Peter G (sinetimore) wrote,
Peter G

The Mess That Is Wizard World

This gets real complicated real quick, so grab yourself a sandwich and a beer.  We need to see where Wizard came from before we can examine what it is now, especially now that that $2.5 mil has been invested and what it portends.  Strap on your helmet, we're going in.

The whole thing started with the debut of Image Comics in 1991 -- there were other indie comic companies that survived the purge that claimed First and Eclipse (Dark Horse and Valiant), but Image had buzz around it.  Founded by seven comic creators who had become big names in a short amount of time without having to work their way through the Old Boy Network of comics, they told Marvel to screw off and, using the cause du jour of "creator rights," set out to best their former employer.  The dynamic art, explosive colors, and artificial collectibility enabled them to storm up the best seller lists (and change the popular understanding of "indie comics" into something that killed off innovation, but that's something to bitch about another day).  In the summer of 1991, the first Image comic, Youngblood #1 by Rob Liefeld, was released and sold like proverbial hot cakes.  Such was the following of the Image crew that the Chicago ComiCon set up a tent at their event that July where fans could meet the creators, even Liefeld if you were lucky (Liefeld was determined to sign comics 24 hours a day the entire weekend, but burnt out early Saturday morning and didn't make the rest of the time.  No, I won't pick on him for that, I just file it under, "It seemed like a good idea at the time").  July '91 was Ground Zero for the indie comic revolution.

July '91 also saw the first official issue of Wizard Magazine.  Gareb Shamus was a kid growing up around Nanuet, Noo Yawk.  In the 1980's, Gareb's mom opened a comic book and sports card shop in town.  Gareb not only worked there, but also started a newsletter called Wizard that he sold at the store.  The newsletter was a big hit with the customers, and Gareb, who had a degree in economics, recognized he was on to something here.  So he decided to partner with Pat McCallum and work Wizard into a regular magazine, one that focused on the cool, collectible side of comics, of which Image and Valiant, another indie, were prominently featured.  Gareb's brothers, Stephen and Ken, also joined the band.

It was from these meager beginnings that the Wizard juggernaut grew from.  Gareb seemed to have his finger on the pulse of pop culture fandom.  Issues routinely vaulted past 100,000 copies without even blinking.  Gareb started sister publications focusing on cards, toys, anime, and other fandoms.  Wizard eventually decided to become a player in the pop culture arena.  In 1997, Wizard bought the Chicago ComiCon, turning it into the Wizard World Chicago Con and the first of many con acquisitions.  In 2000, Wizard started a comic publishing company called Black Bull that featured talent like Mark Waid and Garth Ennis.  It seemed like there was nowhere to go but up.

And then, Wizard started overplaying its hand.  In 2005, Wizard decided to try to muscle Heroes Con, the granddaddy of comic conventions, out of the business.  To this end, they scheduled Wizard World Atlanta, which was four hours away from the Charlotte, NC home of HC, on the exact same weekend.  Just about anyone in the industry who was a name blew up, making special arrangements to attend Heroes Con and swearing off Wizard.  In mid-August, Wizard blinked and canceled the Atlanta show that year.

There were lots of curious stories about Wizard and their handling of big publishers like Marvel and DC, and the spillover that made Dark Horse and Image pull out of their cons.  Most of it is behind-the-scenes whispers that I don't think I have the right to present as fact, but if anyone wants to tell the story, please do.  Bottom line:  Wizard was burning bridges left and right, and a lot of people who they needed to draw crowds were telling them where to get off.  In 2006, Wizard went from a perfect bound magazine to the more traditonal stapled layout.  In November that year, McCallum, the EIC, got sacked, and Wizard has yet to say why.  In August 2008, longtime editor Brian Cunningham got the thumb.   In 2009, it laid off 10 percent of their staff and replaced them with freelancers.  That year, they also cancelled Wizard World Los Angeles five weeks before the show was to go down, angering a lot of vendors who had already transported material, made non-refundable arrangements, and other logistics who were now holding the bag ( Betsy Russell , just starting her career revival as Jill Tuck in the Saw movie series, was to be one of the guests there). That year also saw Wizard buy up the Big Apple Con to go head to head with Reed's New York Comic Con (Wizard surrendered in 2013, and Big Apple is now back in the hands of founder Mike Carbonaro).

2010 didn't go any better.  By the end of the year, Wizard would only be selling about 17,000 copies of its magazine.  In January 2011, Rich Johnston, my boss at Bleeding Cool, reported that Wizard Magazine was going to be canceled.  Wizard confirmed this, saying that it would be replaced with an online magazine called Wizard World in February 2011.  The first issue went live on March 2.  (It was during this time that Wizard did something shady -- they had offered a bunch of subscription specials, then cancelled the magazine shortly thereafter, not offering refunds.  Many people trolled Wizard about this, including a YouTuber called White Lando Calrissian, who famously went to Wizard cons to get a statement from staffers.  Wizard eventually offered free admission to Wizard shows to subscribers.  This was not the PR coup you might expect.)

With 2011 rolling, it was clear the wheels were falling off the bandwagon.  All the sister publications of Wizard were cancelled by this point.  Wizard got itself on the stock market through a reverse merger, with the Shamus brothers getting a bunch of shares.  The company began selling stock shares on the floors of its conventions to the fans, another entry for the, "It seemed like a good idea at the time," file.  In late 2011, Gareb Shamus was pushed out as CEO of Wizard, replaced in March 2012 by John Macaluso.  He also had shares -- between the Shamus brothers and Macaluso, roughly 40% of the company was in their hands.

Among the people who should be noted in this is one Paul Kessler.  Kessler joined Wizard's board of directors in 2013.  He also owns real estate like office buildings and is the founder of the Bristol Investment Fund.  We will be getting around to him in short order.

Wizard needed to do something to keep their brand alive.  Cons are very easy to make money with, but some shows did fine, some didn't, and Wizard would occasionally mention in its SEC reports that it would have trouble making a profit for the year.  It was then Wizard decided to jump on the streaming media bandwagon.  There's a reason Taylor Swift is starting her own online channel -- if you have a big enough fan base, the lack of overhead makes an online channel practically a license to print money.  Wizard partnered with Cinedigm and launched ConTV in March 2015, which featured, among other things, a game show hosted by Bruce Campbell, a reality show starring former Power Ranger David Jason Frank, and an original movie starring Kevin Sorbo.  While ambitious, it was a practical disaster -- starting up ConTV was named the primary reason Wizard finished 2015 with a loss of $4.25 mil.  Wizard became a minority holder in the channel, letting others handle the books and programming, scaled back the number of conventions from 25 in 2015 to 19 in 2016, and saw Macaluso resign as CEO.  He was replaced by one John Maatta.

Everybody still with me so far?  That's good!

In May 2016, Wizard dropped a bombshell -- they had a bunch of people from the Marvel Cinematic Universe coming to Wizard World Philly.  Industry insiders whisper that it took Wizard $1 mil up front to get them all, and most of them you couldn't just get an autograph, you had to buy the special VIP package to do it.  I suspect this is where the trouble developed.  In July, 2016, Wizard moved their offices into a building owned by the aforementioned Kessler.  The 63 month lease was paid for in advance to the tune of $200,000 cash.  That arched some eyebrows.  But that was nothing compared to October 2016.

In October 2016, two strange things happened in one day -- Ken Shamus resigned as a board member, and CMO Stephen Shamus got sacked from Wizard.  Wizard also filed a lawsuit against Stephen, alleging that he was using Wizard to book big name guests on Wizard's dime, getting items signed by the celebrities himself (this is not uncommon in convention circles), and then selling it for the benefit of him and his compatriots, Wizard alleging $1 mil worth.  Shortly thereafter, Stephen filed a countersuit, alleging wrongful termination and that the lawsuit was bullshit.

Then, November 22.  While the country was preparing for Thanksgiving, Wizard filed its SEC report.  And they said that, while they had enough money to stay in business until the end of 2016, they lacked funds for longterm operations in 2017.  Yes, Wizard was running out of money.

Side note:  there was supposedly supposed to be a shareholders' meeting by now, but one has not happened yet.  This did not portend well.

On Friday, December 2, Wizard announced it would tell the world about the new financing it had arranged on Monday.  Rich Johnston at Bleeding Cool actually scooped the announcement -- Kessler's BIF was going to invest $2.5 mil in Wizard, secured against Wizard assets.  In exchange, they would get 12.5% interest, a half million shares, and options on up to 3 million more.

This, as you might expect, has not been met with enthusiasm by the shareholders.  Rumors are swirling that they are planning a class action lawsuit, alleging that the financing was done without consulting them or asking permission, maybe more favorable terms could have been found, and Kessler and Maatta diluted the value of their own stock shares.  The big shareholders are gearing up, but...well, remember when I said Wizard sold shares of its stock to fans on the convention floor?  Yeah...that's going to be a problem.  There is also rumors of a shareholder revolt kicking both Kessler and Maatta out.

If Kessler is hoping to take control of Wizard, possibly by being first creditor during a bankruptcy liquidation (which would free Wizard of things like those longterm leases they signed on convention spaces like in Rosemont), he needs to act quick.  I've mentioned before that comic books are dying.  The company that puts on the Amazing Arizona Comic Con runs three large shows besides Arizona -- they just announced they are canceling two of them for next year, saying the demographics and returns just don't make four shows profitable (Arizona is interesting, because it was during an off year for Arizona that Image Comics made its own Image Con to fill the gap).  A number of longtime comic shops are reporting problems making enough money to keep the lights on.  The last Wizard World show this year was the November 4 weekend in Pittsburgh, and it was a complete disaster -- attendance was so low, Wizard was offering vendors free booth and table space at other shows to keep them happy.

Longtime readers are aware of my sometimes contentious relationship with Wizard.  But while we didn't always get along, I never wanted Wizard to fail.  Honestly.  I wanted them to make some changes, fix a few things, but I never wished that level of ill on them.  This puts me in the minority, as a LOT of people are licking their chops at this, which I don't think is fair -- there's a lot of good people working for Wizard, and they are now caught up in events completely beyond their control that will determine their careers.  Spare a thought for the innocent, will you?

The first Wizard show of the year is New Orleans on January 4.  After that, it's Portland in Februrary.  Beyond that?  I'm afraid to guess.

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