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Dylan Stableford

Ads on Covers: Scholastic is Ad it Again

Dylan Stableford Editorial - 06/05/2009-11:14 AM

For our June issue’s cover story—“The Great Cover Ad Debate”—we ran an online poll asking readers if selling ads on magazine covers is a violation of editorial ethics, or a legitimate business opportunity. The results were surprisingly close, and hinted that the overall industry position on cover ads is softening:

51 percent of respondents believe any form of cover advertisement is a violation of editorial ethics. However, 46 percent think cover ads are a legitimate business opportunity,

One of the magazines that is beginning to explore this opportunity openly is Scholastic Parent & Child, which got some blowback from the American Society of Magazine Editors over its use of an ad on a recent cover.

“That’s the only ‘Full Monty’ execution we’ve seen that just went ahead and put an ad—two, actually—right on the cover,” ASME president and Runner’s World editor David Willey told FOLIO:. “There was no attempt to make the ads feel like they were part of an editorial execution or idea at all. The other magazines that have tried new things have all taken different approaches, but none of them were that blatant.”

Well, Willey won’t be pleased with Parent & Child’s June issue, which features a cover strip ad for Sunny D that “wraps” to a back cover ad.

Scholastic, though, is unapologetic. “In June, we actually had three advertisers compete for the ad space,” publisher Risa Crandall said. “In print, you don’t tend to sell out, so we have found that this kind of advertising is getting clients to act more quickly. Last year we finished up 28 percent in ad pages; right now, we are tracking 14 percent ahead of that. We decided to go the route of cover ads based on innovation and creativity—not as a response to the economy."

Dylan Stableford

What a Time Inc. Spin-Off Might Look Like, Part II

Dylan Stableford M and A and Finance - 06/04/2009-10:46 AM

Last week, after Time Warner announced that it would spin off AOL—ending a disastrous, marriage with the former dial-up powerhouse—analysts and media industry onlookers turned their attention, almost immediately, to Time Inc., TW’s troubled publishing arm. Would Time Warner, as some have speculated for years, want to shed Time Inc., too?

Rich Greenfield, an analyst at Pali Research, thinks so: “Unlike many of its media peers, we believe [CEO] Jeff Bewkes and the Time Warner board of directors have no emotional attachment to the assets within Time Warner. In turn, we would not be surprised to see Time Warner seek a separation or sale of its publishing division (magazines) following the AOL spin. With publishing set to represent under 10 [percent] of Time Warner’s EBITDA post-AOL … and the inherent difficulties of shifting Time Inc.’s magazine business to an online subscription model, we believe it may make sense to further simplify Time Warner down to only cable networks and filmed entertainment in 2010.”

But Reed Phillips, managing partner at media banking firm Desilva + Phillips, in an e-mail to FOLIO:, doesn’t think the AOL spin will usher in a quick flip of Time Inc.:

I don't think the spin-off means that much to Time Inc. I believe their Internet operations are pretty independent of AOL and for areas of overlap they can work out agreements to deal with those issues. If TW decides to spinoff Time Inc., I don't think that would happen for another year. If they do so, the deal might look similar to what they are doing with AOL—particularly if the M&A market has not recovered by then.

Of course, we’ve heard this kind of rampant speculation about a Time Inc. spin-off many times before. In 2007, for instance, FOLIO: published this story—“What a Time Inc. Spin-Off Might Look Like”—about just that:

"Bewkes is not a magazine guy, which I think is very important," says one magazine industry observer. "He's a TV guy. And I think that when you get right down to it, the core properties that Bewkes knows about and cares about are the video and movies, not print. Because even if they invest heavily in developing new digital versions of their magazines, it's going to cost money. Meanwhile the revenue is going to continue to be flat to declining."

But according to Reuters, Bewkes “has simply said that by shedding the company’s cable and internet businesses—it is spinning off both Time Warner Cable and AOL—Time Warner will be able to concentrate on 'creating and distributing content,’ which would presumably include its magazines too.”

Dylan Stableford

Law Journal Launches Sotomayor Web Portal

Dylan Stableford B2B - 06/02/2009-15:20 PM

There have been plenty of bad (even egregious) examples of magazines looking to capitalize on big media stories for their own benefit (see “The Ethics of Covering Heath Ledger,” "People Looks to Capitalize on Newman Death" et al).

 This one, however, is a good example of a niche magazine trying to capitalize on a general-interest story that legitimately crossed over to its market.

Incisive Media’s National Law Journal has launched something called “The Choice,” an online “news center tracking breaking news, background, and commentary” related to the nomination and confirmation of Judge Sonia Sotomayor as the nation’s next Supreme Court justice.  The site will pull in original and related coverage from Incisive’s NLJ, American Lawyer and New York Law Journal.

Without a dedicated URL, and a limited shelf life, this may be a short-lived experiment.

But who knows? Maybe it’ll work, maybe it won't, but, at the very least, it’s opportunistic.

Dylan Stableford

Print-to-Web Codes: Coming to a Magazine Near You

Dylan Stableford emedia and Technology - 05/27/2009-15:02 PM

Last month, a French magazine called Amusement announced that it had become the “first-ever magazine connected to the Internet”—linking a page in its magazine to the Web using RFID (“radio-frequency identification”) technology.

The process, however, was something out of a James Bond film—readers were instructed to bring the page near a specially-designed “RFID interrogator,” which was plugged into their computer’s USB port. As we explained it: “The RFID-tagged page has a unique ID number, which is then scanned by the device, unlocking exclusive online content—in this case, games, videos and assorted digital applications.”

In other words, a pain in the ass for non-nerds.

Now comes the word that simpler print-to-Web technology—big in Japan—may be coming to U.S. magazines sooner than previously thought.

According to a post on PBS’s Media Shift blog, QR codes—two-dimensional codes (like the one used as a Pet Shop Boys album cover, above right) embedded in print, scanned by Web-enabled camera phones—are starting to appear in European magazines. Once scanned, the phone’s Web browser is pointed to a site with, presumably, additional buying information, special offers or exclusive content.

This development would seem to have serious potential over the aforementioned French quarterly’s complicated use of RFID.

But given my own Web-enabled phone’s spotty coverage (hi AT&T!), the rise of URL shorteners and increasing ubiquity of texting—wouldn’t a dedicated (and shortened) URL printed in a magazine or ad do the trick?

UPDATE: As a below commenter points out, U.S. magazines are already experimenting with print-to-Web codes. (FOLIO: even profiled one provider back in March.) What I meant to say (and I assume Media Shift meant too) is that QR codes and similar technology may be gaining traction in the U.S. market soon. They're already here.

Dylan Stableford

Second Issue of 'Mine' Doesn't Feel Like It

Dylan Stableford Editorial - 05/27/2009-11:06 AM

Great idea, but Time Inc.’s Mine kinda sucks.

There, I said it.

When I first heard about Time Inc.’s experiment in publishing a customized magazine, I was impressed—particularly that a big publishing conglomerate would attempt such an innovative idea—and hopeful that the concept, at least, would be successful, even if the business model was not.

After two issues, however, it’s clear to me that the execution of this cool idea is failing from a consumer perspective.

Why? Because nothing about Mine feels like it.

From the customized belly band Lexus ad with the mismatched shades of grey—for a car I have no interest nor means to buy (the all-new 2010 RX was inspired by me? I don’t think so)—to the dated content (James Poniewozik’s essay on the future of mobile television peppered with references to Thanksgiving and the Super Bowl) that is neither customized to me nor matches my interests (I like Sports Illustrated, don’t like football—so why, in May, would I want to read a story about an ex-Green Bay Packer’s drug use?).

My hope probably should’ve been dashed much earlier. That Time Inc. only solicited answers to three questions—designed mainly to fill in the blanks on the Lexus ads—before cobbling together my “custom” magazine was not a good omen.

I’m not the only one in this office that thinks Mine feels like someone else’s. My colleague, Bill Mickey, made that call after his first issue arrived.

Still, there is at least one jaded media type who is ready to call Mine a success. Slate’s Farhad Manjoo says his skepticism was “misguided”:

I've received two issues of Mine, and I love it. Unlike a lot of the publications that slip into my mailbox each month, Mine is full of stories that I actually feel like reading. As promised, many of the articles look as if they were picked just for me.

Mine isn't an echo chamber that merely reflects my narrow views. Instead, reading it is a bit listening to Pandora, the online service that serves up songs based on my musical preferences. Like Pandora—and like the best magazine editors—Mine exposed me to stuff that I liked but probably wouldn't have sought out on my own.

To each his own.

Dylan Stableford

Do Publishers Owe It to Their Readers to Ensure the Accuracy of What They Publish?

Dylan Stableford Editorial - 05/22/2009-12:06 PM

Earlier this month, I wrote about a weak case against Entrepreneur ("A Ponzi Suit That Sounds Like a Scam") in which a group of investors filed suit, alleging the magazine misled them about a company featured on its “Hot 100” list.

According to the suit, Entrepreneur “deliberately, willfully and recklessly failed to exercise due diligence in publishing information” about a company called Agape, whose founder, Nicholas Cosmo, was arrested and charged with a $370 million mail fraud. (According to, it appeared Cosmo was running an alleged Ponzi scheme, similar to Bernie Madoff's.)

At the time, I said the lawsuit was bogus. And I still think it is. But one of the arguments Entrepreneur is using to try to convince the court to dismiss the claim—while, perhaps, legally correct—sounds as almost as egregious as the lawsuit itself.

According to court documents filed yesterday, Entrepreneur, citing rulings in similar court cases, argued that it is “under no duty to provide information with care to its readers”:

“New York law establishes … that a publisher is under no duty of care to its readers to ensure the accuracy of published information  … A publisher, even those who maintain a paid subscription service, such as Entrepreneur, owes its readers no duty to ensure the accuracy of its publications, and thus, cannot incur liability for an allegedly inaccurate statement.”

A magazine is “under no duty to provide information with care to its readers?” I’m sorry, what?!?!

If not, then why publish a magazine or Web site in the first place? (“Screw readers, they don’t need trusted information!”)

What about the subscribers who invest in Entrepreneur? Don’t they deserve accuracy? Or at least care?

Again, it’s probably all legaleze, but it’s awfully weird for a publisher to argue it isn’t obligated to care about its readers.

Click here for a PDF of the court documents.

Entrepreneur’s better argument (somewhat buried on page 10) is about the purpose of its “Hot 100”—and why investors shouldn’t necessarily deem a company on the list worthy of their hard-earned cash.

“The Hot 100” list, Entrepreneur said, was “offered as informative material to an audience of general readers” and does not “draw any conclusions nor makes any recommendations to its readers, as to the financial suitability of an investment in any of the listed companies.”

Dylan Stableford

Jimmy Kimmel Channels Infamous Jon Stewart MPA Appearance at 'Upfront' Event for Advertisers

Dylan Stableford Sales and Marketing - 05/21/2009-12:27 PM

RELATED VIDEO: Kimmel's Upfront Presentation

A few years back, the Magazine Publishers of America organized a rally during television’s “Upfront Week”—the annual glitzy gathering of network executives and media buyers where fall programming lineups are unveiled by their on-screen stars—staging a peaceful protest outside of the Upfronts wearing goofy t-shirts. The stunt was part of the MPA’s three-year, $40 million advertising campaign touting the power of the print medium—and to remind potential ad buyers heading into the network’s pitch that magazines  are here too!

Perhaps the MPA should’ve hired Jimmy Kimmel.

Kimmel, comedian and the host of ABC’s Jimmy Kimmel Live, spoke to advertisers during his network’s presentation, and promptly eviscerated Jay Leno, the business of Upfronts—and ABC itself.

“If Jimmy Kimmel still has a job at ABC on Wednesday,” the New York Times wrote, “he is either a very lucky or very deft comedian, or he has great blackmail photos of the network executives.”

“Everything you’re going to hear this week is [bullshit],” said Kimmel. “Let’s get real here. Let’s get Dr. Phil-real here. These new fall shows? We’re going to cancel about 90 percent of them. Maybe more.

“Every year we lie to you and every year you come back for more,” he continued. “You don’t need an upfront. You need therapy. We completely lie to you, and then you pass those lies onto your clients.”

Kimmel added: “I think all our shows are going to work this year. I really do … I don’t, really. The important thing to remember is, who cares? It’s not your money.”

Déjà View

The scene reminded me of another event staged for advertisers in which a comedian, hired to entertain, took a hard left turn into a Friar’s Club roast territory.

The comedian, you may recall, was Daily Show host Jon Stewart, who was hired by the MPA for a reported $150,000 to host an Advertising Week event in 2005. Instead, he delivered a blistering rant on the magazine industry in front of a roomful of gasping advertisers and shocked magazine executives.

It started innocently enough. "Do the men on the cover always have to be—what's the word—glistening?" Stewart asked Men's Health editor Dave Zinczenko. "I enjoy health, yet when I read the magazine, I don't know whether to go to the doctor or rub my nipples."

Stewart turned to Jim Kelly, Time magazine’s editor at the time: "Time magazine has been a tradition in America, yet...what's happened? One federal prosecutor says 'let me see your notes' and immediately everyone pulls their underwear over their heads and hands it over—Not only that ... Newsweek breaks the story."

Soon, though, it devolved into an attack on print’s relevance in the 24-hour news culture.

"The way news is driven today is not through print," Stewart said. "I don't consider print media as relevant," adding that his infamous appearance on CNN's Crossfire that year wouldn't have had the same impact in print. "I wouldn't have walked into a newspaper or magazine and gotten angry, because they're not the ones driving the discourse."

Dylan Stableford

Anna Wintour's 60 Minutes Episode Watched by 10.2 Million

Dylan Stableford Editorial - 05/19/2009-10:15 AM

The numbers are in: Vogue editor Anna Wintour’s highly-anticipated 60 Minutes profile drew 10.2 million viewers for CBS on Sunday, according to Nielsen’s rating data released today.  That’s about a million more than NBC’s Dateline drew for its exclusive interview with ailing actress Farrah Fawcett on Friday.

Executives at CBS are said to be pleased by Wintour’s draw—6.4 percent of U.S. households were tuned in, generating a 12 percent share—considering the weekly show, which airs at 7:00PM EST, is on while it’s still daylight. (A 60 Minutes interview with Barack Obama in the darkness of November, for instance, drew 25.1 million viewers.)

It’s unclear how many more online viewers the piece drew—though it was picked up by blogs including Gawker, New York magazine’s “The Cut” and Radaronline, among other outlets.

Click here to watch the entire Wintour segment.

Dylan Stableford

Newsweek Unveils 'The Newsweek'

Dylan Stableford Consumer - 05/18/2009-11:34 AM

In December, FOLIO: published a report on Newsweek, breaking the story that the venerable news magazine was considering an overhaul—rethinking everything from its circulation to its design to its news coverage to its voice—with the end result something akin to the Economist, a “thought-leader” position editor Jon Meacham (and Time editor Richard Stengel, for that matter) not-so-secretly covets. (It was one of our most highly-trafficked stories of 2008; Newsweek eventually confirmed the news.)

Well, today marks Day One of the New Newsweek (we’re calling it “The Newsweek”).  And Meacham explains the shift (“A New Magazine for a Changing World”) in his editor’s letter:

It is no secret that the business of journalism is in trouble. Venerable American institutions are facing uncertain futures; once profitable enterprises are struggling to find ways to fund their operations. At an otherwise lighthearted White House Correspondents' Association Dinner, President Obama concluded his remarks on a serious note, expressing his sympathy for the trade's plight and quoting Thomas Jefferson, who remarked that he would rather have newspapers and no government than a government without newspapers.

The point, we believe, holds true for a magazine like ours. We think what we do is important, but in the end what matters more is whether you think so, and in so thinking, whether you find that our work repays the investment of your time. And so the magazine you are holding now—the first issue of a reinvented and rethought NEWSWEEK—represents our best effort to bring you original reporting, provocative (but not partisan) arguments and unique voices. We know you know what the news is. We are not pretending to be your guide through the chaos of the Information Age. If you are like us, you do not need, or want, a single such Sherpa. What we can offer you is the benefit of careful work discovering new facts and prompting unexpected thought.

Counterintuitively, perhaps, the weekly cycle is a promising one in a world running at a digital pace. The Internet does a good job of playing the role long filled by newspapers, delivering headlines, opinions and instant analysis. Many newspapers have long been forced into a traditional newsmagazine model, with longer-form reporting and more big-picture thinking, but they still have to do it every day, and there is only so much wisdom one can summon in a few hours. As we see it, NEWSWEEK's role is to bring you as intellectually satisfying and as visually rich an experience as the great monthlies of old did, whether it was Harold Hayes's Esquire or Willie Morris's Harper's, but on a weekly basis.

There will, for the most part, be two kinds of stories in the new NEWSWEEK. The first is the reported narrative—a piece, grounded in original observation and freshly discovered fact, that illuminates the important and the interesting. The second is the argued essay—a piece, grounded in reason and supported by evidence, that makes the case for something. What is displaced by these categories? The chief casualty is the straightforward news piece and news written with a few (hard-won, to be sure) new details that does not move us significantly past what we already know. Will we cover breaking news? Yes, we will, but with a rigorous standard in mind: Are we truly adding to the conversation? When violence erupts in the Middle East, are we saying something original about it? Are our photographs and design values exceptional? If the answers are yes, then we are in business.

Read the rest of Meacham’s letter here. See the new table of contents and interior spread below.

A Changing World

NEWSWEEK 2008 2007 %CHNG
AD PAGES 1,505.87 1,859.02 -19.0
AVG. PAID CIRCULATION* 2,701,893 3,109,228 -13.1
SINGLE COPY SALES* 106,114 92,576 14.6

* Second half

Dylan Stableford

One Music Magazine Celebrates its Return from Death While Another Scrambles to Avoid It

Dylan Stableford Consumer - 05/14/2009-14:06 PM

RELATED SLIDESHOW: Relix Relaunch Party

Last night on the west side of Manhattan, a group of about 150 people, armed with an excess of sweet tea vodka and Magic Hat, gathered in a renovated basement bar to celebrate the relaunch (or, more accurately, a reprieve from the governor) of a music magazine.

Unlike some magazine parties I’ve been to recently, this one felt like a celebration—and with good reason. Relix, which began as a Grateful Dead fanzine in the ‘70s, stared down its own death and will survive, at least for now, by the guts and guile of its staffers, who found a backer (Peter Shapiro) and took across-the-board pay cuts to, as the Dead would say, keep on  truckin’.

Yet, despite the generally good vibes, there was something of a dark buzz in the room: Paste, one of the music industry’s well-respected, up-and-coming titles (and one of Relix’s quasi-rivals), had hit on hard times, and, according to various music blogs, was about to launch a fundraising campaign to save its own beer-soaked hide. (Paste confirmed the rumors today.)

It used to be that the fall of a competing magazine would trigger at least a bit sinister, inner-glee. Not anymore. As one music magazine executive put it: “This vertical is already small enough—we need each other now.”  

Dylan Stableford

R.R. Donnelley's $1.3 Billion Letter to Quebecor

Dylan Stableford M and A and Finance - 05/13/2009-09:42 AM

Yesterday, R.R. Donnelly, the Chicago-based printer, sent a letter to Quebecor World indicating its interest in acquiring the mega-printer for approximately $1.3 billion. It's unclear whether or not Donnelley's overture is hostile, nor is it clear whether or not a deal of this size would raise the ire of antitrust regulators (I'm thinking it might).

Here's the letter in full:

May 12, 2009

Jacques Mallette
President and Chief Executive Officer
Quebecor World Inc.
999 de Maisonneuve West
Suite 1100
Montréal, Province of Québec
H3A 3L4

David McCarthy
Quebecor World (USA) Inc.
150 East 42nd Street
New York, NY 10034

Steven Strom
Managing Director
Jefferies & Company, Inc.
520 Madison Avenue, 10th Floor
New York, NY 10022

Re: Purchase of All or Substantially All of the Assets of the U.S. and Canadian Debtors

Ladies and Gentlemen:

As you know, on August 11, 2008 we expressed to you in writing our interest in acquiring a significant portion of the assets and businesses of Quebecor World. We subsequently further indicated our interest in pursuing a transaction in conversations with various people, including Mr. Randy Benson, Chief Restructuring Officer of Quebecor World Inc. (“QWI”), Mr. Andy Kramer of UBS, and Mr. Eric Korsten of Jefferies & Company, Inc. Although we have not received any response to our previous proposal, we have continued to follow the publicly-available information concerning your reorganization proceedings.

We recently reviewed the draft First Amended Plan of Reorganization proposed with respect to the U.S. bankruptcy proceeding and the draft Plan of Reorganization and Compromise proposed with respect to the Canadian reorganization of QWI. We refer to these documents as the "Plans", and to QWI, Quebecor World (USA) Inc. and their debtor affiliates as the "Quebecor Debtors".

After reviewing the draft Plans in light of our own valuation of the relevant companies as stand-alone businesses, we believe that the proposed transaction set out in this letter is superior for the Quebecor Debtors and their creditors to the restructuring proposed by the Plans in their current form. Accordingly, R.R. Donnelley & Sons Company (“RRD”) is pleased to submit to you a preliminary indication of interest to purchase all or substantially all of the assets and properties of the Quebecor Debtors (including shares of their Latin American subsidiaries), free and clear of all claims and interests, on the terms and conditions described below (the “Acquisition”). RRD is ready to proceed as quickly as possible to reducing its proposal to a legally-binding asset purchase agreement for implementation in a court-approved sale pursuant to Section 363(b) under the U.S. Bankruptcy Code and accompanying proceedings under the Companies’ Creditors Arrangement Act ("CCAA"). We would be willing to consummate the Acquisition prior to or in connection with plan confirmation, as you consider in the best interests of the Quebecor Debtors and their creditors.

We understand and appreciate the time and effort that have gone into preparing the Plans, but we only learned of the Plans’ terms upon publication and, in light of those terms, we would like to submit another approach for your consideration as you weigh the options available to you to propose the best possible plan of reorganization for the Quebecor Debtors and their creditors.


The key provisions of our proposal are as follows:
(a) Purchase Consideration. We propose to pay the Quebecor Debtors (in the aggregate):
cash in an amount equal to the cash amount contemplated for distribution under the draft Plans, which we believe is approximately US$700,000,000; plus
cash on balance sheet (estimated as of June 30, 2009, at $257,000,000 pursuant to the Plans); plus
30 million shares of RRD common stock, which represent approximately 15% of RRD’s outstanding shares and have a value of US$394,200,000 based on the closing trading price on May 11, 2009. RRD common stock is listed for trading on the New York Stock Exchange, and the current market capitalization of RRD is approximately US$2.7 billion.

We believe that the publicly-listed common stock of the pro forma combined company will offer attractive investment characteristics for current creditors of the Quebecor Debtors when compared to the newly-issued securities of a stand-alone reorganized company. In addition to providing an attractive valuation today and immediate liquidity, for those investors that choose to remain stockholders of RRD, our proposal offers the opportunity to enjoy the synergies involved in the Acquisition and participate in any future appreciation of RRD stock as we grow our business around the world. This is an exciting opportunity and we expect that the Acquisition will be accretive to RRD stockholders after the first 12 months of combined operations.

(b) Valuation Assumptions. Our proposed acquisition price is based on publicly-available information and our deep knowledge of the industry. We have assumed (i) interim operations in the ordinary course, (ii) normalized working capital at closing, (iii) the assets and properties of the Quebecor Debtors (and their Latin American subsidiaries) are consistent with our business expectations based on our industry knowledge and our review of public financial information, (iv) the non-debtor subsidiaries are free of liabilities outside of the ordinary course of business, and (v) the assets and properties of the Quebecor Debtors will be transferred to us free and clear of all claims and liabilities (other than ordinary course trade payables, specific contracts that we ask you to assume and assign to us, and other liabilities to be agreed).

(c) Financing. There would be no financing condition to the Acquisition. We have sufficient funds to pay the cash portion of the consideration from cash on hand and/or availability under our existing revolving credit facility.

(d) Internal Approvals. This proposal has been reviewed at the highest levels of RRD and we are pleased to advise you that the only further internal approval necessary for the execution and delivery of a binding asset purchase agreement is the approval of our Board of Directors. No shareholder approval is required.

(e) Due Diligence. We are prepared to work with you and our respective advisors to proceed as expeditiously as possible to complete our business, financial, accounting, tax, environmental and legal due diligence review, including meetings with QWI’s management, and the reasonable opportunity to inspect QWI’s facilities. With access to the right data and personnel, we are confident that this work could be completed without material delay.

(f) Regulatory Matters. The Acquisition will require expiration of the applicable waiting period under the U.S. Hart-Scott-Rodino Act and under the Competition Act Canada, if applicable, approval under the Investment Canada Act and, potentially, filings in other jurisdictions. We and our advisors have done considerable work assessing the regulatory issues associated with the proposed Acquisition and are confident that the proposed Acquisition can be completed in a timely manner.

(g) Competitively Sensitive Information. We are sensitive to any concerns that you may have with respect to the treatment of competitively sensitive information during the due diligence process. One of the first conversations that we would like to suggest take place would be between your antitrust counsel and our antitrust counsel at Sullivan & Cromwell LLP and Osler, Hoskin & Harcourt LLP. Our advisors are very familiar with the issues relating to conducting diligence for potential strategic transactions in this industry and can describe to you the set of safeguards that we would implement to avoid any risk that information is shared inappropriately.

(h) Structure and Documentation. The purchaser would be one or more wholly-owned subsidiaries of RRD. There would be no other investors or sources of capital or financing for the Acquisition. We would expect the transaction to be documented in a customary asset purchase agreement, with an agreed form of bidding procedures, contract procedures and sale order for the U.S. proceeding, and appropriate equivalent Canadian documents and proceedings relating to the CCAA. The asset purchase agreement would be effective upon court approval and would include customary representations, warranties, covenants and closing conditions and other terms customary for similar transactions. Following due diligence, we are interested in exploring alternative structures in order to achieve the most tax efficient transaction for the parties.

(i) Stalking Horse Protections. We do not require any exclusivity period, no-shop provisions or expense reimbursement to conduct due diligence or finalize the terms of the proposed Acquisition. However, once we execute a definitive asset purchase agreement, we will require customary protections for a stalking horse bidder in light of the value created for the Quebecor Debtors by our offer, including overbid protections and other bidding procedures to be agreed, milestones to closing and a termination right if the milestones are not met, expense reimbursement, and, in the event the Quebecor Debtors consummate an alternative transaction, a break-up fee in an amount to be agreed.


We would like to suggest that you immediately identify a working group at the Quebecor Debtors that can work with us and our advisors, Sullivan & Cromwell LLP, and Osler, Hoskin & Harcourt LLP, to conduct the due diligence process and finalize the terms of the definitive asset purchase agreement. As mentioned above, prior to signing a definitive asset purchase agreement, we require no expense reimbursement and no deal protection of any sort. We understand that the Quebecor Debtors would be free to abandon discussions with us at any time (and vice versa), and we believe that we can progress very quickly to agree upon a transaction without materially impairing your ability to solicit approval of the current draft Plans later if for any reason you decide not to proceed with a transaction with RRD. We stand ready to execute a customary confidentiality agreement upon request.

About RR Donnelley
RRD is a full-service provider of print and related services, including business process outsourcing. RRD provides the industry’s broadest product and service line, including solutions in commercial printing, direct mail, financial printing, print fulfillment, labels, forms, logistics, call centers, transactional print-and-mail, print management, online services, digital photography, color services, and content and database management to customers in the publishing, healthcare, advertising, retail, technology, financial services and many other industries. RRD’s broad product and service mix enable the company to provide end-to-end services to customers in virtually every business, education, government, and non-profit sector.

RRD has operations on four continents to provide exceptional service to leading global organizations. Its agile fleet of digital printing devices includes more than 1,000 proprietary and commercially-available units across more than 60 facilities worldwide.

Through its leading proprietary eCommerce systems it provides customers a comprehensive array of print management, premedia, and other services. RRD’s development pipeline continues to deliver innovations, such as the world’s first 1200 dpi 4-color inkjet press and the company’s recent announcement of a breakthrough that will bring lithographic economics, flexibility, and performance to variable printing.

Its logistics capabilities include services that help it effectively deliver customers’ mail deep into the postal stream, handle complex rollouts of retail signage and point of sale materials, fulfill direct mailings that incorporate personalized URLs, and provide customers online access to tracking information.

Since 2004, RR Donnelley has completed acquisitions and asset purchases in Latin America, North America, Europe and Asia.

We believe that we are uniquely qualified to assess and complete the Acquisition given our experience in financing and executing major transactions in the printing industry. We have a proven track record of successful execution of complex, structured transactions, providing you with a high degree of certainty that we can consummate the Acquisition in a timely and efficient manner.

* * * *

This letter is not a legally-binding offer or agreement. Any legally-binding offer or agreement will be set forth only in definitive documentation approved by you and us.

If you have questions about our letter or would like to discuss the next steps, please do not hesitate to contact me. You also may contact Stefan Selig of Banc of America Securities/Merrill Lynch & Co. (REDACTED), or Andy Dietderich at Sullivan & Cromwell LLP (REDACTED).

In connection with our own disclosure obligations we will be publicly disclosing this letter by filing it with the US Securities and Exchange Commission. We also understand and appreciate that you will want to share this letter with the many stakeholders in your restructuring process.

We are very excited about the possibility of this transaction and look forward to taking the next steps with you.

Very truly yours,


By /s/ Thomas J. Quinlan III
Name: Thomas J. Quinlan III
Title: President and Chief Executive Officer

cc: Louis J. Gouin
(Ogilvy Renault LLP)

Michael J. Canning, Esq.
Neil M. Goodman, Esq.
Joel M. Gross, Esq.
(Arnold & Porter LLP)

Murray A. McDonald
(Ernst & Young Inc)

S. Richard Orzy
Kevin J. Zych
(Bennett Jones LLP)

Ira S. Dizengoff
David H. Botter
Ryan Jacobs
David Staber
Sarah Schultz
(Akin Gump Strauss Hauer & Feld LLP)

Audra D. Cohen
Andrew G. Dietderich
(Sullivan & Cromwell LLP)

Edward Sellers
Randall Pratt
(Osler, Hoskin & Harcourt LLP)

Stefan Selig
(Banc of America Securities/Merrill Lynch & Co.)

Dylan Stableford

A Ponzi Lawsuit That Sounds Like a Scam

Dylan Stableford M and A and Finance - 05/06/2009-11:53 AM

Last May, Entrepreneur put Agape World, a Hauppauge, New York-based company, on its “Hot 100” list of fast-growth businesses.

In January, federal agents executed warrants on Agape’s offices, and Nicholas Cosmo [above], founder and owner of Agape World, was arrested and charged with a $370 million mail fraud. According to, it appeared Cosmo was running an alleged Ponzi scheme, similar to that of Bernie Madoff.

Earlier this month, a group of 87 investors (which may or may not include the actor Vincent D’Onofrio) filed a $178 million lawsuit against Entrepreneur, alleging the magazine misled them by putting Agape on its “Hot 100” without checking them out thoroughly.

Entrepreneur is no stranger to legal battles, many involving the use of the word “entrepreneur,” for which it holds a trademark and doesn’t mind flexing its legal muscle against other companies that use the word in their names. (Which, to me, would be like Time suing Rolex.)

This lawsuit, however, sounds like a scam.

That Entrepreneur should be responsible for investments made in a company that’s found to be fraudulent is laughable. Should investors sue Fortune because GM was ranked number five on the Fortune 500? Should I sue Sports Illustrated for picking the Mets to win the World Series when they crumble in September, and I lose my shirt in Vegas?

Of course not.  

According to the suit, Entrepreneur “did not attempt to verify the information it received from Agape, at no time did Entrepreneur visit Agape headquarters.”

How about those 87 investors try doing their own homework? And use something other than Entrepreneur?

Click here to read FOLIO:’s report on the suit. Click here for a PDF of the lawsuit. And click here for background on the federal case against Agape.