IDW Media Holdings CEO Kerry McCluggage is leaving the company and will be replaced by its chairman and largest stockholder Howard Jonas, as the company’s annual report shows a $36 million loss. McCluggage had been in his post since last July, when he replaced founder Ted Adams (see “TV Exec Replaces Adams as IDW CEO”).
Jonas thanked McCluggage for his brief stint as CEO. “We are grateful to Kerry for leading and growing our team during a challenging period,” he said.
He wasn’t kidding about the challenging period. The company has been battling losses as it invests in TV programming and faces tough conditions for its publishing company (see “IDW Publishing Division Loses $801,000 in Most Recent Quarter”). It borrowed $28 million from Jonas last year (as of last December, see “IDW Chairman Loaned Company $28 Million”).
The reasons for the big loan amount became clearer when the company released its delayed final annual report for the fiscal year ended October 31 today, which showed a loss of $36 million for the year, including a loss of $28.8 million in its fiscal Q4 alone. Losses were concentrated in the Entertainment segment, which lost $21.8 million from operations for the year.
IDW’s publishing operations lost $823,000 in its fiscal Q4, roughly the same as they lost in Q3, and $3.4 million for the fiscal year, $343,000 more than they lost in 2017.
Publishing sales declined to $21.9 million in 2018 from $24.5 million in 2017 and $27.9 million in 2016 (see “IDW Swings to Loss for 2017”), an 11% one-year decline and 22% two-year drop. Q4 sales were down 14%, so the sales declines were not abating through the year.The biggest factor cited for the sales decline continued to be “industry cyclical downward pressure driven by market leaders.”
CTM, the brochure distribution and advertising division, lost $490,000 for the year, flipping from a profit a year ago.
In addition to the operating losses, the company took a $9.9 million provision for income taxes, which brought the total loss to that eye-popping $36 million number.
Things weren’t calm on other fronts either. In the publishing division, there was turnover at the top as former CCO Chris Ryall, who’d left IDW last April, returned as President in December and long-time President Greg Goldstein left the company (see “Chris Ryall Returns to IDW”).
And a prominent board member is facing legal trouble, as Vice Chairman and Director Stephen Brown, who’s been on the board since May 2017, was charged with fraud in December in a complaint filed by the Attorney General of New York. The charges were based on his alleged activities as CFO of Cardis Enterprises (not related to IDW), which according to the complaint solicited tens of millions of dollars in investments through fraudulent means.
Where does all of this leave the people and companies doing business with IDW Publishing, the part of the company with which our readers are most familiar? There are no signs of any impact of this turmoil on IDW Publishing’s operations, which to date are continuing as they have in the past. And with a significant amount of programming moving toward release, including October Faction, Wynonna Earp Seasons 4 and 5, V-Wars, and Locke & Key, perhaps the TV operations can be moved toward profitability this year.