CK Media, parent company of Creating Keepsakes and PaperCrafts magazines, can no longer deny (after months of rumors) that it is in financial trouble after word has come out publicly that the company has hired turnaround and bankruptcy consultants CRG Partners to assist it.
A representative for CRG Partners confirmed to Scrapbook Update today that CK Media is a client of CRG but declined further comment.
A message requesting comment left with CK Media’s parent company, Sandler Capital Management, was not returned.
CK Media had the following to say when asked for comment:
Economic times are tough. Like so many companies, CK Media is feeling the hardships that come from being in a recession. In order to continue doing business during such tumultuous times, a time when so many magazines are closing their doors, the company is restructuring its finances to settle outstanding debt and keep its doors open. Our lenders have contracted with an outside firm called CRG Partners to resolve this debt.
Supporting the crafting industry has always been a top priority for our company, and this step, however difficult it may be, is a necessary one we must take in order to continue offering that support. Please know that this is a business decision and in no way changes or reflects how much we value and appreciate our business partners and readers. After all, it’s because of their contributions and the support they give that we have products to provide. This restructuring is the best opportunity our company has to move forward and continue producing our various crafting titles.
This statement is very similar in wording to an email that was reportedly sent to PaperCrafts creditors whose payments are past due, instructing them to contact CRG Partners regarding their payments.
The most important part of this statement is the veiled admission that CK’s lenders are taking a direct hand in the company’s financial management by bringing in CRG. This is eerily reminiscent of the recent situation of Creative Memories, which was basically forced into bankruptcy court by its lenders after missing loan payments.
CRG told an unnamed Scrapbook Update source who is owed money from CK Media that the company has $70 million in debt and only $20 million in assets. The creditor was offered 25 cents on the dollar to settle their debt, and was told that 80% of the company’s major creditors would have to agree to similar settlements within 30 days to satisfy CK Media’s lenders.
Based on the timing of CRG’s contact with that creditor, the clock will be running out very soon on CK Media’s 30 day deadline from their lenders. Given the challenge of getting concessions from that large a percentage of the company’s creditors, it seems a distinct possibility that the company will be forced into bankruptcy court by their lenders in the very near future.
So how did CK Media get to the point of its lenders calling in a turnaround specialist for it that is threatening bankruptcy to its creditors?
CK Media was created by Sandler Capital Management when it bought the crafts magazines group from struggling Primedia in June 2006.
In the past 18 months, CK Media has shut down 4 magazines. First to go, after its Sept/Oct 2007 issue, was the Memorytrends trade publication for the scrapbook industry. Then in July 2008, the company’s other trade publication, Craftrends, shut down its print operation in favor of a web publication. In November 2008, the death of the surviving Craftrends web operation occurred, along with the demise of Digital Scrapbooking Magazine’s print operations. The slashing continued with the announcement last month of the shutdown of Simple Scrapbooks magazine.
A major contributor to the company’s problems would appear to be the same advertising slump that has taken down many other non-scrapbooking magazines in the past 12 months. A survey of Creating Keepsakes issues during the past 12 months shows a drastic decrease in the amount of ad content in the issues. Between March and October 2008, the issues that I surveyed contained between 33% and 38% of their pages devoted to paid advertising space (excluding CK’s own ads). Examining the March 2009 issue, the issue is 8 pages shorter than the standard length of the 2008 issues, and the paid ad space still only equals 22% of the issue’s pages.
One obvious shortfall in the ad space occurs in the “Store Directory” section. In June 2008, this section was 14 pages long and contained 248 store listings. In the March 2009 issue, the store directory section is only 6 pages long and contains only 137 stores. The missing 111 stores add up to over $16,000 in lost revenue if calculated at the $150 “CHA Special” rate for the directory listings being offered on CK Media’s advertising handouts in Anaheim. Some of those stores also probably advertised on the CK’s website, which cost an additional $55 at the CHA special rate in Anaheim last month, resulting in even more lost revenue. Many of these stores have probably closed due to the economy.
And that is just the “Store Directory” ads. The March 2009 issue of CK had 21.5 pages of paid display advertising in it. In March 2008 that number was 31 pages. The June 2008 and October 2008 issues had even more pages of advertising than the March 2008 issue had. The October issue had seventeen more pages of paid display advertising than the current March 2009 issue.
These numbers just reflect the state of CK Media’s flagship publication, Creating Keepsakes, but it is hard to imagine that the company’s other publications (PaperCrafts and an array of quilting and sewing titles) have not been affected as well by the advertising downturn that has been hammering the entire publishing industry.
There does seem to be one bit of good news for CK Media – their events operations seem fairly healthy. The same total number of CK Conventions/CKU/Creative Photography Retreat events are scheduled for 2009 as for 2008. How successful those events will be for the company remains to be seen in most cases, but CK apparently felt secure enough to not cut back on events for this year at a time when the company is slashing in other areas.
Will it be enough? We may not have to wait very long to find out.
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I’m am very sorry to hear this. Thank you, Nancy, for keeping us informed.
UGH! And I just renewed CK magazine too!
Wow, Nancy, great reporting!!
Another big hit that these magazines have to take are the manufacturers that are going under and passing their unpaid debts in advertising dollars on. How are they supposed to pay the people they owe money to if they are not ever paid? Consider how many of these cicumstances we have seen in the last year…
This is a vicious cycle, one that a decrease in consumer spending is sure to accelerate if not approached with a patient hand by lenders and borrowers alike. Consumption is aided by publications, people turn to the media to understand and learn about what is new, interesting and exotic, thus devloping their preferences for spending.
I hope that the lenders who are dealing with this business would exercise compassion for the families that large changes would inflict, and understand that by keeping a business going during the hardest of times reaps many benefits later.
Let me just start by saying that I **love** CK magazine (my favorite of the 4 I get, including Simple, which is on its last issue), absolutely adore many of its designers (e.g., Ali Edwards, Jessica Sprague, Becky Higgins), and enjoy CK Media’s book publications.
But I am surprised you didn’t mention CK Media’s customer service fiasco. Especially with its Kits of the Month, and even more specifically the recent Project 365 mess (just read comments on http://kitofthemonth.blogspot.com/ and also on Becky HIggins’ blog in the month of January and you will get a glimpse of how horrible it really is). They had posted that customer service was under new management but it has not improved and apparently its third-party contractor answering the phones gets no info from CK about a huge amount of recent backorders and has left numerous customers in total limbo. Numerous people have had messes with KOTM before and then with P365 it just got worse.
And if you check their status on the Better Business Bureau website, it’s very bad. They are not BBB members but are still rated and not in a good light. =(
Yet I don’t want CK Media to expire!! In the scrapbooking industry, it’s products/courses/designers/etc. are what I consider among the very best!!!! But in this environment of financial turmoil, I think customer service is KEY and more vital than it ever has been before, and sadly, amidst CK’s own financial crisis, I don’t think they get that.
This is an interesting read, too:
http://www.kimwerker.com/2009/02/12/worth/
(AND thanks for all of this information, Nancy, I had heard ramblings but this makes it more clear.)
Honestly you talk about ad revenue. . .and I can say for a fact that the company does not understand how to monetize online or email traffic that they have. I’d even give my time for free to the company to overhaul their entire web advertising just so I can stop seeing the crappy Commission Junction ad(and other poor performing CPA offers) they are running which clutter what was once a good email newsletter. Take that for what it is but I’ve managed campaigns for thousands of the largest advertisers online.
Thanks for the great, well-written article, Nancy. The writing has been on the wall but it’s nice to hear we aren’t imagining things, right? Yet super sad to hear the probable fate of one of our favorite, most long-standing resources
~Erika
Michelle is right on the mark. There IS a market, they’re just not hitting the target. Recent shuffling of people and positions may see changes for the better though. The right ideas are floating around there but getting it done right isn’t easy.
Very interesting information Nancy. Like someone else pointed out I’m surprised there was no mention of the fiasco over the Kit of the Month which is still ongoing and many are frustrated beyond belief while they wait almost two months later for kits that they ordered. That’s not even to mention those that didn’t get a chance to order because customer service wasn’t on the ball that day and the website was having difficulty. They still aren’t even answering questions about it either. It’s all beginning to remind me of the fiasco that lead to the end of Scrap In A Snap.
Beware those of you submitting projects for publication. CK Media is alledgedly over twelve months behind in payments to those providing projects for submissions. And, in the event of bankrupcty these debts would be unsecured and would likely result in litte to no payment to those submiting.
That’s right txscrapaddict. Be very careful. CK Media owes us $1000 since Sept 08. (that was supposed to be my Nov mortgage payment). Same story…they are trying to pay. Looks like they will screw us little contributors so they can pay the big guys that will be at the top of the creditor list. Maybe the CK investors just needed a tax write off…buy a failing business with no intention of making it successful.
I was a teacher at many CK conventions in 07 and 08. I am owed a large amount of money for classes I taught at Valley Forge 2008, Charlotte 2008 and Hartford 2008. This is money they collected from my students well before the event…not lost advertising dollars. I am beyond disgusted at their behavior. It is too bad for those owed money but I do not feel sorry for a company that is just run badly and then blames the economy for their troubles.
you mentioned in your article that the convention sector is the one area that seems like it is doing well still. That will not be for long, like Cara said above – companies are not being reimbursed for the class materials from 2008! How long are companies going to keep teaching and vending for them?
I just returned from their office in Bluffdale having gone to hand in a new invoice in person after getting a bit of a runaround with my standard email submission. The accounting head told me I would be getting a letter explaining everything. When I pressed for details, she refused to explain. So I came home and started some internet research. Looks like I’m another “little person” getting screwed out of hard earned money (they owe me over $1000). Like some of the other commentators, this money has been owed for some time. And I need it to pay our mortgage. My husband finished grad school last May (PhD, Physics) and is still looking for a job. The work I’ve done for them (I’m an editor) does not support my hobbies, it supports my family. I, too, am disgusted by this behavior.
I supplied them with 400 camera straps this summer for their retreats. I am a stay at home mom of two and I seriously doubt I will ever see my money
Very hard for our family.
I have had THE most shocking service on my subscription in the last 6 months & I live in Africa & am used to bad service, lol! I am STILL waiting for my December & January issues but have just received my February one. Their subscriptions department is clueless & practically illiterate. I’m not surprised, with the morons they employ, that they are in trouble. Really, I have sent DOZENS of e mails & get nonsensical replies & empty promises. The mag content is the best in the world I reckon but as for the management…hard to correlate the two.
I LOVE Paper Crafts and I really hope they can pull through this. I know it has to be such a difficult time for them.
I think that their problems were caused way before the economy took a hit when they lost site of what made them great. CK Magazine really went downhill for over a year & people just weren’t subscribing/buying & it took them a while to bring it back (Jan issue this year). Customer service problems with ordering kits & books was yet another problem that drove customers away. Also having too many magazines was not a smart move on their part. When you lose customers you will lose advertisers & that is what happened.
I hope they can reorganize to a company that is viable in todays marketplace because they really have a lot of great talent (Ali, Jennifer, Stacy, etc.) and I’m loving the CK magazine this year & looking forward to how they will merge in the SS magazine in the future issues
So sorry for all of you not being paid by CK. They have been going down the wrong path with their business practices for several years now. I quit submitting to them two years ago when I wasn’t paid for work I provided to them even after having an attorney send them a letter of demand. Just kept getting a run around. Washed my hands of them at that time.
There issues are NOT just economy driven, they are driven by BAD business practices over the years and that is what is driving them under.
I am one of the people who dont feel ‘sorry’ for them! Their customer service via on-line, I NEVER EVER got a responce, and by phone was ALWAYS lacking, I WAS a member of their message board for many years and when they went to BETA it didnt seem to matter to anyone(everyone I wrote to) that I couldnt log on to the boards any more so I stopped shopping on QVC for Lisa Bearnsons items! When my CK Subscription runs out, I dont intend to renew! I have been unhappy with them for years now! janet Kubick
Way to go George Bush for ruining the economy! This is the third magazine that I subscribe to that is going under.
I just sent a bunch of cards and projects that they requested for pub, at this point I don’t think I will submit anymore, I am still waiting for payments since last year! how rude from this people!
Do you think these magazines can be saved under new management, or have they alienated too many people to survive?
I came upon this site whilst searching for someone at CK Media to contact about the bad service I am experiencing getting an order I placed for 2 magazines in November 2008 sorted out with the new Customer Service staff. Now I understand better why this is the case! I have several subscriptions with them as well and have not had problems till the end of last year. I live in South Africa and they told me today that it will cost me $80 to ship one magazine that costs $5,99! The big pity is that I really love their magazines. I am so sorry for all the ladies that are owed money.