More details on IDW layoffs and reorganization emerge

It was one of the sad, sad days for the comics industry yesterday, as IDW announced they were laying off 2/5th of their staff, including some well-known industry figures. The comics industry had an outpouring of emotions on social media, praising the good people who used to work at IDW….and those who still work there. 

The Beat can confirm that Jamie S. Rich remains at the company and has been promoted to editor in chief. Mark Doyle, who spearheaded the Originals line, also remains, as does Scott Dunbier, the editor behind the much lauded Artist’s Edition line, Star Trek editor Heather Antos, Top Shelf editor Leigh Walton, and editor Kristen Simon. Sonic/Godzilla editor David Mariotte confirmed his continued employment in a tweet. 

We’re told that Doyle and VP of publishing operations Tara McCrillis will take over as co-publishers. We’ve reached out to IDW for more details on their restructuring.

As we reported yesterday, publisher Nachie Marsham has been let go. Deadline reports that Paul Davidson, EVP and head of IDW Media’s entertainment division has also been let go – leaving the future of IDW’s entertainment division in doubt. All but two people in the division were laid off.

I’ve been told that the entire sales and marketing department was removed, including Blake Kobashigawa, SVP of sales, marketing & strategy; Keith Davidsen, director, PR and marketing; and Anna Morrow, VP of marketing. Several other folks that we worked with in marketing had their emails bounce back, including Topher Alford, senior digital marketing manager.

It’s being reported that other layoffs include content strategy director Greg Gustin, marketing art Director Jack Rivera, and editors Megan Brown and Zac Boone. Group editor Tom Waltz confirmed his departure on Twitter, as did sales and marketing associate Devon Ashby and art director Shawn Lee.  In his tweet Waltz noted that he would continue on as a freelancer for IDW.

I’m told by numerous sources that those let go were called into a Zoom meeting at noon PT; the meeting lasted for less than five minutes and consisted of the message that the company was losing money and “We’ve decided to reduce our workforce by 35% and you are all part of that reduction. Your last day will be today.” They were told that they would later have 30 minute meetings to discuss their severance packages. 

Those on the call got off it to find their slack and emails disconnected – some were literally in the middle of projects, according to those who were on the call.  

Needless to say, this was brusque even for these kinds of things. “It was shocking how careless it was,” one former IDW employee told The Beat.  

Remaining IDW employees are still processing the shock and wondering how the company will continue with so many departments that are essential to the business basically removed…and also upset that those removed included one employee who had just moved their family cross-country, another who had just purchased a house, and others facing severe health issues.

As for what went wrong…that is a long, long story. IDW first started being traded as a stock in 2009 and this screenshot of the stock value since then tells at least part of the story.

At its peak in January 2017, IDW stock was trading at $50. Over the next six years it would lose 99% of its value. As the only publicly traded comic book publisher, IDW’s financials were always public to see, and over the last year the numbers were brutal.

There’s also this, as pointed out in a tweet from Dirk Vanover, that IDW’s stock would have been delisted anyway because of New York Stock Exchange rules.

Re: The IDW news. Just to be clear, IDW is not going out of business—at least not yet. They are “voluntarily” removing their stock from the NYSE, and they’re using the phrase “going dark” to state that their stock will not be publicly traded for the time being. (Cont.)

— Dirk Vanover (@DirkVanover) April 28, 2023

He writes:

Re: The IDW news. Just to be clear, IDW is not going out of business—at least not yet. They are “voluntarily” removing their stock from the NYSE, and they’re using the phrase “going dark” to state that their stock will not be publicly traded for the time being. (Cont.)

A requirement to stay on the NYSE is that your stock should trade for a reasonable amount (usually over $1.00), and if it falls below that amount for 30 days straight, the stock exchange will delist it. (Cont.)

IDW’s stock had been under $1 for a while. IDW is just voluntarily delisting before they were removed anyways.

IDW’s cutbacks are the worst comics implosion since Oni last summer. Oni has since begun a comeback story, and IDW isn’t going out of business…but just what business they will be in remains to be seen, including the fate of the IDW Entertainment division that at one point was self-financing projects.

Somewhat reassuring: Parent company IDT is very successful (principal stockholder Howard Jonas is, like Ike Perlmutter, a self-made billionaire) and they have at least the inklings of how to run a company.

This is still a developing story, but I have a few observations to kick things off. Note that this is pretty off-the-cuff – it’s as accurate as I can make it, but there is lots of backstory missing.

• Lack of IP: IDW was (I know I shouldn’t use the past tense but the company going forward is going to be very different) known for its licensed books: Transformers, GI Joe, Star Trek, Teenage Mutant Ninja Turtles, D&D, My Little Pony, even Marvel and Star Wars. When they lost huge licenses – Transformers and GI Joe – it was a blow. But IDW has always lagged other comics publishers in the amount of original IP they publish. Perhaps the most important IP they are connected with is at the Top Shelf imprint: The March Trilogy and George Takei‘s They Called Us Enemy were critical and sales hits, winning awards and getting major media attention as important stories. (A follow-up to the Takei book talking about his personal journey as a gay Asian man is forthcoming later this year…or was, anyway.)

The other prominent original story they controlled is Locke and Key, which had a loooong journey to being made into a streaming series for Netflix, with many stops and starts. With that series ended, the entertainment division wasn’t making any money. Wynonna Earp (based on a property originally published by Image) was a cult hit for SyFy – it was trending on Twitter just the other day – but finished its run several years ago despite the fan fervor for the show.

According to Deadline, IDW reports projects in development with Ánima Studios, Cartoon Network Studios, HBO Max, Universal Content Productions, Universal International Studios and Warner Bros. Television, but “in development” can mean anything.

Not having established, popular IP that they could leverage during the height of the streaming era was an ongoing problem for IDW – one that they tried to remedy by launching the Originals line last year. While the books were/are strong, this is pretty late in the game to try to launch a new Umbrella Academy or The Boys. Comics IP is still highly valued in Hollywood, but IDW is playing catch up.

• Instability at the Top: The relationship between IDW and its parent company IDT deserves a deep dive of its own, but there was increasing turmoil over the last few years, with no fewer than three CEOs in just the last two and a half years: Ezra Rosensaft, Allan Graffman and now Davidi Jonas. There was also higher-than-normal turnover at the president and publisher positions, with Chris Ryall coming and going twice, and one person named to the publisher job removed after unsavory details of their past were revealed. That’s not good.

• IDT’s role: IDT itself is basically a fintech company that has evolved from selling things like ringtones (Zedge) to now handling online payments and other financial services. Just yesterday its stock closed at $33.50. It acquired a 53% interest in IDW in 2007, and soon paired it with CTM, a company that made travel brochures, and spun the two companies off as CTM Holdings, with its own stock. It’s this company that evolved into the IDW Media Holdings we’re talking about now.

Under Howard Jonas IDT also has a history of legal issues. Most of these stories are paywalled but here’s a few.

• William Rapfogel, who is currently Chief of Staff to the Chairman, Executive Chair, IDW Media Holdings, is a convicted felon, charged with embezzling $9 million from a non profit company he chaired. Although he was released from prison, he’s still on parole.

• IDT had  a complicated lawsuit over its sale of wireless company Straight Path to Verizon in 2017, with plaintiffs alleging that IDT could have sold Straight Path for more than the $600 million sale – I think. A sample of a story about it:

Plaintiffs claim that the asset – a contractual indemnification claim that put IDT on the hook for some Straight Path liabilities – was worth vastly more: According to their theory, the indemnity would have required IDT to cover a $614 million penalty that Straight Path was required to pay to the Federal Communications Commission in conjunction with the Verizon deal. Straight Path shareholders contend that they lost out on hundreds of millions of dollars because Jonas allegedly forced Straight Path to sell the indemnity claim on the cheap before he would agree to the Verizon deal.

Jonas and IDT have disputed that interpretation of their obligations under the indemnity agreement. Glasscock found the language of the contract was too ambiguous, obscure and turgid – his word, not mine – to be decided as a matter of law, which is one of the main reasons he denied defendants’ motion for summary judgment.

If you understood that, you probably make $500 an hour. 

• As far as I can make out (paywalls) this spun out into another claim: Short-Selling Claims Put Accusers on Defense in Delaware Court Firms – they allegedly shorted stock based on what they learned in discovery for a class-action lawsuit, according to the deck.

The case was eventually settled with a $12.5 million payout to those in the class action suit. New IDW CEO Davidi Jonas was heavily involved in the case.

• Although this sounds like an unfortunate accident unrelated to any publishing concerns, a worker was burned over 60% of his body in an accident at IDT’s Newark headquarters. He suffered horrible disfiguring injuries and won a $28 million settlement against IDT Corp., Rafael Holdings Inc., Broad-Atlantic Associates, and Jeffrey Blanck.

• Via an SEC filing:

On January 29, 2016, a shareholder derivative action captioned Hofer v. Jonas et al., No. 2:16-cv-00541-JMV-MF, was filed in the federal district court for the District of New Jersey against Howard Jonas, Davidi Jonas, Jonathan Rand, and the Company’s current independent directors William F. Weld, K. Chris Todd, and Fred S. Zeidman. Although the Company is named as a nominal defendant, the Company’s bylaws generally require the Company to indemnify its current and former directors and officers who are named as defendants in these types of lawsuits. The allegations are substantially similar to those set forth in the Zacharia complaint discussed above. The complaint alleges that the defendants engaged in (i) breach of fiduciary duties owed to the Company by making misrepresentations and omissions about the Company and failing to correct the Company’s public statements; (ii) abuse of control of the Company; (iii) gross mismanagement of the Company; and (iv) unjust enrichment. The complaint seeks unspecified damages, fees, and costs, as well as injunctive relief. On April 26, 2016, the case was reassigned to Judge John Michael Vasquez. On June 9, 2016, the court entered a stipulation previously agreed to by the parties that, among other things, stays the case on terms specified therein.

• Although long before their involvement with IDW, in 2004 IDT was sued for discrimination and not the kind you think.

A lawsuit filed in New Jersey Superior Court says the Newark, N.J.-based telecommunications company — started by Orthodox philanthropist Howard Jonas — discriminated against non-Jewish employees in hiring and firing decisions, vacation schedules and compensation.

“This is not how a mensch treats his loyal employees,” said Samuel Davis from the firm Davis, Saperstein & Salomon. Davis is the lead lawyer on the case.

The bulk of the claims involve 35 non-Jewish employees who were fired in July when IDT, a telecommunications company, moved one of its call centers to Israel. One of the employees who was fired, Terrance Beverly, said “that there exists two sets of rules for the employees of IDT — one for the workers who are Jewish, and another set of rules for the workers who are not Jewish,” according to the complaint.

• Just to give the other side, as mentioned above, the Jonas family is also known for their philanthropy, as leaders of the Howard and Sarah Jonas Foundation, giving away 20% of their income to charities.

And just to emphasize this again, IDT is a very successful company, with many profitable acquisitions and sell offs, and all the other things that keep stock prices going well. Although it will be going on with far fewer employees, IDW is not going away any time soon. We’ll have more to come on that as it develops.

[This story has been updated to include more details of the layoff process.]