IDW “goes dark” on the NYSE, lays off 39% of their staff

The Comics Contraction of ’23 continued today as IDW announced it is being delisted from the NYSE, making large changes in senior management and laying off 39% of its workforce as part of “cost cutting measures.”

The moves come after months of losses for the company in most business sectors, as reported in SEC filings. IDW stock opened at $0.82 cents but plunged to $0.47 as the announcement circulated. 

Among the personnel changes: Davidi Jonas, the son of principal IDW owner Howard Jonas, is replacing Allan Grafman as CEO. CFO Brooke Feinstein is also out, and Amber Huerta has been promoted to COO. 

While the PR did not specifically mention other layoffs among the 39% of the workforce laid off, The Beat has learned that the entire marketing and PR staff and half of editorial have been let go, including editor-in-chief Nachie Marsham. We are working to get names of remaining staff, and information on the fate of imprints such as Top Shelf, as well as details on the editorial reorganization.

IDW is generally considered to be one of the Top Five comics publishers in the direct market, back when sales charts and market shares were available. Last year they moved from Diamond to PRH for their comics shop distribution. Founded in 1999 by Ted Adam, Alex Garner, Kris Oprisko, and Robbie Robbins, IDW was consistently one of the most innovative and forward-looking comics publishers for 24 years, with such hits as March and They Called Us Enemy from Top Shelf, and the much loved Artist’s Edition line of oversized collections. But recent changes in the DM and bookstores, as well as effects of the pandemic and the cutback in streaming platforms, meant changes in the business model, which had expanded to going public under parent company IDT Holdings. 

In the announcement, several reasons were given for what was described as “going dark” on publicly-traded stock exchanges. Although the term referred to being delisted as a stock, it seems an apt metaphor for the entire reorganization. “The Board has elected to take these actions to preserve capital, and put the Company in the strongest position possible to unlock value from its assets, including its intellectual property and ability to generate new intellectual property,” read the statement. 

It was noted that the requirements of complying with SEC regulations were a burden on the company, and removing them would help streamline operations and claw back resources for “recovery and growth.”

“The Board determined that going dark is the best path for the Company due to expected cost savings, reduction of pressure on limited resources and the Company’s current inability to realize many of the benefits from continued listing and Exchange Act registration and reporting,” said David Breau, Lead Independent Director on IDW’s Board. “Low trading values and volume has limited our Class B common stock’s liquidity and made it untenable to effectively use our securities as transaction consideration, attract interest from institutional investors or market analysts or provide meaningful incentive to our employees. At the same time, we continued to bear the direct and indirect expenses associated with the NYSE American listing and SEC reporting.”

The cuts are expected to lead to about $4.4 million in annual savings, with $0.9 million being paid out in severance. 

As reported by ICv2, last month’s SEC filings reported a $335,000 loss for the publishing division in fiscal Q1 ended January 31, down from a profit of $512,000 in 2022. Sales in the direct market were down $462,000, although book channel sales were up $734,000. They also reported a decline in revenue of $1.9 million in the games division, which released the Batman Adventures game in 2022. IDW Entertainment revenue declined from $4.3 million to nearly NOTHING, due to the absence of Locke & Key, which was streaming on Netflix in 2022. 

If you were wondering why comics companies like their streaming revenue, there’s your answer right there. 

Overall, ICv2 reported:

With both divisions losing sales, parent IDW Media Holdings sales were down 44%, from $11.8 million in Q1 2022 to $6.6 million in fiscal Q1 2023.  The company lost $2 million in the quarter, compared to a $2 million profit in the year ago quarter.  The loss in the quarter follows an improving loss of $700,000 in the fiscal year ended October 31 (see “IDW Publishing Posts Big Losses“).  CFO Brooke Feinstein told analysts in the conference call that the company had enough cash to sustain operations “for at least the next year.”

Given the hemorrhaging of profits, lack of a streaming follow-up to Locke & Key, and softening of periodical sales in the DM, it seemed inevitable that IDW would tighten up, but this level of extreme reorganization is still stunning. 

“We appreciate Allan’s industry experience and efforts on IDW’s behalf during the last eight months as CEO and for over three years prior to that as a member of the Board and Chairman of the Audit Committee,” added Howard Jonas, IDW’s Chairman. 

If you want to play a little armchair Succession here, Jonas notes that the new CEO (Jonas’s son) is expected to work HARD. “However, with the need to make pivotal changes to preserve value and transform the Company, the Board felt that a new CEO with new ideas, a tireless work ethic, willingness to roll up his sleeves and do whatever is needed to help the Company, with a successful record at creating a corporate culture of excellence and maximizing stockholder value, was what IDW needed.”

As for Davidi, he gave a long statement reflecting why such changes were made with “alacrity”:

“I am humbled by the confidence being placed in me by the IDW Board in appointing me to this position at such a pivotal time in the Company’s existence,” he said. “I feel an overwhelming sense of excitement and more than a little trepidation as I face the challenges before us.

“Our Board is taking bold action to address the challenges facing the Company and I share their view that alacrity is called for. My trepidation comes from the magnitude of the task ahead and my determination to do everything possible to unlock and create the value for our stockholders that they deserve. Many of our stockholders, not least of them members of my family, have shown patience and loyalty and it is my singular goal to see that rewarded.

“Since re-joining the Company as Executive Chairman, I have taken a deep dive into the Company and have strong views on what is needed to put the Company’s best foot forward on the path of success. The painful cuts we are making are unfortunately absolutely necessary. We need to ensure that the Company can survive and then grow. I want to thank Allan, Brooke, and the great employees and other contributors to IDW’s past successes.

“Today we hit reset. Today I take on the responsibility to those for whom I work and those whom I work with, the stockholders and my colleagues at IDW. I will work tirelessly to unlock value.

“IDW is a great company with a storied history. IDW has a great team of people who are ready to give their all and again I am humbled to be at their head,” concluded Davidi Jonas.

Obviously this is a rapidly developing story, and we’ll be updating it as more information becomes available. 

Here’s the original IDW statement, with more information on the process of delisting from the NYSE and other publicly-traded stock exchanges. 

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