Just a Bit More on the Metro Media Meltdown
By Brian Lambert
(UPDATED: CUT TO THE BOTTOM)
Turnabout, I guess, is fair play. After years of torturing editors with pathetic excuses and flagrant abuse of deadlines, I've been socked in for the last few days in my editor role trying to squeeze a couple very late ten-pound sausages into five-pound skins. (Translation: Late stories, much too long.) It ain't pretty. The only upside is that I have been able to unleash a gleeful torrent of Paulie Walnuts-style profanity at two high-profile, venerable lions of the local pundit scene.
Meanwhile . . . despite a high pitch of anxious, wishful thinking on the part of the cable-news crowd, Barack Obama has managed to sink three pointers with the troops in Iraq and avoid anything resembling a "gaffe-gate" . . . unlike his opponent, Mr. McCain, back here in the States who seems constantly confused about where we're fighting and why.
Also, the courts smacked down CBS's $550,000 fine over Janet Jackson's "wardrobe malfunction," which was always bogus and another vivid example of right wing interest groups gaming the FCC complaint system. Without a coordinated flood of complaints from the Parents Television Council and Reed Irvine's Accuracy in Media, the nine-sixteenths of a second America's children ogled Ms. Jackson's nipple would never have been so titillating.
But before moving on to any other topic, I remain fascinated with the meltdown of the local Metropolitan Media Group (MMG). Believe me, there is one sordid, juicy business-character study waiting to be written here.
At a quarter to seven tonight, Chris Serres of the Star Tribune wrote that he finally got a call back from Kenan Aksoz, chairman and CEO of MMG, the Bloomington company that published Minnesota Business, Sun Country's in-flight magazine, and all those astonishingly vapid community lifestyle magazines.
Says Serres:
"Earlier, I noted that Kenan Aksoz had not bothered to return my calls. He did, in fact, call me this afternoon and suggested that the Star Tribune do a fuller account of what happened at Metropolitan Media Group. For now, however, he does not want to discuss it." (Let me get this straight. Tell a "fuller" story but don't count on anything from me, the central character?)
If you haven't read through the comments to Serres's Tuesday business story, you're missing some quality invective.
Here's a sample:
Double check your law books
It's too easy just to look at the legal aspects of this case in terms of Petters' acquisition of MMG, and ignore the Minnesota state statutes that protect the rights of workers, regardless of change of ownership or responsibility. MN Statute 181.13 states that a company cannot refuse to pay workers for time worked, in fact said company can be liable for 1 days unpaid wages for each day the company refuses to pay. Petters liability may not be 100% secure in this case, but rest assured, the workers, including those STILL employed at the NEW company (curiously titled CMG...who by the way, also were refused their last paycheck by the new entity) are legally owed their pay. Whether Askoz or Petters or whomever pays the bill isn't the point. The point is, these workers are due their wages, and if you were in their shoes you would feel the exact same way. Empathy, try it on for size, see how it feels, then get back to us. Oh, and the MN Dept. of Labor is investigating this case. They have told workers that what Petters/MMG has done is illegal. So, instead of bickering about assets and liabilities, and making inane comments about salary miscalculations or the legal right of a worker to accrued vacation, let's look at the basic facts, see the truths and find it in our minds to understand the plight of people making an honest wage. Both Petters and Askoz should feel ashamed for leaving their workers, current or former, with the sense they no longer care. What's a couple extra $100,000 when you're making sales figures like Petters?
posted by Topherk13 on Jul. 22, 08 at 3:01 PM
Not to mention the nugget where Tom Petters, who now owns what little is left of MMG, tells Serres he had loaned Aksoz $5.5 million dollars over some undisclosed period.
The picture of the MMG is of a house of cards with the king of diamonds—Aksoz—living the full CEO/baron lifestyle: home next to Paul Douglas in gated Bearpath, hand-tailored suits, new BMWs, regular lunch at Kincaid's (where one story has him insisting on the white napkins instead of the black). Meanwhile, his empire of lifestyle magazines was being edited and largely written by kids—all young women, average age "twenty-three to twenty-five," according to one who was there—being paid less than $40,000 a year.
This is one very shabby scene.
The gist of the conversation in the Strib comments section is over which gentleman, Aksoz or Petters, has a moral obligation to compensate the sixty or so employees for the eighteen days they worked and are being told they will not be paid. As an "asset sale" (something frequently mentioned in the context of what's next for the Strib itself), neither Aksoz or Petters may have any strict legal obligation to pay a total sum of what one former editor calculates to be more than $140,000 but not more than $200,000.
$200k? "Big whoop," you say.
The presumption is that Aksoz, based on nothing more than the appearances of his lifestyle, has personal assets sufficient to make good on this debt to his former employees. Given Petters's various holdings, it would be startling news indeed if he declared he has no way of coming up with $200,000, which you'd think he would do if only to stop what may swell into a period of very bad publicity. (Publicity that, as one aggrieved ex-MMG editor pointed out, could well impact the foundation Petters operates for his son who was murdered in Italy several years ago). Also, if, as is rumored, Aksoz has outstanding bills with printers and other vendors and Petters was an investor in MMG, no matter how small, it is hard to imagine him blowing off those debts and maintaining credibility with that crowd in a town as small as this.
Meanwhile, I'm told employees who were summarily dismissed from MMG in the guillotining last Friday are coalescing around possible legal and publicity action. Letters to the attorney general's office and other state agencies may just fall into the slow grinding wheels of the bureaucracy and, given the amounts owed each employee, a trip through conciliation court with a toothless judgment against whomever may be all that ever goes down. But, this particular aggrieved crowd has some grasp of the court of public opinion and seems to know how in a bad economy rife with stories of obscene CEO compensation simultaneous with mass layoffs, this local, tangible mess is a squalid step beyond the usual cruel attrition.
The stories of executive mumble mouthing and preening and cheapskate shortcutting at MMG are, as you might imagine, both vicious and hilarious, in a gallows humor sort of way. The point is that the longer either Aksoz or Petters takes making right with the people who created the product they allegedly sold, the longer the spirited vindictiveness will take to go away.
I mean, I'm certain some reporter hip to Internet reporting is already doing a check on MMG's pattern of payments to vendors.
Others will be trying to verify the story about Aksoz standing up at a June 11, 2008, MMG staff meeting and assuring the troops that, "Profits are better than ever."
UPDATE: Wednesday brought news that Petters had announced "retention bonuses" for the three dozen or so former Metropolitan Media employees he brought over to his operation. These "bonuses" were, I'm told by both those getting the bonuses and those still out in the cold, equivalent to the eighteen days of unpaid salary voided by the MMG meltdown. This does nothing for the ten or eleven still unemployed. As of Thursday, they are still holding the bag for the eighteen days they worked for Aksoz and are not being paid.
Also . . . I got a note from an editor of one of the Metropolitan Media lifestyle magazines I described rather uncharitably. She was upset with me for calling her and her colleagues, "kids," and implying that they were all doing sub-standard work. Well, I call everyone who is the same age as my kids, "kids," and I stand by my remarks on the general content of those magazines. But I do not want to leave the impression that that was the "kids'" fault. I know for a fact how little they were paid, how much of the entire magazine they were expected to write themselves (she said each magazine had a $250 freelance budget!), and how absurd the editorial direction was they were operating under. For most, it was their first experience in publishing. I'd like to think it is all uphill for them from Metropolitan Media.
© 2008 MSP Communications, Inc. All rights reserved
Kenan sticks his foot in his mouth again, but this time, it's without even speaking! He wants to see a more thorough story on what happened at his company, but he doesn't want to discuss it right now. He often demonstrated an utter lack of understand of the press/media, which he blamed for the "exaggerated" downturn in the economy. Well Kenan, there are a lot of well-spoken, former employees who are happy to tell the true story, and your character is the villain. How about if Aksoz responds to Tom Petters' statement that he loaned Kenan $5.5 million that he never paid back? Now we begin to see how poorly Aksoz and COO Tom Beauchamp were running the company. How irresponsible of them to keep hiring new employees and adding new magazines when they were in so much debt.
I wonder if Kenan’s new luxury car is from trade for advertising? And all his lunches at Kincaids where the staff knew him by name? Countless parties seemed like diversion tactics to try to fool employees into thinking everything was rosy. Brian, you wouldn't believe all the waste. Stop work! It's time for the monthly birthday cupcakes. Everyone, we're all cutting out at noon to go on a Lake Minnetonka boat cruise and get drunk because Kenan wants to party, all paid for with trade. We should be so glad for the free Saints tickets and, extra vouchers for snacks--whoopi, oh boy, you won't get your back pay, but you got nachos at the baseball stadium concession stand and got slimed. Wow, doesn't that have new meaning now.
I'm all for boosting employee morale, but fair pay for work already performed is far better than snacks. The Christmas party was at the Graves Hotel with Sun Country tickets as raffle prizes. Kenan wanted to be popular, but he was ruining careers while partying and supporting his lavish lifestyle through company trade. Maybe if more revenue was generated through real advertiser payments instead of the pathetic trade, he could have paid back Petters and protected jobs.
LAMBERT: Ouch.
Posted by: makebillions on July 23, 2008 at 8:41 AM
We never partied so irresponsibly at the Reader.
Our trade use was, however, quite legendary.
Posted by: bertram jr on July 23, 2008 at 11:27 AM
Not to change the subject, but things are getting a bit warm for your "Comrade in Hair":
http://www.nationalenquirer.com/sen_john_edwards_caught_with_mistress_and_love_child_in_la_hotel/celebrity/65193
Posted by: bertram jr on July 23, 2008 at 11:34 AM
Wow, there are a lot of people on here that seem to think they know exactly how this transaction went down. There are a lot of “quotes” from Kenan that are just plain incorrect. Someone said Kenan mentioned the company had the highest profits ever in a company meeting? Apparently your understanding of business is as misguided as your hateful personal attacks. Kenan said that sales in the company were up to the highest ever, which they were, and if you have half a business mind you know that sales are entirely different than profits. Maybe if people didn’t tune out during company meetings they would have heard this and heard him talk about the AR balances, the need to run lean and the search for further financing but then again based on your responses you wouldn’t have understood it anyway. The company had been working with Petters over the last 12 months to try and raise money to help grow the company. Petters didn’t want other investors to come in as he felt it would diminish his ownership percentage so he said he wanted to be the only partner. Kenan took him at his word but Petters subsequently had his team of attorneys work to starve the company by not allowing Kenan or MMG to bring in money to keep the company running, I assume only so they could take it over and suck everything out of what Kenan built. I saw first hand that Kenan fought as hard as he could to not only have the employees paid but the vendors as well and Petters people refused. All of you that label Kenan as a terrible, wealthy man ought to know that he didn’t take a pay check for the first 2 years of MMG’s existence and for the last 6 months and put more of his owe money into this company over the years and that he will never see dime one for it. All of you that conjecture as to what happened and sling all your crap around cause more grief than good. Know your facts before you make statements.
Posted by: mninfo on July 23, 2008 at 12:19 PM
It's not rocket science, people: I don't care whose responsibility it is to get me my back pay, I just want to be able to pay my rent and medical insurance next month, then go on my merry way and look for a nice, stable job as a trapeze artist or a clam-farmer or something. People go to work because they get paid, people get paid because they go to work. 11 of us got the short end of that equation(update: rumor is that those re-hired by Petters are getting their last check as a "retention bonus.") Someone needs to make it right.
Posted by: Myrtle Schmeckpepper on July 23, 2008 at 12:43 PM
Methinks Msr. Petters is being penny wise yet pound foolish....
Posted by: bertram jr on July 23, 2008 at 2:56 PM
With all due and sincere sympathy to the laid off employees involved here (you deserve your back pay), the fact that these fatuous lifestyle rags did not find success in this market is a ray of hope, not an aching desideratum in the cultural life of the metro area.
As a business story this is obviously good fodder for gossip among all the big machers around town. But as a development in the media life of the seven county areas, it is of no consequence to any thoughtful consumer.
Again, sorry about all the wrenching upheavel in the lives of those who worked for metro, but the magazines are a loss to no one in the reading public. Here's hoping you can all coalesce around a more worthy publication under wiser management.
Posted by: Jim Leinfelder on July 23, 2008 at 5:24 PM
It’s great to finally hear some details from the Aksoz camp. We want explanations and we want to be paid what we're owed. I don't doubt that Kenan begged Petters to pay all employees back pay. I don’t doubt that was upsetting when the answer was “no”. It’s sure upsetting to those of us who were supposed to get checks yesterday to cover mortgage and rent payments. Since Petters won’t pay the unemployed workers (we hear Petters is paying those he hired back, but not those laid off), then Kenan should pay his former employees all that is owed in back pay and accrued vacation.
So, now that we have an insider from the CEO's office, how about some answers. I noticed there was no response to the validity of the $5.5 million figure. That's the amount Petters says he loaned MMG but never had paid back. Is that accurate? And, was Kenan's new luxury car on trade or did he pay for it? Either way, that would be worth more than the amount owed to laid off workers for work already performed. That’s nice that he didn't take a salary. That doesn't mean that the non-millionaire workers with signed employment agreements for a designated salary signed by company management should do work and not be paid for it. Employees were led to believe everything was sunshiny and it wasn't.
Now to some of the specific charges from mninfo: the direct quote I frantically scribbled in my notebook from the last company meeting was: "We are up significantly from last year". Hmmm, how silly of employees to deduce that means the company is doing great. And, I took notes in March also, when Kenan explained to the whole group that many potential investors showed interest in the failed start-up custom publication, Radio, and we might have seen them walking through on the way to Kenan's office. So, why talk to these people if Petters wouldn't allow them to invest (according to your information)? And, clearly, none of them was really going to do so, because Kenan told us none of them clinched the deal. On that day, Kenan said he'd make a few more phone calls, but he wasn’t hopeful there'd be an investor. So, what does it matter if Petters didn't allow other investors? The truth, based on what we were told in that meeting, is that investors didn't want to be part of MMG. Were there investors who were TRULY serious about investing in the rest of the company? Really?
Now to your recollection of the call to “run lean”: Then why was Kenan living large on the company trade? If that’s not true, then correct me. And, remember the chilling speech discouraging employees from using their health insurance and urging the use of less expensive doctors because medical is so costly to the company? We paid high premiums. We had every right, as every worker in America, to use our health insurance as needed and choose the doctors we felt were best. Did Kenan’s wife shop around for the cheapest doctor when she gave birth? I’ll bet she went with the person she felt was the best. I took detailed notes on everything he ever said. Please don’t accuse me of not paying attention. I certainly was.
Kenan, the truth is coming out. If you don't feel it's the real story, then you can speak out and tell your side. The post from your associate above is pretty contradictory and puts down your former employees at a publishing company---we’re talking writers and designers---for not understanding business. Huh? I thought you “loved” your employees and cared so much. Suddenly we’re dumb and don’t understand business? You didn’t hire dumb people, though we now feel like fools for trusting you. So “we’re causing more grief than good?” Not being able to pay rent is grief. Kenan is getting criticized based on facts. He’ll feel better when he pays his employees what’s owed. The company was his when the bills for employee wages and vendor fees were accrued, so it’s his duty to pay.
Kenan has the money. Pay the laid off workers what they are owed. And, while you're at it, severance packages would be in order as well. Do the right thing.
Posted by: makebillions on July 23, 2008 at 5:42 PM
Anyone else see the irony? Kenan's affairs are being discussed on the web site of MSP Magazine, so what he viewed as one of his former competitors gets web hits and, presumably, makes money off the dispute with his former employees. Kinda funny. Kind of like KARE featuring a Paul Douglas story right after he was fired from WCCO. Oh yeah, that did happen! At least we can find something about all of this that's humorous.
LAMBERT: We're here for the light touch.
Posted by: cravegiftcards on July 23, 2008 at 7:51 PM
Four years ago I was volunteering for an organization that had an auction and program that was attended by hundreds of people. My task was to have winning bidders fill out slips for the items they won.
The first item was rather expensive and I ran over to get information on the winning bidder. I asked him his name. He scoffed and couldn't believe I didn't know who he was. Made me feel nice and small.
You guessed it. That person was Tom Petters.
Posted by: Dave on July 23, 2008 at 9:35 PM
I am ashamed of Tom Petters. Local Minnesotans should protect their fellow Minnesota companies and workers. The manner in which he is treating both his newly re-hired and recently let go employees is despicable. It certainly is enough to make this resident of Edina unwilling to continue reading any of his magazine, or traveling on any of his planes. Brian, a fine piece of reporting. I hope you, and your peers continue to get to the bottom of this story.
LAMBERT: I'm told that yesterday Petters offered "retention bonuses" to the MMG employees he brought over equivalent to their back wages. That leaves the 11 who were not offered positions.
Posted by: Concerned Citizen on July 23, 2008 at 10:18 PM
Bertram - I remember some Mark Hopp boat cruises that make this sound awfully familiar. Was never distracted with any plane tickets, though.
LAMBERT: You weren't in sales, David.
Posted by: David Brauer on July 24, 2008 at 12:31 PM
Uh, that was a client presentation, as I recall....
Posted by: bertram jr on July 24, 2008 at 3:18 PM