Source Interlink, the distribution company and publisher of magazines such as Motor Trend, Automobile and Hot Rod has filed for bankruptcy.
The publishing side of Source is focused almost entirely on the automotive sector with 70 magazines dedicated to covering the automotive and motorcycle industries. With the suffering auto industry (March sales down 37 percent from the same month a year ago) it’s no surprise that Source is hurting. Magazine ad sales were down 20 percent in the first quarter of 2009 compared to a year before.
Source can’t, however, entirely blame the economy. The company hasn’t posted a profit since the second quarter of 2007. Things have been getting progressively worse for Source as well, recently laying off 115 employees and cutting several of its magazines including Sport Compact Car and Modified Luxury & Exotics.
Recently the company also entered into legal action, suing several of its publishing house clients after a strong-arm tactic to raise distribution costs failed. Instead of folding the publishers rejected Source’s offer and stopped shipping magazines (including titles like People and Sports Illustrated) to the distributor.
In retaliation, Source Interlink filed an antitrust suit against the publishers (and several competing distributors) claiming the group tried to force Source out of business. The suit has since been settled, however, the move by Source to sue its clients was seen as a desperate move by a desperate company.