Welcome to your new job: Turn around a struggling entertainment and media company where your predecessor was just indicted for an alleged stock manipulation scheme.
That's the task that awaits Timothy Durham, appointed last week as interim chief executive of National Lampoon Inc. He said he's up to it as soon as he learns more about the company.
"I've been somewhat aware of what's going on with the company," said Durham, who has served on the company's board since 2002. "I've talked to them about once a week or once every other week, but obviously I'm going to have a bit of a learning curve."
Durham on Dec. 17 took the place of Daniel Laikin, who had been National Lampoon's chief executive since 2002 but stepped down after he was arrested two days earlier on charges of conspiracy and fraud in what the Securities and Exchange Commission calls an attempt to artificially raise the value of the company's beleaguered stock.
Durham said he would rely heavily on Laikin, who was released on $50,000 bail, to introduce him to the inner workings of the West Hollywood-based company. A company press release said Laikin would remain on the board, but Durham said Laikin was considering resigning from the board as well.
A phone call to Laikin's office Thursday was not returned.
Laikin's arrest is seen as a significant threat to the future of the 24-employee company that sought to profit from the comedy brand associated with the popular magazine and movie franchise, but without much success. Last fiscal year the company reported a net loss of $1.7 million, and its stock price was languishing at around 70 cents before it was de-listed last Monday. Durham's appointment should buy National Lampoon some time to calculate its next move and perhaps retain some advertisers on its Web sites and marketing network that otherwise might have fled, said David Morrison, president of Twentysomething Inc., a Philadelphia consulting firm.
"This was without question damage control," Morrison said. "It's a quick, decisive response to a potentially devastating blow to the corporation, and that's imperative if National Lampoon is going to rebound from this black eye."
Before Laikin became the company's chief operating officer in 2002 and effectively took over its operations National Lampoon's primary business was licensing out its brand for commercial film fare such as "National Lampoon's Van Wilder."
Laikin was the driving force behind the company's efforts to reinvent itself as an Internet, film and publishing enterprise and Durham is one of Laikin's close friends and business partners. Both have roots in the Midwest and when Laikin was seeking a controlling interest in National Lampoon in the late 1990s, he brought Durham aboard. Together the two make up the company's largest shareholders, owning more than 50 percent of the common stock.
They are also among the company's largest private holders of its debt; according to SEC filings, National Lampoon currently owes Durham $756,945 and Laikin $412,070. The company had relied on Durham and Laikin's loans as its "principle source of funds for operations and working capital" according to filings.
The company also owes about $3.2 million to Red Rock Picture Holdings Inc., an entity in which Laikin and Durham own stock.
The concentration of the company's debt and stock with Laikin and Durham could raise concerns among outside shareholders about their decisions. But those familiar with Durham said he was the right person to lead National Lampoon through a troubled time.
"Tim is very performance-based, he has a very critical eye. I don't have anything bad to say about him," said someone familiar with the company who asked not to be named. "He's much more tough-nosed than Dan, which could be a good thing at this point."
Durham, 47, is a wealthy financier who made his millions turning around small and midsize firms in his home state of Indiana. He said his first priority would be to launch a top-to-bottom review of National Lampoon's business model.
Laikin had sought to expand National Lampoon by launching a book publishing arm, a record label and snapping up Web sites such as Allmodelzone.com to expand the company's online presence. He also started financing and distributing original films, such as "National Lampoon's Pucked" and "National Lampoon's Jake's Booty Call." The target audience has always been the college-age crowd.
Durham said National Lampoon might only require minor adjustments. But he did not rule out a wholesale overhaul, such as returning the company to a licensing business.
"I have to look at it from the perspective of a CEO. What strategies have we implemented and are they working? I think you could make an argument that they're not," he said.
Durham, who is chief executive of Obsidian Enterprises Inc., a private holding company in Indianapolis, also said he would not commit to investing more of his own money in National Lampoon until his review was complete. When asked why he had poured so much money into a company that had struggled to turn a profit, he said, "Persistence is one of my great virtues and it's also one of my great enemies."
As one of Los Angeles' newest chief executives, Durham said he planned to commute between a home he owns on Sunset Boulevard and Indiana. According to a CNBC profile, his Indiana residence is a 30,000 square foot, eight-bedroom home and he keeps a collection of almost 70 cars.
He said he isn't worried about the commute hurting his family life as he's divorced and his sons have grown up and moved out.
"Other than my dog, I'm sure no one would miss me," he said.
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