The Source Continues its Downward Spiral

If you've read ProHipHop for long you know I love writing about The Source. In fact, it's the one publication that has its own category at ProHipHop, not because I respect them or think they're especially important but because they do the craziest things and, as a friend of mine pointed out, they're driving that car till the wheels fall off.

Here are the highlights in case you've missed the recent craziness:
As the New York Post recently reported, a lawsuit filed by Textron Financial Corporation, a principal lender for The Source, states that the magazine "has failed to file state and federal income tax for two years and has skipped mailing issues of its magazine as its financial crisis has mounted . . . top executives have written nearly $3 million in bad checks over the past nine months."

Textron, who loaned The Source $18 million, is expected to return to "New York State Supreme Court Wednesday in a bid to force the company into receivership — a first step toward a takeover and eventual disposal or sale of assets."

Other goodies from the article:
The Source has "lost more than $11 million over the past four years . . . the landlord of 28 W. 23rd St. has started eviction proceedings and has given the magazine until Monday to clear the premises because of unpaid rent totaling $156,000 . . . The Source's freewheeling, self-styled moguls appear to routinely write checks to themselves for parties, jewelry, exotic trips and other things — with little or no record-keeping . . . in the first half of 2005, auditors unearthed nearly $1 million in unauthorized expenditures. The figure comprised $422,000 in payments to company insiders, $357,000 to travel agents, and $80,000 for 'promotional jewelry'."

Revenue and circulation are plummeting and, technically speaking, the situation is totally FUBAR.

The whole article is well worth reading and registration is free, so check it out.

For their part, The Source has sued BET for allegedly not airing The Source Awards as agreed. They're also pursuing some kind of legal action against Hot 97 and Funkmaster Flex due to on-air comments he made regarding their claims that he's taken payola. Furthermore, they claim to be pursuing a class action suit along with indie labels against alleged monopolistic practices of major labels.

As Dave Mays stated, "We are about to enter into a period of serious legal activity."

No doubt. Which reminds me that I haven't heard anything lately about murder charges against Source execs or the gender discrimination lawsuit brought by a former editor and a former v.p. but I have heard that their latest editor-in-chief Dasun Allah got busted for vandalizing a Jehovah's Witness assembly hall.

I should probably link to something about The Source's recent G-Unot cover but I'm running out of time here. Suffice it to say that the cover looks like some kid cut stuff out of other magazines and taped it together. I guess it's tough to get competent help when people finally realize that you aren't going to pay them.

Yes, The Source really is the gift that keeps on giving till there's nothing left to give.

Update: It's currently rumored that a group composed of Jay-Z, Lyor Cohen & Steve Stoute and, separately, XXL publisher Harris Publications may be looking at buying The Source.

Comments

[Omar]

Dave Mays is running the company into the ground. If The Source was a public company, I'd be selling short, BIG TIME.

I can't believe how stubborn their management team is.

[Sterfish]

The part in the article about how they "skipped mailing issues" definitely hit home to me. I was a subscriber to The Source for years and only a couple of months after paying them nearly $50 for two years worth of magazines, they stopped coming. I contacted them and was able to get two back issues, but I have never received an issue since. After that incident, I was through with the magazine.

I think that the people who used to distribute The Source have quietly tried to make up for what happened by sending me Marc Ecko's magazine Complex. That magazine suddenly appeared on my doorstep and I had never sent any subscription info (or even so much as heard of the magazine). Even though I have ignored subscription bills, I still mysteriously keep getting magazines.