sunday Nov. 10.”
In a letter to Stern, Noble proposes purchasing Frontiers Media, which also operates the FrontiersLA.com website, for $300,000. Noble suggests three options for funding the purchase — with cash, by taking on new debt and/or by assuming some of Frontiers’ existing debt. The Noble purchase offer is conditioned on the bankruptcy court agreeing to cut the debt that Frontiers owes to no more than $300,000.
Noble proposes to pay $140,000 of that amount to Wells Fargo — nine percent of what Frontiers now owes the bank. Another $34,000 would pay bills incurred before Frontiers filed for bankruptcy protection in March, and $34,000 also would be allocated to pay bills incurred after the bankruptcy filing. That money is owed largely to various printers and other vendors. Noble proposes to pay $87,406, or 10 percent, of the $874,000 Frontiers Media still owes to Frontiers Publishing Co. LLC, the company from which Stern and his business partner, the late Mark Hundahl, bought the magazine in 2007.
Noble says in its proposal that it will employ Stern and Dustin Tyner, the company’s managing director of integrated media. It makes no statement as to what other members of the 16-person staff will be retained.
Noble Media Ventures, headquartered at 1875 Century Park East in Los Angeles, was organized in December last year according to state business records. Its president is Kristin Nobles, who lists various other positions on her LinkedIn.com profile. They include: chair of Noble Records; chair of Be Noble Energy, a firm that sells LED lighting systems, and chief creative officer of Be Noble Management Inc., which says it works “with socially conscious entrepreneurs to turn their ideas into companies able to make money and a difference.” Noble also describes herself as an artist and discusses her art career in a video posted on YouTube.
Frontiers, which is published twice monthly, was founded in 1981. It has struggled financially in recent years, with revenue declining from $3 million in 2011 to $2.7 million in 2012. According to records filed with the federal bankruptcy court, Frontiers has generated only $9,382 in profit on $1.19 million of revenue since it filed for bankruptcy protection in March. While the magazine boasted an impressive 30 percent profit margin in May, based largely on advertising sold in advance of the June Los Angeles Gay Pride events, in July it reported a loss of $30,864 and in August, the last month for which figures are available, a loss of $21,000. In its Tuesday filing with the bankruptcy court, Frontiers projected a profit of $1,996 for October, $22,528 for November and $470 for December.
The magazine, which distributes 30,000 free copies every two weeks across Southern California, is an important institution in West Hollywood, a city where 40 percent of the population identifies as gay. It distributes 5,000 copies in West Hollywood, making it the city’s largest print publication with somewhat of a local focus. It also has received city support, with the City of West Hollywood and Frontiers co-sponsoring the third annual Go Go Appreciation day in November. The city recently donated $29,000 to the Frontiers Awareness and Education Foundation, a non-profit founded by Stern that variously describes its mission as training young LGBT journalists and, in its request for city funding, increasing community awareness of social services by “assisting West Hollywood nonprofits to develop visibility and marketing assets, while increasing community capacity through employment development activities.”