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The Day Gay Media Died (That Would Be Today)

washingtonbladeAvalon Equity Fund, the investment group that owns The Washington Blade, The Southern Voice, Genre magazine, Express Gay News, Houston Voice, The New York Blade, The 411 Magazine and has a non-majority stake in HX Media has been placed into federal receivership by the Small Business Association, which will liquidate the companies and distribute the proceeds to investors.

The Avalon Fund has been in receivership since last August, a fact that its media properties have been either unaware of, or unwilling to admit, which is a strange position for a media organization to be in, to say the least. Gay City News reports:

“As a consequence of defendant’s continuing violation… SBA is entitled to the injunctive relief… including the appointment of SBA as receiver of [the Avalon Equity Fund],” the SBA wrote in an August 2008 court filing, which was only recently found by Gay City News.

Avalon, which owns a stake in the company that publishes the New York Blade and HX, was licensed by the SBA as a small business investment company (SBIC) in 2000. Through 2007, it borrowed just over $38 million from the federal agency to invest in gay media properties and a range of other ventures.

As part of its contract with the SBA, Avalon was required to have private money or assets in the fund from sources, such as individual investors, that had a value equal to half the amount it borrowed from the SBA or just over $19 million.

In 2007, the SBA wrote Avalon that it had a “condition of capital impairment” because the value of its private assets had fallen below the required level.

In its 2008 lawsuit seeking to force the receivership, the SBA wrote that the “capital impairment” was 61 percent in August of 2007 and that it rose to over 134 percent by December of that year.

Capital impairment is a “type of solvency test,” said Tom Morris, director of SBA’s Office of Liquidation. If a hypothetical SBIC borrowed $40 million from the SBA and was required to have $20 million in private capital, its capital impairment would be 50 percent if it reported realized and unrealized losses totaling $10 million, Morris said…

David W. Unger, an Avalon founder and managing partner, did not respond to a call seeking comment, and Benjamin E. Brandes, Avalon’s other founder and managing partner, told Gay City News he had little information.”

The report goes on to say that HX publisher Matthew Bank doesn’t think the receivership will effect HX Media and that the publications will not go on the block til September at the earliest.

By:           Japhy Grant
On:           Feb 6, 2009
Tagged: , , , , , , ,

  • 17 Comments
    • Ed
      Ed

      This is sad, even if only for The Washington Blade. Maybe it was just because I lived in DC for so many years, but with the capital location, I’d always felt The Blade was the Grey Lady of gay papers. They did some good reporting from DC.

      Feb 6, 2009 at 9:03 pm · @ReplyReply to this comment ·
    • porky poon
      porky poon

      a cartoon bird in a dream once told me that it was harder still to find HX where he comes from.

      Feb 6, 2009 at 9:23 pm · @ReplyReply to this comment ·
    • joe j
      joe j

      your headline is exaggerated to say the least. receivership just means that the Blade will end up with a new owner in about 2-3 years. which could end up being a good thing.

      Feb 7, 2009 at 6:18 am · @ReplyReply to this comment ·
    • Jock
      Jock

      Stay away from any publication put out by Matthew Bank.

      The man is a PARASITE. He will ruin anyone who gets in his way.

      I know many many people who have been screwed over by him.

      Feb 7, 2009 at 10:24 am · @ReplyReply to this comment ·
    • SS
      SS

      Should have thought twice before getting rid of Bill B.

      Feb 7, 2009 at 11:12 am · @ReplyReply to this comment ·
    • The Voice of the Night People
      The Voice of the Night People

      look at what they did in Boston, screwed Bill Berggren and now Berggren is with Bay windows and OUT at NIGHT
      I wonder how much they screwed Chris Robinson old owner of In newsweekly, rumors are 400K’ that he never got.
      Maybe banks should throw in towel

      Feb 7, 2009 at 11:20 am · @ReplyReply to this comment ·
    • Gianpiero
      Gianpiero

      “The Day Gay Media Died,” said the gay media outlet.

      Feb 7, 2009 at 12:54 pm · @ReplyReply to this comment ·
    • Christian
      Christian

      This is bad new. First, we had the increasing consolidation of gay media (Regent now owns here!, Advocate, Out, and a host of websites), and now this. Given that major print newspapers are having trouble staying afloat, this will certainly mean more consolidation (which is less actual news), and probably the elimination of some of these titles.

      Feb 7, 2009 at 2:34 pm · @ReplyReply to this comment ·
    • Monica Roberts
      Monica Roberts

      Good riddance.
      As I have wheezed about ad nausical, it is high times the Gay Mafia Hoarding of the Blogingsphere was replace by the likesness of the FACT-BASE and overlooked viewpernt of the struggling eternal victims of the transgendered poverty people of colour in crisis.
      To hell with tragic whiny “bitch sessions” and “foam fisting party” announcements” of the queeny nelly white privilege boys of the SouthLand!!!
      Rise Up!
      Yes, We Can!
      It is time for the
      Black Alliance Against Defamation From Gays!!”
      Community to rise up and TAKE BACK!!!

      That is how is TEE HOW ZED ZOO HOUZ ZWEE HAZZ!!!

      Feb 7, 2009 at 10:13 pm · @ReplyReply to this comment ·
    • Brian Miller
      Brian Miller

      Given that major print newspapers are having trouble staying afloat, this will certainly mean more consolidation

      When was the last time you folded open a gay paper or magazine?

      For me, it’s been over 12 months.

      I read them online for the most part. A lot of the content is out of date by the time it hits print, and in the case of The Advocate, Genre, etc., the recent changes made there made those mags into silly teen rags… especially the depoliticizing of the Advocate announced by its new owners.

      The old print business model is failing for everyone — big city papers, national newspapers, and gay periodicals alike.

      Blogs and real-time resources like Queerty are replacing papers. Rather than fight the future, let’s take a moment of silence to remember what was (the print media), and then cheer at the collaborative meritocracy the Internet is creating.

      No more media dynasties! Now content lives or dies based on its quality — not on little incestuous cliques of urbanites who all have the same opinions and have known each other for thirty years.

      Hurrah!

      Feb 8, 2009 at 11:18 am · @ReplyReply to this comment ·
    • NY Diva
      NY Diva

      Avalon Equity’s major investments are in Cable and Radio stations. The gay pubs are a small piece of their total investment and they are not impacted by Avalon’s mismanagement of its interactive media properties. Gay media is saved!

      Feb 8, 2009 at 5:22 pm · @ReplyReply to this comment ·
    • NY Diva
      NY Diva

      No worries, the Blade will be fine. Avalon Equity’s screw ups have nothing to do with the business of the paper that has provided us with such award winning editorial.

      Feb 8, 2009 at 5:24 pm · @ReplyReply to this comment ·
    • CattleCall
      CattleCall

      Bill B was the guy that stole all of the Boston paper’s contacts and tried to open his own paper? That has nothing to do with the the equity group. What a dumb comment.

      Feb 8, 2009 at 5:25 pm · @ReplyReply to this comment ·
    • Chelsea
      Chelsea

      I have a friend at a station that Avalon owns and it is the radio stations that are in receivership not the newspapers – and the SBA did not even appoint a receiver like they said they could. They just left things as they are.

      Feb 9, 2009 at 12:40 am · @ReplyReply to this comment ·
    • Shaniqua Ubangui
      Shaniqua Ubangui

      Jock, Matthew Bank has nothing to do with those publications

      Feb 9, 2009 at 7:28 pm · @ReplyReply to this comment ·
    • J
      J

      The comment from “Chelsea” is completely at odds with the facts of this receivership, as reported by Gay City News, and furtermore the comment is oddly similar to one made there.

      According to GCN’s report on the SBA filing, “the fund” is in receivership. That means the fund, not select parts or companies owned by the fund, as Chelsea asserts with the statement that “it is the radio stations that are in receivership.” No, it’s the fund, Avalon, that is in receivership.

      SBA wants their money back, it’s pretty straightforward, and unless you have something concrete to tell us, Chelsea, about SBA filings that are seeking moneys only from one or another company owned by the fund, then you are making statements out of the thin air.

      Feb 12, 2009 at 6:18 pm · @ReplyReply to this comment ·
    • Toby
      Toby

      @Brian Miller: No on-line outlet has the resources of even a moderate size publication’s investigative reporting staff. Most of what I see on the net is round-ups from other sources and endless hot air opinionating. As for the “incestuous clique of urbanites” its called an enducated staff of professionals. Of course they all know each other. People in the same profession generally do know each other. Moreover, there aren’t that many people with the credentials to be serious journalists. Any half baked geek can sit around in his BVDs and spew a blog on his bedroom computer. Proper spelling isn’t even required.If that is where we are to get our news from in future, I fear for the republic.

      Mar 12, 2009 at 8:02 pm · @ReplyReply to this comment ·

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