MuscleMag, Oxygen & Clean Eating Magazines Under New Ownership? An Update on Canusa – Robert Kennedy Publishing


In June, we shared the unfortunate news of popular female fitness magazine, Oxygen shutting down its Canadian and U.S. operations. A week later, Tosca Reno broke her silence and confirmed the news. Tosca took over  Robert Kennedy Publishing when Robert (Bob) passed away. Tosca had been married to Bob for eight years before his death in April 2012.

 

robert-kennedy-publishing
On her blog Tosca shared, “Canusa, parent company of Robert Kennedy Publishing which produced magazines Muscle Mag International, Reps!, Oxygen, American Curves and Clean Eating as well as hundreds of books (New York Times best sellers: Hardcore Bodybuilding, Reps!, RockHard!, Beef It!, Pumping Up! and the Eat-Clean Diet Series) has ceased business operations by officially closing its doors last Friday.”

Many subscribers and readers have emailed us voicing their frustrations over the closure of the magazine. Despite what appeared to be a sudden collapse of the health & fitness publishing powerhouse it was a long time in the making. We’ve recently learned that the sale of Canusa has been approved but what does that mean for fans of Oxygen and the other magazines?

Let’s back up a bit and go over some details that surfaced since June. The following information was gathered in part from preliminary reports posted on Deloitte & Touche’s website. Deloitte and Touche Inc. was appointed  the Trustee of the bankrupt estate.

BACKGROUND – CANUSA Products Inc. (Company)
Canusa Products Inc. operated as a magazine and book publisher. Canusa was incorporated in 1999 and conducted business as Robert Kennedy Publishing. One very important detail that many people (us included) were unaware of until recently was that Robert Kennedy Publishing is a separate legal entity from Robert Kennedy Publishing Inc. Robert Kennedy Publishing Inc. changed its name to Tosca Reno Media Inc. and was not in bankruptcy.

There were five magazine titles published by Canusa. They were American Curves, Clean Eating, MuscleMag International, Oxygen and Reps. Along with the magazine titles there were 52 active titles in the book publishing division of the Canusa. Things get a bit more confusing when it comes to the intellectual property and who owns what like the trademarks, copyrights, etc.

Despite Canusa being the publisher of the five magazines it did not own all the intellectual property related to the magazines. There were different trademarks for different countries and some were held in the estate of Robert Kennedy but others were not. Some of the trademarks appear to be held by Tosca Reno Medica Inc. which would avoid bankruptcy and their assets would not be part of the bankruptcy. The subscriber lists were property of Canusa however not all international licenses were held by the Company.

Deloitte & Touche Inc. (Trustee) was appointed the trustee of Canusa after its sole director Tosca Kennedy (Reno) filed for bankruptcy. Keep in mind it was just for Canusa. Deloitte & Touche, Inc. decided to sell the assets of Canusa and discontinue the publishing business.

There were numerous reasons mentioned as to why Canusa (Company) struggled and was forced into bankruptcy.

• the illness and death of the Company’s founder, Robert Kennedy, in April 2012, and the resulting impact that this has had on the Company;
• unfavourable industry trends for printed magazines;
• the cost of a settlement dispute in early 2013 with a significant advertiser;
• lower than expected renewals of subscriptions due to difficult transition to a new subscription service provider in early 2013;
• costs relating to the closure or a retail venture for MuscleMag International brand;
• commitment to a significant lease for a large distribution centre in Mississauga, which was significantly in excess of current corporate needs; and
• significant distributions to Robert and Tosca Kennedy relative to recent cash-flow and profitability.

In regards to the book division, the Trustee faces many challenges in selling this part of the Company. There are many constraints due to authors, copyrights, royalties and more.

The company was shelling out around $75,000 a month in rent. Yes, read that number again. 75k per MONTH.

At the time of closure there were 96 employees at the company. The employees were informed that the company was closing by the Trustee on Friday June 7, 2013. The locks were changed on the property and the computer systems blocked everyone out as well. Employees were left wondering if they’d see any severance and why they were blind-sided by the news despite warning signs along the way.

The printer and distributor were owed approximately $2.3 million and the paper supplier claimed to be out nearly $950,000. The subscription service provider claimed they were owed $151,000. It’s noted that approximately 218,000 parties prepaid for their digital or magazine subscription which could be a liability of over $2 million dollars.

The Trustee held an auction on July 23, 2013 where all of the physical assets were auctioned off. Items such as furniture, gym equipment, magazines, etc were placed on the auction block in an attempt to recover some much needed money.

According to mastheadonline.com this is how the asset sale breaks down. Note the copyrights, licenses, domain names and number of print and digital subscriptions that are listed for each title. Some of the subscription numbers are surprising.

Oxygen
International distribution licenses
Print Subscription list (109,000 subscriptions)
Digital Subscription list (15,000 subscriptions)
Magazine content and copyrights
Domain name: www.oxygenmag.com
Oxygen Canadian trademark

MuscleMag International

International distribution licenses
Print Subscription list (13,000 subscriptions)
Digital Subscription list (2,000 subscriptions)
Magazine content and copyrights
Domain name: www.musclemag.com
MuscleMag Canadian trademark

Clean Eating
International distribution licenses
Print Subscription list (105,000 subscriptions)
Digital Subscription list (15,000 subscriptions)
Magazine content and copyrights
Domain name: www.cleaneatingmag.com
Clean Eating Canadian and US trademarks

Reps
International distribution licenses
Print Subscription list (12,000 subscriptions)
Digital Subscription list (4,500 subscriptions)
Magazine content and copyrights
Domain name: www.repsmag.com

American Curves
International distribution licenses
Print Subscription list (31,000 subscriptions)
Digital Subscription list (2,500 subscriptions)
Magazine content and copyrights
Domain name: www.americancurvesmagazine.com

Maximum Fitness
Maximum Fitness and Robert Kennedy’s Maximum Fitness Canadian and US Trademarks
Magazine content and copyrights

Maximum Fitness had folded into Reps however Canusa still owned the copyrights and trademarks.

SALE APPROVED TO CRUZ BAY PUBLISHING, INC. 
The Trustee, Deloitte and Touche Inc. filed a motion on August 16th for the sale of the Canusa Products Inc. On Friday, August 23, 2013 Ontario Superior Court approved the sale of Canusa Products, Inc. The purchaser is listed as Cruz Bay Publishing, Inc.

The Deliotte document reads…
Pursuant to an Order of the Honourable Mr. Justice Newbould of Ontario Superior Court of Justice (the “Court”) dated August 23, 2013, the Court approved the asset purchase agreement (the “Sale Agreement”) month the Trustee, the Testamentary Estate of Robert Kennedy (the “Testamentary Estate”), Tosca Reno Media Inc. (f/k/a Robert Kennedy Publishing Inc (“TRM”) and Cruz Bay Publishing, Inc. (the “Purchaser” dated August 16, 2013, and provided for the vesting in the Purchaser of the Debtor’s (Canusa Products Inc.) right, title and interest in and to the Purchased Assets, which vesting is to be effective upon the delivery by the Trustee to the Purchaser of a certificate confirming: (i) the payment by the Purchaser of the Purchase Price for the Purchased Assets; (ii) the conditions to Closing as set out in the Sale Agreement have been satisfied or waived by the Trustee, the Testamentary Estate, TRM and The Purchaser; and (iii) the Transaction has been completed to the satisfaction of the Trustee.

The purchase price and what exactly was included in the assets were not disclosed.

Who is Cruz Bay Publishing, Inc? 
According to Business Week’s website, Cruz Bay Publishing, Inc. operates as a subsidiary of Active Interest Media, Inc. and is based out of El Segundo, California.

So who is Active Interest Media, Inc. would be the next questions, right?

Active Interest Media (AIM) publishes a number of magazines and has five publishing groups — the Equine Network, the Home Buyer Group, the Healthy Living Group, the Marine Group, and the Outdoor Group. Healthy Living and Outdoor are the two groups under AIM that are in line the most with Canusa’s titles. Under the Health Living Group their current magazine titles include Amazing Wellness, Better Nutrition, Black Belt, The Box, Muscle & Performance, Vegetarian Times and Yoga Journal. AIM’s Outdoor Group includes Backpacker, Climbing, National Park Trips, NASTAR, Skin, Skiing, Snews and Warren Miller.

Only time will tell what will come of the Canusa titles however we’ve been told by numerous sources that there are plans for the titles to return.  Until we receive concrete evidence, it’s purely speculation however we wish the best for all who are involved. We’ll keep you posted .

 






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