Can this company be saved?

images-3.jpegInvestors in Source Interlink (SORC), a frequent flier here at footnoted (see here and here and here) have been through a lot these past few years. When I first questioned some of their disclosures back in March 2005, Source was trading at just under $12. Today, it’s trading at just under $3. Just this year, the stock is down over 60%, a decline that’s hard to beat, unless you’re a bank specializing in sub-prime loans, which Source is not. It’s just a company that has never managed to figure out a decent business model, even though that hasn’t stopped the company from rewarding former Chairman and CEO Leslie Flegel who was able to airbrush his business accomplishments by endowing a b-school program.

So it was interesting to come across this exhibit filed late Friday detailing the severance agreement for Flegel’s son, Jason. Although Jason didn’t get the $1 million a year consulting gig that his father did when he stepped down last year, there’s also a consulting component to his deal too. But unlike dad’s three year deal, Jason was only given six months. Still, it’s hard to get too misty, given all the pay and perks that have been doled out to both father and son over the past 10 years.

Indeed, for all those b-school students out there, Source provides a great case study of exactly what not to do when you’re a public company: Go public via reverse merger, surround yourself with sycophants, milk the company for everything (and then some) and exit when the business strategy really starts to derail. Other than the Flegel’s, the only people who seem to have really benefited from Source have been the shorts. With the stock under $3, the majority of those folks seem to have moved on.

Investors/bottom-fishers who are still hanging around can only hope that Ron Burkle, Source’s largest shareholder, is able to figure something out. The latest news — or rumor — has Source merging with American Media, publishers of supermarket tabloids like The Star. But like the stories about shaky marriages that are featured in Ladies Home Journal’s “Can This Marriage Be Saved” column, it’s unclear whether there’s too much history to save Source.