Music publisher Team Rock drummed into administration
Thomas MacLennan, Alexander Fraser and Jason Baker of FRP Advisory have been appointed as joint administrators of publisher Team Rock Ltd, which has collapsed after experiencing long-term financial difficulties, with the loss of 73 jobs, despite a £5m cash input from private equity in 2015
21 Dec 2016
The company, which produces the magazines Classic Rock, Metal Hammer and Prog, is being managed on a care and maintenance basis only whilst a buyer for the assets is sought. Accordingly, the Team Rock website will be unavailable for the foreseeable future.
Out of a total of 80 staff employed by Team Rock, 27 based at its Glasgow headquarters and 46 in London have lost their jobs. A further seven have been retained ‘in the short term’ to assist administrators with ‘magazine publishing, website maintenance and other matters’.
A statement from the administrators said the company had traded at a loss ‘for a significant period of time’, although it had posted an annual turnover of more than £6m in the last set of accounts filed at Companies House. The current Team Rock set up had only been going since 2013, when John Myers, ex-GMG radio chief, bought the three titles from Future Publishing for £10.2m.
During October 2015, the company completed a £4.5m investment round led by North Atlantic Smaller Companies Investment Trust plc. The main shares issued were 4.5m £1 redeemable preference 2 shares, redeemable in 2025.
In the 2015 annual report and accounts, Team Rock stated: ‘The increase in equity and net reduction in debt resulting from the additional loans and the transaction has strengthened the balance sheet. The effect of the transaction is demonstrated by the restatement of the company’s balance sheet as at 31 March 2015.’
At the time, the directors said that the cash input would sustain the company, stating they were ‘confident that their investment… will realise sufficient income to support the going concern assumption’.
However, there were signs of financial pressure. Team Rock’s strategic report for the year ended 31 March 2015 oulines the company’s principal risks and uncertainties.
It stated: ‘The principal risk facing the company is the inherent risk of changing its underlying business model from a traditional to a digital one. The business is managing this risk by continuing to invest strategically in publishing to support the traditional business.’
The report also mentions a revenue risk saying: ‘continued investment carries with it the risk that new revenue streams will not start to produce a return as quickly as forecast and this in turn will put pressure on the resources of the company. However, this risk has been substantially addressed by securing the new investment that came into the company in October 2015.’
The company was audited by BDO LLP who did not express concerns about long-term viability in the last auditor’s report.
Administrators FRP Advisory said: ‘Cost-cutting measures were implemented and despite the best efforts of the directors to seek additional investment or a purchaser for the business, no deal could be completed, leaving the company with no viable option other than to enter administration and to immediately cease trading.’
Joint administrator and FRP Advisory partner Tom MacLennan said the administration presented an ‘excellent opportunity to acquire high profile rock music titles, products and brands that have a substantial global following’.
‘The brands and assets could appeal to a music publishing business looking to expand its portfolio, or an entrepreneur that sees the potential for developing the brands,’ he said.
Team Rock’s website, teamrock.com, was said to have been attracting in excess of three million hits per month and the company also attracted significant audiences for the radio channel, Team Rock. The company was founded in 2012 and a year later expanded to acquire the Classic Rock, Prog and Metal Hammer titles from Future Publishing.
The Team Rock annual report and accounts for 2014/15 is available at Companies House.
A JustGiving page has been set up to raise £20,000 for the staff that have been made redundant only six days before Christmas. The campaign has currently raised £43,400. The page can be found here.
Additional reporting by Sara White