Petters buys suburban lifestyle mags, then kills several

The Petters Group — best known for owning Sun Country Airlines, Polaroid and Petters Warehouse Direct —has purchased Metropolitan Media Group (MMG), publishers of 14 suburban lifestyle magazines as well as Sun Country’s inflight magazine and MinnesotaBusiness.

A Petters representative told employees the new owner will kill eight of those titles and lay off many employees, according to a former employee with access to a handout given surviving staffers early this afternoon.

Petters and MMG officials were not available for comment, but the surviving titles are expected to be announced at a second afternoon meeting, the ex-employee says.

MMG publishes free surburban glossies — like a “local, local” version of Mpls.St.Paul without the editorial budget or in-depth features — for the creamiest zip codes in Apple Valley, Bloomington, Burnsville, Chanhassen, South Minneapolis, Eagan, Eden Prairie, Edina, Lake Minnetonka, Maple Grove, Plymouth, St. Croix Valley, St. Paul and Woodbury.

Other titles include Radio Magazine and Petters Group’s internal magazine.

The Capital City title, St. Paul Illustrated, will reportedly be shuttered. In general, the more suburban magazines are said to be profitable while those in or near the central cities were not. The Sun Country magazine, Escape, is likely to survive.

Petters is believed to be a significant MMG investor, and in recent months, founder and chairman Kenan Aksoz had sought additional funds to keep the magazines going. According to a current employee, MMG paychecks have recently bounced; the company blamed direct deposit errors and canceled that payment method. Also, May magazines were delayed several days, the employee says.

It’s unclear whether Aksoz or chief operating officer Tom Beauchamp will remain with the company. It will be renamed Community Media Group (CMG) and operate out of Petters’ Wayzata headquarters, the ex-employee says. The takeover allows all MMG employees to be laid off; CMG will rehire a subset.

However, MMG workers won’t get paid for the last two weeks, including those rehired by CMG, says the ex-employee and another knowledgable source. They said MMG chief financial officer Gary Pederson blamed the “credit market.”

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Comments (11)

  1. Anonymous Submitted by Anonymous on 07/20/2008 - 03:15 pm.

    I am definitely outraged. Do they think that all their employees are idiots? “do to the state of the company” my ass. Not only do they have to pay them their wages, but if they are late in doing so, a suit could be filed for harm done (If they can’t pay their bills on time what will happen to credit reports? That can stick with former employees for years to come and its hard to even estimate the damage that could cause)

    And as an investor, isn’t Petters obligated to pay? The whole thing seems underhanded and sneaky to me. I can’t imagine Aksoz leaving the company employees to the sharks if there was anything he could do about it. What did Petters do to get a hold of it?

    Articles I read say about 40 employees would be offered positions with the new company. That is at least 15 people out of work and out of their last paycheck. And being offered a position doesn’t mean that offers will be on par with former salary and benefits. Looks like everyone loses.

  2. Submitted by Leslie Mole on 07/21/2008 - 09:54 am.

    I’m just thankful I got out before this all happened. MMG was a company with big dreams and even bigger promises. Maybe a lesson to all of us to be more realistic and not work outside of our means. I wish them all the best and hope those indivuals let go eventually see this as a blessing in disguise.

  3. Submitted by Myrtle Schmeckpepper on 07/18/2008 - 02:30 pm.

    As for those paychecks bouncing and direct deposit being canceled, it was only no-harm-no-foul for those of us who weren’t living paycheck-to-paycheck and weren’t therefore greatly inconvenienced by having to wait an extra two days for our banks to clear the checks, putting little things like car payments and rent checks in jeopardy. Regardless, these events leading up to MMG’s demise were cited not to question whether they hurt anybody, but to illustrate the coming apocalypse.
    People should be focusing on the fact that on Thursday Petters terminated the entire staff of MMG, including owner Kenan Askoz, and illegally refuses to pay any of them for time they’ve worked in the past two weeks (or for any accrued vacation time; MMG’s policy was that any employee terminated was to receive compensation for 2/3 of their PTO.)
    Those of us in that unfortunate earlier meeting asked Gary Pederson point blank “Will we be paid?” Gary, with his eyes on the floor, feebly responded “No. Due to the state of the company … ” Not much of an answer.
    Those in the afternoon meeting, though they also won’t get their last paychecks, received job offers from Petters.
    Who’s read the official Petters release? It makes it sound as if we were all carried by limousine to the new offices in Minnetonka.

  4. Submitted by Bob Loblaw on 07/17/2008 - 09:02 pm.

    You should probably stop relying on anonymous sources.

    “Many employees” were not laid off; about 10 out of 55 were terminated. Still a sad situation, but let’s keep it in perspective.

    MMG paychecks didn’t bounce, they were somehow deposited into employees’ accounts twice. The extra money was quickly taken back out the same day – no harm, no foul.

    It’s true that May magazines were delayed, but June and July editions were out right on time.

    Also, Pederson did not blame the “credit market,” but rather the “capital market.”

  5. Submitted by Alyssa Geronsin on 07/18/2008 - 09:26 am.

    Hmmmmmm … There was no one at MMG by the name of Bob Loblaw … should we assume it’s a pseudonym for someone else? Gary Pederson, perhaps? And for the record, the phrase “credit market” was thrown around a few times at the termination meeting and in company meeting in previous months.

  6. Submitted by David Brauer on 07/18/2008 - 09:27 am.

    Bob –

    Totally fair to ding me on anonymice – definitely not my preferred option. As the story notes, management wasn’t made available – three calls to three different MMG/Petters folks weren’t returned, though I did get the press release about two hours after I filed.

    However, I’ll note the big points (closed mags, laid-off workers, two weeks unpaid, etc.) all seem to hold up, at least based on what’s not in your rebuttal.

    We can disagree about what “many” means – that’s subjective, but I will say a nearly 20 percent whacking does it for me.

    As your note indicates, my sources’ May point was correct, but thanks for adding more context about June and July.

    I’ll check further about the paycheck issue, though you don’t seem to dispute the cancellation of direct deposit point. I’ll also check the capital/credit market thing.

    Thanks for being a careful reader. I encourage any other MMG employees to post their insights here.

  7. Anonymous Submitted by Anonymous on 07/20/2008 - 10:03 am.

    And, the first commenter, Bob Loblaw, is absolutely wrong. While the direct deposit payments were electronically fixed, paper checks bounced. That was not corrected for days. Direct deposit was never reinstated. Did vendor checks bounce as well? I don’t know.

    I have to agree with Alyssa. There was no “Bob Loblaw” in the office, so who is he to criticize Brauer for using an anonymous source? I’m sure readers can understand why sources would not want to be identified in this situation.

    The belief around the office was that the May issues were late because the printer was not paid on time. If “Bob Loblaw” has a more specific explanation for that, I would be interested to hear it.

    I hope that more attention is drawn to the way the former MMG management and now Petters is treating these employees. And, maybe this should be a warning to all workers out there that you can’t be sure you’ll be paid until you have the cash.

  8. Submitted by John Olson on 07/18/2008 - 09:39 pm.

    “Credit market” or “capital market”…makes no difference.

    This will be the reason du jour for any and all layoffs/restructures/downsizing/etc. from now until who knows when.

  9. Submitted by Elizabeth Wilbanks on 07/18/2008 - 09:47 am.

    MMG should be ashamed at their business practices and the treatment of employees who worked their hearts out just to be thrown out on the street after months of assurances that everything was fine with the company. It is a violation of the Fair Labor Standards Act not to pay employees for work they have done for the company and hopefully the Minnesota Department of Labor will step in and make sure these actions are accounted for.

    If Petters Group has taken on the company then they should also be responsible and take on the company’s debt. And if everyone was told to leave and they wouldn’t be paid for work done, then it is just a plan FACT that the entire staff was laid off, not just “10 out of 55”.

    If this is how Petters is doing business then those individuals told they might have a job opportunity at Petters should beware and hopefully they look elsewhere for reliable employment.

    Residents of the twin cities should consider a boycott of these products for the awful treatment of these employees. We won’t be flying Sun Country anytime soon that’s for sure!

  10. Anonymous Submitted by Anonymous on 07/19/2008 - 05:32 pm.

    Where is the outrage? About 60 people don’t get paid for work already performed. Yet, the people involved in the decision are all very wealthy and like to act like good corporate citizens for photo ops and black tie fundraisers, but then treat employees like this. Three weeks pay is a big deal to these workers(the unpaid period is July 1st-18th). No one should accept the new offers until everyone is paid as they should be. That includes those laid off and those who are offered new positions. And, all accrued vacation should be paid too.

    Boycott Petters and anything Aksoz and Beauchamp do in the future.

    How about if everyone gets paid in trade (an inside joke for all you former MMGers out there).

  11. Submitted by Lisa Soldo-Johnson on 07/25/2008 - 11:14 am.

    Each one of us in our lives desire to achieve something great, something that we have conceived. We desire to be successful. But success has a greater purpose than the acquisition of physical wealth. Success is not just achieving things or appearing as if you are doing well for others. It’s a whole composite of attitudes that makes a person a wholesome person. It makes you achieve things that are significant, memorable and help you to leave a legacy for those who come after you.

    It starts from a humble heart, a repentant heart, a generous spirit, compassion, empathy for people, sharing what you have with others, making other people’s live successful. These attributes do not include cutting out your partner when things become inconvenient for you. You don’t become successful by taking, you become successful by giving.

    Tom, you owe it to your employees and their families to pay them what they have earned. No excuses. And while you are at it, why don’t you pay Kenan for his company?

    “What shall a man profit if he gains the whole world, and looses his soul”.

    This is nothing short of a travesty for Kenan and the commitment and sacrifice he has invested into HIS company for years now. When it is all said and done, Kenan was betrayed by his investor and his compnay was stolen out from under him.

    Prov. 1:19
    Such is the end of all those who go after ill gotten gain; it takes away the lives of those who get it.

    Kenan, you are in our prayers-

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