February 1, 2004
Vanguarde Media Files For Bankruptcy
The clock ran out for high-profile Vanguarde Media Inc., publisher of Savoy, Heart & Soul, and Honey. Principals were unable to make a last-ditch effort to raise capital for the cash-starved company and successfully pursue a viable publishing model.
A total of seven black magazines have been consumed by the birth and death of Vanguarde. Honey, repositioned as a fashion and entertainment magazine for urban women, was the company’s first acquisition. Vanguarde later bought and subsequently closed a music trade magazine called Impact! Following the $3 billion sale of BET to Viacom, Vanguarde launched Savoy, a general interest lifestyle magazine (Savoy Professional, its spin-off, arose in January 2003). Savoy supplanted incumbents Emerge and BET Weekend, which Vanguarde shut down.
Savoy, Heart & Soul, and Honey circulated their December-January issues as their final output, ending the employment of approximately 70 staff members two days before the Thanksgiving holiday. Vanguarde’s decision to cease publication of the magazines and liquidate the assets of the company came after majority shareholder Provender Capital Group, a New York-based private equity firm, voted to file Chapter 11 bankruptcy. Vanguarde’s other primary financial partner was BET founder Robert L. Johnson. The company’s plan for growth required additional financing in 2003. Vanguarde simply ran out of money to meet its obligations.
According to a statement from Provender: “The environment for raising capital for a young company remained difficult this year and the sources of capital limited. As such, it was the fiduciary duty of the company’s board to support a decision to file for bankruptcy protection.” The statement continued, “Vanguarde was building its business in a magazine industry that has struggled with dramatically lower advertising revenue due to the downturn in the economy.”
Vanguarde was considered the most highly capitalized black company in U.S. history, gaining roughly $60 million over four years. It has been widely reported that Provender invested in excess of $40 million in multiple rounds of financing, and that Robert Johnson kicked in $19 million after the sale of his publications.
Vanguarde Chairman and CEO Keith T. Clinkscales, who left his post as president, CEO, and co-owner of Vibe to launch the company in 1999, concedes he was not the majority shareholder and would have opted for other alternatives rather than file bankruptcy. However, he gave his investors credit for backing the publications for as long as they did.
Clinkscales says that the company had 70% of the funds it needed. “As we got closer to our deadline, we just couldn’t close the gap.” Even though the business continued to grow, “it could not get to a point of profitability as quickly as it needed to attract additional capital,” he adds.
According to an industry insider, Vanguarde needed another $5 million to $7 million to reach profitability. In 2002, the company posted a loss of between $3 million and $6 million on revenues slightly under $25 million, reports Advertising Age. Publishers Information Bureau data shows that from January through October of 2003, advertising pages for Savoy, Heart & Soul, and Honey collectively