Before Time Inc. and Source Interlink kissed and made up today, their lawyers each made some interesting statements about the other company.
Source is behind in its payments to Time to the tune of about $120 million, Time's attorney said during a hearing last week. "We had a very real concern that we were never going to collect any meaningful portion of that amount of money," Rowan D. Wilson continued. The transcript is at http://amlawdaily.typepad.com/SourceTROtranscript.txt.
Source didn't deny that it was in financial trouble: "Your honor, our client, Source Interlink, is going under, and it is going under as we speak." Source attorney Marc E. Kasowitz said. "And the reason it is going under is that it is a magazine wholesaler and the defendants who have been supplying it with magazines -- People magazine, Time magazine, Sports Illustrated and the like -- for seven uninterrupted years have now abruptly cut it off from 80 percent of the supply of magazines that is the lifeblood of its business."
"As a result, Source's business is being destroyed," Kasowitz continued. "Its customers are leaving. Its employees are being raided by competitor wholesalers. Its bank credit is evaporating. Its vendors are threatening to demand cash in advance or cash on delivery. And if things continue the way they are going, Source will not be able to make its payroll this Friday. The result of that, your Honor, will be that the company will have no choice but to lay off thousands of employees."
The two companies announced today that they had settled Source's antitrust lawsuit against Time and its newsstand-distribution arm and that the two sides had "reached a multi-year agreement securing Source's access to Time Inc. magazine products." There was no mention of what happens to the money Source owed Time or of any settlement talks between Source and the other defendants, which include national distributors Curtis and Kable.