The Advocate, long considered the national publication of record when it comes to coverage of gay and lesbian issues, is facing more troubles than others in the struggling magazine industry.
The 43-year-old magazine, its website and other properties owned by Westwood-based Here Media Inc. have been plagued by money troubles leading to loud complaints from writers saying they haven’t been paid. The magazine’s top editor left recently. And hanging over the head of Here’s chairman is a $90 million lawsuit filed by Merrill Lynch Mortgage Capital Inc. and Bank of America for alleged fraud and breach of contract.
“I don’t think there’s any question that Here Media is a precarious place to be.” observed Bruce Steele, a former editor of the Advocate who is now features editor at the Asheville Citizen-Times in North Carolina. Nevertheless, Steele remains supportive of the magazine and is complimentary about its website.
Stephen Macias, Here Media’s executive vice president and general manager of publishing, acknowledged financial troubles and the tardiness in paying freelancers.
“When we acquired these properties, they were millions of dollars in debt with an antiquated business model,” said Macias. “That combination and the changing media landscape in addition to the collapse of the economy was a huge challenge for the company and an even bigger challenge with freelancers and contributors.”
Macias said he expects the company will be caught up by the end of the year. The Advocate is now using fewer freelancers.
Here Media, then called Regent Entertainment Media, paid $6.5 million in 2008 to become the owner of the Advocate, Out magazine, Gay.com, Alyson Books, HIV-plus magazine, Out Traveler magazine and SheWired.com.
The company has 120 employees, many of whom work in its headquarters on the penthouse floor of an 18-story office building on Wilshire Boulevard near UCLA. There are also offices in New York and a Washington, D.C.-based reporter.
Here Media filed with the Securities and Exchange Commission last June to delist its stock, then valued at less than one cent per share. In its last quarterly statement, for the three months ended March 31 of last year, the company reported a loss of $1.4 million compared with a loss of $1.6 million in the same quarter of 2009. Revenue was $6.8 million compared with $6.4 a million a year earlier.
In an e-mail to the Business Journal, the company said it broke even in fiscal year 2010 with revenue of $25 million.
The company has taken considerable heat over the freelance pay issue. The website Gawker.com ran an article last year calling Here Media “Colossal Deadbeats.” Michael Musto, a columnist for New York weekly Village Voice, complained in a column that his unpublished book was being held “hostage” by the company, which, he quipped, “was breaking almost as many contracts as Lindsay Lohan.”
Here Media filed a lawsuit Feb. 15 – since withdrawn – against gay-oriented website Queerty, its founder David Hauslaib and writer Sean Carnage, alleging “an offensive and outrageous scheme” to create the appearance of scandal with its extensive reports on Here Media’s problems. The suit alleged that some employees felt they had to resign as a result of Queerty’s reports, although it did not specifically name the former editor and Washington correspondent, who also left recently.
Here Media’s lawyers said the Queerty suit was dropped as part of a larger legal strategy related to defending against the Merrill Lynch lawsuit, which was filed at the end of January. That suit seeks $90 million in damages, and names Here Media Chairman Stephen P. Jarchow lead defendant.
The suit does not name Here Media, but does list Jarchow’s movie and distribution companies, including Regent Releasing LLC, Regent Studios LLC and Here Networks LLC.
The Merrill Lynch-Bank of America suit alleges that Jarchow’s companies took out loans from the banks for film projects that did not exist. The banks are seeking repayment of $50 million in loans and $40 million in damages.
Attorneys for Regent said the suit has no merit and will be “defended vigorously.”
Jarchow, who produced 1998’s “Gods and Monsters” and other films with Here Media Chief Executive Paul Colichman, said the lawsuit surprised him and insisted that it has no bearing on the magazines and other media properties.
Macias remains upbeat and said Advocate.com now has an audience of nearly 1 million readers per month, something that is crucial in maintaining and growing the oldest lesbian, gay, bisexual and transgender-interest title.
“The Advocate has been around for 43 years and has weathered all kinds of different crisis and is still respected as the LGBT brand of record,” he said. “I’m very confident in the tenacity and the strength of our staff, of our history and the quality of our work.”
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