Monday, November 18, 2013

1254 Forbes and MisFortune (Correct)

1254 Forbes and MisFortune

Somewhere in his magazine years ago, Steve Forbes wrote about third generation owners of family businesses.  He said, in effect, they generally send their company circling down the drain.

There are plenty of examples of third generation owners who don’t… the Waltons of Wal-Mart for example.   

But Steve seems to be right about his own business.

Forbes Magazine?  You can hear the vortex in the sink.

Now, the family owners of the nearly 100-year old “must read” in the world of business has put the thing up for sale.  This after selling pretty much every other piece of high-value property they own.

According to news reports from The Atlantic and Bloomberg, they  hope to reap up to $500 million for the magazine and its widely read and relied-on website.  Those same reports quote magazine industry insiders as saying the figure is unrealistic.

It isn’t that Steve’s a bad magazine guy.  To the contrary, he’s a very good magazine guy. His libertarian outlook has informed the magazine’s tone, but pulls no punches when it takes out after the  bad guys of business.  

And there’s no list like a Forbes List.  Wealthiest Americans, World’s Wealthiest, Most Influential men and women,  Highest-earning Entertainers, highest earning dead people (think Elvis and Sinatra.)  The biggest companies, the biggest privately held companies, and on and on.

But between the general downturn in print media, and some un-Forbes-like business moves, the magazine is on the ledge of its building and vertigo has kicked in.

Here’s some of the other stuff they’ve sold:  The world’s largest private collection of Faberge eggs. A ranch.  Some other real estate including their building on 5th Avenue in Greenwich Village (leased back for five years.)  The “Highlander,” a 151 foot yacht that has hosted more A-list names than a year of Entertainment Tonight.

Some time back, they also sold 45% of the company to Elevation Partners the private equity firm whose co-founder and mascot is the Irish singer Bono.

Elevation spent $30-million for its chunk and has written off most of that but still stands to be paid in full when/if the magazine sells.

Steve’s grandfather, Scotland-born BC Forbes left the Hearst papers and founded the magazine in 1917. Steve’s father, Malcolm took the reins at BC’s death in 1954.  The third generation took over in 1957.

That’s job security.  And Steve isn’t the only Forbes working for grandpa’s company.

But a funny thing happened along the way.

First, they “promoted” their long-time editor, Jim Michaels to … um… retirement.  That’s kind of like when the new owners of the New Yorker fired editor William Shawn.  These men WERE their magazines.

Somewhere in there, the Don Quixote mosquito of
politics bit Steve and he ran a disastrous campaign for the Republican Presidential nomination. Twice.

Not too much of a stretch.  After all, Malcolm Forbes had served in the New Jersey State legislature for awhile.  But the failure of the 1996 campaign apparently didn’t teach Steve much about investing his money.

Y2K was about the time the Forbes fire sale began.  The two events could be related.  Ya think?

Ad pages are way down; sister publications shed.

In times like these, a magazine needs a patron.  Kind of like when Bloomberg bought Business Week, which probably loses money, but so what, it’s Bloomberg.

A report circulated some years back that Conde Nast wanted to buy Forbes, but Forbes said the offer was too low and CN -- which would have been a reasonably good patron folded its checkbook and went home.

Competitor Fortune Magazine has the (dwindling) resources of Time Warner and eventually will have the backing of revived spinoff Time, Inc to carry its umbrella.

So where do the financial titans get their news today?  The Bloomberg Terminal, the Wall Street Journal, Financial Times, CNBC, Business, the New York Times, Google and Yahoo, Reuters.  Forbes doesn’t swing the weight it did for so many decades.  If it goes downmarket, it will lose its core readership.  If it sells too many Advertorials it will lose credibility. The website is worth more than the magazine and probably will survive.  But it won’t be the same in others’ hands.

Note to readers: I am retired from Bloomberg News.  For many of the years I worked there, my daughter, Julie Richards, was employed in the business/administration side of Forbes.  She was not consulted and did not otherwise participate in or contribute to this Wessay.

Correction: An earlier version of this post erroneously said BC Forbes served in the NJ Legislature. It should have said Malcolm Forbes.

Other Note to readers: For an interesting perspective on the JFK assassination, please click on the High Heels Hot Flashes link on the right side of this page for David Bedein’s remembrance at age 13.

I’m Wes Richards.  My opinions are my own but you’re welcome to them. ®
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© WJR 2013

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