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Cancel This Subscription: Palm Coast Data Revenue Plummets Another 21% in 3Q

| March 16, 2011

Newsweek is one of Palm Coast Data\'s latest scores, but the company, like Newsweek (which was sold in August for $1), is losing money. (© FlaglerLive)

Newsweek is one of Palm Coast Data\'s latest scores, but the company, like Newsweek (which was sold in August for $1), is losing money. (© FlaglerLive)

Palm Coast Data’s deep troubles continue. Revenue at the Palm Coast-based magazine subscription fulfillment company fell another 21 percent in the third quarter of 2011, according to figures the company’s parent released last week (from $23.1 million in the same period last year to $18.3 million this year). Revenue for the first nine months of fiscal 2011 feel 22 percent (from $72.5 million last year to $56.8 million this year).

The numbers underscore the difficulties the company is facing as readers migrate to the internet, magazine circulation falls, and magazines close. The company, which has anywhere from 1,000 to 1,200 employees, depending on how they’re counted, is rumored to be for sale. It has been experiencing bursts of layoffs in the past two months. It will almost certainly not be making good on its 2008 promise to Palm Coast and Flagler county government to hire 700 new employees in exchange for cash incentives and a sweetheart deal on the 70,000 square-foot building that used to be Palm Coast’s city hall. That deal is compelling the city administration to lobby for a new, $10 million city hall at taxpayers’ expense (the city claims it has the cash).

Palm Coast Data’s parent, Princeton, N.J.-based Amrep Co., reported similarly plummeting revenue, from $28.9 million in the third quarter last year to $23.8 million in the third quarter of fiscal 2011, a 17.6 percent drop offset by a one-time $764,000 tax benefit and an additional one-time, pre-tax profit of $759,000 from the settlement of a property tax appeal. The combination of the two matters, in addition to completing the consolidation of a three-state subscription fulfillment operation into one, in Palm Coast, yielded the company a net income of $1.3 million for the third quarter of 2011, compared with a loss of $721,000 in the comparable quarter last year. But the reversal is more coincidental than indicative of a turn-around in the company’s fortunes.

Most of that fortune is now driven by the Palm Coast Data operation. Amrep’s other subsidiary, Amrep Southwest, a real estate company built around selling land in Rio Rancho, N.M., is at a virtual standstill, with revenue of just $257,000 in the third quarter, almost half the previous year’s and a fraction of Rio Rancho revenue last decade: In 2008, the company sold 406 acres for $27 million in Rio Rancho. The company has sold just 16.3 acres in the first nine months of fiscal 2011, for $1.57 million. The company, which owns more than 17,000 acres in Rio Rancho, is also facing a severe financial set-back that will impact Palm Coast Data if it cannot make good on a $22.5 million loan.

According to a company press release, “Amrep Southwest has a loan with a bank that matured on December 16, 2010. Amrep Southwest has initiated discussions with the bank regarding renewal of this arrangement, which had an outstanding principal balance of $22,464,000 at January 31, 2011, but this facility has not been renewed and there can be no assurance that it will be renewed. Amrep Southwest does not have sufficient funds to satisfy this obligation and, if it is unable to renew this loan facility, it would be forced to seek either replacement financing, which might not be available on satisfactory terms, or other sources of capital, such as by selling assets or the Company issuing equity, which may not be possible on acceptable terms.”

Palm Coast Data itself may have a $3 million liability headache soon: if it doesn’t produce the promised jobs in Palm Coast, it must return that money to the state of Florida, which provided the incentives. The company recently got an extension on that due date.

Writing yesterday (March 15) in Seeking Alpha, the stock market blog, analyst Alex Gray noted that while Amrep’s stock traded at well over $100 per share four years ago, “it has been nothing but a downward spiral since. In fact, the stock currently trades below its March 2009 lows, when everyone thought the world was coming to an end.” The stock was trading around $9 a share this week. “The company has made moves to improve the cost structure at its Kable Media subsidiary by consolidating its subscription fulfillment operations from three locations into a single existing location in Florida,” Gray writes, referring to Palm Coast’s nominal parent, itself a subsidiary of Amrep. “While this consolidation led to improved results, I anticipate revenues will continue to decline barring an acquisition or the addition of major new customers.”

To lift its profile, and after losing a major consortium of titles, Palm Coast Data made much of its acquisition of the Newsweek contract in January. Newsweek’s base-rate circulation–that is, the circulation the magazine promises advertisers–was 1.5 million in January, according to a Palm Coast Data press release. What the release didn’t say is that the base rate had been 1.9 million just six months earlier, and 3.1 million in January 2009. The Washington Post Co. sold Newsweek to 91-year-old billionaire Sidney Harman in August, for $1 because of its huge liabilities and doubtful future. Newsweek’s “brand and subscriber base fit especially well with our expertise and the service model we deliver,” Palm Coast Data said in January: the two companies’ financial profiles are, in fact, a good, if grim, fit.

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12 Responses for “Cancel This Subscription: Palm Coast Data Revenue Plummets Another 21% in 3Q”

  1. Tech says:

    “While this consolidation led to improved results, ……
    If by improved results you mean clients leaving in droves, then yes, results have improved.

  2. PCD Fan says:

    Can’t imagine why anyone would be surprised at PCD’s disasterous performance. This is certainly not the first time Taschler and Meneough drove a company directly to ruin, which begs the question, how would these two ever get hired in the first place? Simply defies understanding. They also know, and have known for some time that they’ll never reach the job number requirement for the state financial subsidy. The state will have very little recourse for recovering their $3 million, since true to their form, Taschler and Meneough will take Palm Coast Data into chapter 11 bankruptcy and ultimately to liquidation, just as they have done before.

  3. Former Kable Fulfillment services in boulder, CO says:

    Pretty good for listenned to liar people and moved business to Florida… PCD filed for bankruptcy before merge to Kable…. But still moved the business to palm coast.. I’m telling you people this business is not going to survive……! Hahahahahahhaha………..


  4. palmcoaster says:

    Probably the taxpayers of Palm Coast should get back our city hall! In their desperation to retain or attract large corporate interest to Flagler County our government officials fund these blunders with our hard earned tax dollars and we end up with the short en of the stick all the time. This is really how they fund fraud with public monies. Same thing with this Desalinization Coquina Plant. No wonder then they cut in education, jobs and social services while the above 1 percent fatten up their wallets.

  5. Justilied says:

    Too bad the service provider didn’t approach the customers differently. The customer looked at this change as a dictatorship and not a partnership. The service provider should have spent the cash, had a conference with applicable presentations to give their customers an opportunity to absorb and adjust. It is true, you cannot please everyone and yes, attirtion would have occured. However, it’s a bitter taste when it’s forced down the throat. Shame on the AMREP board for allowing this mismanagement to occur. PCD knows the cost to acquire new business – PCD knows they will never recover in new business what has been lost. PCD – let the tap dancing to the Board continue because they must like it.

  6. FromIllinois says:

    WAY TO GO PCD and AMREP – take a thriving business (Kable Fulfillment Services) and throw it into PCD’s trashbarrel. How many times does a company owned/run by Meneough & Taschler get to claim bankruptcy and still keep going on – ruining other companies? Like most of big business today it’s all about the big boys and how much $$$ they can stuff into their pockets. They could care less about the EMPLOYEES, the PRODUCTION PEOPLE who make all those $$$ for them or the towns they just ruined.

  7. justilied says:

    I wonder if CDS, SFG, ESP and others have sent “Thank You For Your Business” notes to Meneough, Karabots, AMREP Board and other company officers that sat in board meetings and never uttered a word when they knew Meneough wasn’t presenting a truthful status.

  8. LivinginReality says:

    How many people out there actually send those little subscription cards or get subscription bills either. I don’t get any magazine subscriptions in the mail any more, all of my subscriptions are to online news services or news apps on my iphone or ipad. Magazines are going the way of the dinosaur. by the time you get a magazine now the info in it is out dated. If a company can’t evolve to meet customer needs then it will die.

  9. and no wonder why the company is falling apart, they treat their employess like crap, newest garbage is the stopped smoking in the company property and now tell employess they can even walk OFF the propertly to smoke. Taschler watches poeple from him office to make sure they are NOT smoking enen on thier own time. And they posted signs on the ends of commerce blvd stating its a tobacco free CAMPUS and not tobacco products beyond this point, DID they get approval to post these signs on city property?? I doubt it, And the are laying off people but hired secrutity guards to watch for smokers. Send all those poeple running PCD back to where they came from, PCD has not been the same since it was sold the first time to out of town companies. COME back Mike, Bob and Vince, they were the best and cared about the clients not making their pockets fuller

  10. Been There Done That says:

    How’s that PCD 2.0 working out for you Taschler and Lee? You get what you deserve and the worst is yet to come. Shame on you both.

  11. Past PCD Employee says:

    As a past PCD employee in sales, I am curious as to what PCD 2.0 is. Could you explain?

  12. Past PCD Employee says:

    Remember “FromIllinois says:
    March 17, 2011 at 3:27 pm ” your owner (Amrep, Co) after purchasing PCD approved of the concolidation to PCD and not Kabel Fulfillment.

    I wonder why?

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