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Matt Kinsman

Blame Game: Bankers vs. Publishers Over Covenants

Matt Kinsman M and A and Finance - 05/08/2009-14:59 PM

Covenant lite deals and the 30 percent cushions attached to many publishing loans a few years ago seem almost laughable today. Publishers are now being held to much stricter covenant terms and for many, that's an even bigger immediate danger than losses in revenue and EBITDA.   

Last month, a memo from BNP Media executives informing staffers of a 25 percent pay cut said banks are "forcing near unattainable terms on companies such as ours, considering the fact that there has been such a severe downturn in the economy."

The margin for error is razor thin for many publishers. Bankers are increasingly taking control of publishers, including GE Capital negotiating with ABRY Partners for the takeover of Cygnus and BIA Digital taking over Douglas Publications, which it first invested in as part of Douglas' estimated $15 million acquisition of the Briefings Publishing Group.

But is it the fault of bankers or publishing executives overleveraging their companies and taking on too much debt?  

"This is an easy time for CEO's to blame bankers and for bankers to blame CEO's," says Reed Phillips, managing partner at DeSilva & Phillips. "The truth is that there was a great supply of capital available and many publishers took advantage and leveraged their companies to very high levels. Because of the great supply, companies could play one bank off another and get better terms and more leverage. The end result was that this spiraled out of control because everyone - the banks and the companies - erroneously believed that the good times would continue. Instead, the music stopped and now a lot of people are paying the piper."

Matt Kinsman

Is Publishing Becoming a Minimum Wage Trade?

Matt Kinsman B2B - 04/29/2009-15:54 PM

The memo received by BNP Media staffers this week alerting them to 25 percent salary cuts for the foreseeable future includes a line that jumps off the page almost as much as that "25 percent" figure: "Minimum wage will be the floor for this reduction."

It's a line that assures employees the company won't be cutting below minimum wage (which of course, would be illegal), and only applies to those support positions that may be hovering around minimum wage after the 25 percent cuts.

But still, are things so bad that we have to be assured now that salaries won't be cut to minimum wage? Salary cuts usually start at the top and the Henderson family (who owns BNP) have taken theirs as well. However, an associate editor making $40,000 who is hit with a 25 percent salary cut is suddenly making $30,000. Forget trying to live on that in publishing capitals like New York City-that's a tough hit anywhere (BNP is based near Detroit).

As publishers continue to make cuts to keep their businesses alive, they need to be mindful of labor rules and regulations in their state, particularly with employees below a certain salary level. As Southern Breeze editor Mark Newman noted in FOLIO:'s March issue, many high level employees (particularly editors) need to "stop being figureheads and do some work." But for those entry and associate level employees, for whom the historic trade-off has always been "low pay but great experience," the returns are getting harder to justify. 

The company leaders who impose these cuts will need to balance their contribution margins against the eventual pushback: The unwillingness of their teams to tolerate major pay cuts even as they're being asked to do significantly more work. It's a dangerously narrow line to walk.

Matt Kinsman

Blogs as Big Business: Support Staffs and 300+ Posts Per Week

Matt Kinsman emedia and Technology - 04/02/2009-10:31 AM

Blogging is becoming the dominant force for many magazine Web sites and while most sites have their magazine staff blogging on a rotating schedule, the industry is starting to see some staffers dedicated full-time to blogging.

That's the approach The Atlantic has taken in hiring big names such as Jeffrey Goldberg, Ta-Nehisi Coates and Andrew Sullivan, who was named to the 2009 FOLIO: 40 for his efforts in making the Atlantic a credible online brand (its bloggers are also tasked with writing for the magazine as well-Sullivan's next project is to look at how the conservative party in England came back into prominence and what lessons that may have for the reeling Republican party in the U.S.)

Sullivan says that he typically posts 300 times per week (a number that surged to 400 or 500 a week during the presidential election). Of course, Sullivan has also been able to hire two full-time assistants to help navigate the white noise of the Web.

And with seeing traffic grow from 522,066 uniques and 1.4 million page views in January 2007 to 2.5 million uniques and 68 million page views in January 2008, it seems to be worth the investment.   

Matt Kinsman

Top CMS and Social Media Picks for Smaller Publishers

Matt Kinsman emedia and Technology - 03/25/2009-09:13 AM

The most popular content management systems have their passionate advocates, reminiscent of the Quark versus InDesign battles between art directors. Below, Joe Bachana, president and founder of technology agency DPCI, offers his three top choices in Web CMS for publishers who don't want to go the enterprise route. "I did not include proprietary Web CMS software in my top-3 pick since I don't think that small publishers can afford these solutions, certainly not in this economy," says Bachana.

1. Drupal. "Hands down one of the best open-source initiatives for WCMS in history—the core codebase was built lean and the intent was to encourage enhancement by 3rd parties. What Dries Buytaert started 10 years ago is perhaps one of the most successful movements with thousands of developers worldwide contributing modules free of charge. This is by far the best solution for small publishers and the fastest growing WCMS platform today.

2. WordPress. "For rapid deployment of a blog-like site with some CMS capabilities, WordPress is the way to go. I also like that Matt Mullenweg is to WordPress as Dries Buytaert is to Drupal."

3. Clickability. "Not so much for its functionality/feature set as the fact that small publishers that can't afford to implement their own WCMS platform will need to go to a hosted solution. We've seen a number of small publishers get stuck with smaller SaaS providers that didn't have a robust infrastructure or a rich enough feature set to assist the publisher with its business. I think Clickability is right in there for hosted WCMS

Top 3 Social Media Platforms

When picking a social media platform that is hosted, make sure you have a legal agreement that ensures you retain ownership and control over the content you upload as well as the user generated content, according to Bachana. "This way, if you decide to port over that content to a different system (internal or hosted), you will have legal rights to that content."

1. Kickapps.
"Comprehensive functionality, good video handling capabilities too so the publisher doesn't need to integrate with other 3rd party video distribution platforms. Pricing seems to be reasonable for the small publisher and the product already has connectors with some popular WCM solutions such as Drupal."

2. Lithium. "Similar kind of product and company to Kickapps, we had some good experience working with that solution at an implementation last year."

3. Drupal Organic Groups module.
"Drupal has a number of modules that can make implementation of a social media platform attainable. That in addition to video handling modules make this worth looking at should the small
publisher want to spend a little more money up front to get their own application."

Matt Kinsman

Tweets and Twits: CEO Says Spot on Twitter Top 20 Worth 'Super Bowl Money'

Matt Kinsman emedia and Technology - 03/13/2009-12:04 PM

Tech Crunch has an interesting story that suggests Twitter may have found a way to make money after all.

It revolves around the list of 100 suggested users Twitter supplies any new registered user. That list includes Al Gore, Lance Armstrong and the New York Times. Tech Crunch's Erick Shonfeld says that Jason Calcanis, CEO of Mahalo (who has 61,266 Twitter followers), has offered Twitter $250,000 for a permanent spot in the top 20 of the suggested list for two years (or $120,000 for one year).

Shonfeld quotes Calcanis as saying, "I believe that in five years the top 20 recommend slots will be worth $1m a year each-super bowl commercial level in fact. ... this is dead serious. I'm thinking of sending the check today anyway."

So much for the organic, populist idea of the user dictating what's popular and what's not. But on the other hand, why not? When even Mary Hart is peering at you as you turn on the TV, extolling you to check out Entertainment Tonight's Twitter feed, it's probably time to realize that Twitter has become yet another one of the oh-so-necessary online bolt-ons for your business (yep, FOLIO: has set up its own account).

Although personally, my own feelings about Twitter are more summed up by this: Why Twitter Sucks.

Matt Kinsman

Survey: Print Still Popular, But Just 7 Percent of Subscribers Visit Mag Web Sites

Matt Kinsman Consumer - 02/26/2009-12:36 PM

A new consumer survey from PR shop The Rosen Group finds print magazines and newspapers comparing favorably in many categories with online, but also some troubling reader habits as well.

News Habits: Print More Relevant Than You Might Think

The majority of respondents (65.8 percent) say they get their news from the Web but 82.7 percent say daily newspapers are still relevant (compared to 65.6 percent who said the same for weekly magazines). Just 36.1 percent of respondents say they get news from aggregator sites and 23.1 percent get it from blogs.

Lifestyle Information: Magazines Still Tops But Web Gaining Fast

When asked where they look for entertainment, advice or lifestyle information, magazines led the way with 26.7 percent, while Web sites were close behind at 25.4 percent. Eleven percent cited blogs while just six percent said social networks.

Few Print Readers Going to Magazine Sites

Nearly 80 percent of the respondents subscribed to magazines, while 42.4 percent had RSS feeds. The majority (36.7 percent) said they read blogs occasionally, while 29.5 percent said they read blogs multiple times per day.

While traffic numbers are growing for magazine Web sites, there is still a major disconnect for print readers and the Web, with just seven percent of respondents saying they seek out the Web sites for the magazines they subscribe to.

When asked if newspaper and magazines will still exist in 10 years, 45 percent said yes, while a pretty significant 40 percent said they weren't sure.

The Rosen Group polled 316 respondents, ages 12-75, online from February 18-23.

Matt Kinsman

ASME Responds to TV Guide: 'We're Not Telling Anyone How to Run His or Her Business'

Matt Kinsman Consumer - 02/06/2009-11:14 AM

Sid Holt, chief executive of the American Society of Magazine Editors, shot us an e-mail this morning in response to TV Guide president Scott Crystal's comments yesterday. Crystal said ASME's editorial guidelines should be "blown up" and magazines should start running ads on the cover if they want to.

Here is Holt's response: 

"Oh, criminy—this is what I get for dragging Scott off a golf course in a driving rainstorm. Look, ASME's not telling anybody how to run his or her business. If Scott wants to put an ad on the cover of TV Guide, that's his decision. This isn't about ASME; this is about readers and advertisers. In the case of ads on covers, the ASME guidelines only reflect longstanding industry practices.

I've run magazines on the trade side that put ads on their covers, so I know what some of the issues are. Consumer magazines don't run ads on their covers because ASME tells them not to. They don't do it because they're afraid it'll cheapen the brand in the eyes of consumers and marketers. They don't do it because they don't want readers and advertisers wondering if editorial coverage is for sale. They don't do it because they don't want clients wondering what deals their competitors are getting—the ASME guidelines protect publishers too, you know.

Editors know the business is changing—editors make hard-nosed business decisions every day, decisions that can make or break a magazine—which is one reason ASME is working on revising the guidelines. This isn't an Us vs. Them thing, Publishers vs. Editors—this is about driving innovation that works. ASME will work with anyone on anything that will ensure our medium stays competitive and beats the challenges our industry—that's our, as in editors' and publishers'—is facing."

Matt Kinsman

TV Guide Prez: 'ASME Guidelines Should Be Blown Up'

Matt Kinsman Consumer - 02/05/2009-18:43 PM


Much of the talk at the DeSilva & Phillips 2009 Dealmakers Summit on Thursday revolved around weaning publishers off ad dollars toward other revenue streams, including paid content. But TV Guide president and CEO Scott Crystal blasted the magazine industry for lagging behind other media when it comes to creative branding opportunities for advertisers-including featuring ads on the cover of magazines.

"The ASME guidelines need to be blown up," Crystal said. "I have no problem with ads on the cover of a magazine. I'm not advocating someone else put an ad on their cover but if I want to do it, it should be up to me, my editors and the research we've done on our readers, not some panel."

While the February issue of Esquire is causing a stir for featuring an ad behind a peel-back flap on its cover, Crystal said it doesn't go far enough. "Ads on the flap is a cop-out," he said. "What signal would an ad on the cover send to a consumer that's so egregious? I can understand why editors aren't jumping up and down about it but if I can monetize this and invest it back into the product, what's the problem?"

Clinging to these church-state rules is holding back the industry, according to Crystal. "I don't take this lightly and I don't mean to sound arrogant about it. But we're the only medium not bucking the conventional wisdom."

Matt Kinsman

Doubledown Founders May Still See Those 'Nice Houses' But It's Unlikely Others Will

Matt Kinsman M and A and Finance - 01/30/2009-12:32 PM

Two years ago, Doubledown co-founders Randall Lane and Jim Dunning posed for the cover of FOLIO:.

While Doubledown published two lush (and at the time, red-hot) business lifestyle magazines for the financial world, its offices weren’t in the financial district but in the far corners of the Garment District, where the main entrance for most buildings is a loading dock (although to be fair, most New York-based publishers seem to reside in buildings with beautiful lobbies and ghastly offices).    

At the time, Dunning said: “We’re not going for the trappings. We’re not going to have fancy offices. We’re going to have fancy houses at the end of this.”

Of course, that was two years ago, when Doubledown was an upstart, innovative company with killer events (such as the Wall Street Boxing Charity Championship, in which usually deskbound traders get to square off in the ring) and a real “roll-up-the-sleeves” ethos.  

Today, the market has taken a toll on Doubledown, with the New York Post reporting recently that the publisher is on the block (in a story from a former Doubledown reporter), layoffs (including president of sales Richard Skeen and general manager Edward Padin) and salary cuts for the survivors.

Dunning (one of the wealthiest people in the publishing industry) and co-founder Randall Lane can probably still look forward to those nice houses, even if it’s likely Doubledown will sell for far less than what they originally imaged two years ago. But here’s hoping the rest of the employees salvage something too.

Matt Kinsman

How Western Interiors & Design Got More Funding

Matt Kinsman M and A and Finance - 01/15/2009-11:40 AM

Recapitalization will determine the fate of many magazines in 2009, including those who were healthy up through much of 2008. Green magazine Plenty shuttered this week and publisher Mark Spellun told Portfolio that the magazine's financing had simply "dried up." Mediabistro reported that Evening Post Publishers Co. will stop publishing Garden & Gun as of January 31, while Garden & Gun publisher Rebecca Darwin said the magazine is "actively engaged in discussion with investors."

In 2007, Western Interiors & Design was the leader in ad page growth in a category that included heavyweights such as Architectural Digest and Elle Décor. But by late 2008, with the economy plunging toward recession and shelter and home magazines among the many categories feeling the brunt, the title knew it needed additional funding to weather the storm.

"It's not like we weren't able to make payroll. We didn't have to close anything or lay anyone off," publisher Jennifer Matthews told me. "We've been streamlining and we've dropped our paper costs, although not the quality."

Some savvy buyers were also circling Western Interiors & Design, thinking its investors might want to sell the magazine (which generates between $5 million and $10 million in annual revenue) at a favorable price. "When it became clear there were some offers to buy the magazine, the investors said, 'No, we believe in the magazine, we know it's going to pay off when we get through this dip in the economy and any sale price will be much higher,'" she said.

Instead, Western Interiors has managed to convince its investors to put another "several million dollars" into the magazine. ‘They realize it's not the end of the magazine world, it's a dip in the economy and they need to help us through it," says Matthews. "We sat down with them and explained it. They knew we are going to have to be funded to withstand this year. We are going to prosper in the near future—they're not in this for sheer pleasure. These guys want to sell the magazine some day and they chose not to right now."

Western Interiors is putting several initiatives in place to try to spark spending, including live events. The magazine is currently hosting a VIP Lounge at the 2009 Sundance Film Festival and will host an "outdoor chic" rooftop event in New York City in May.

The magazine is also gearing up for its biggest issue of the year (April/May), featuring the Gold List, an annual list of interior designers, architects and landscape designers featured in the magazine. In 2007, that issue was Western Interior's first to break 100 ad pages. In 2008, the issue slipped to 85 and Western Interiors is looking for ways to keep spending up. "This year we're going to put a little more muscle behind it by polling these designers/architects," Matthews said. "Consumers want to know what brands they are specifying and we'll publish those later in the year."

They also introduced a "Power Buy" which offers price breaks to advertisers who commit to at least six ads per year.

The magazine will launch a new product this spring called Modern Dream Homes, the first in a planned series of high-end special-focused publications. "We would hope that the net would be at least 10 percent of the revenue by the end of 2010," she said. "This additional funding will help to cover the shortage of revenue from any lost ad pages during this touch economic time."

Matt Kinsman

Your Next CEO Could Be Your Banker

Matt Kinsman M and A and Finance - 01/08/2009-10:50 AM

Forget about new media or broadcast hotshots coming in to whip traditional publishing companies into shape. With so many covenants in danger of violation and some publishers teetering on the edge of bankruptcy, it’s the bankers themselves who are assuming day-to-day control.

We’ve seen three recent examples. ABRY Partners is currently negotiating with GE Capital for the takeover of Cygnus, with Charlie Carnaval, an executive with Zolfo Cooper, a New York-based firm specializing in corporate restructuring, replacing outgoing Cygnus co-CEOs Carr Davis and Tony O'Brien (the move was announced on December 31, continuing the corporate tradition of squeezing these types of announcements in under the cover of holidays). This is essentially the equivalent of ABRY walking away from its mortgage and turning it over to the bank.

Last month, private investment firm BIA Digital took over Douglas Publications, which it first invested in as part of Douglas’ estimated $15 million acquisition of the Briefings Publishing Group (in an e-mail to FOLIO:, founder Alan Douglas wrote that he has filed a lawsuit against BIA prior to the change).

Last fall, the board of directors of Zweigwhite replaced president and CEO Dick Ryan with Ian Rusk, former executive vice president and director of the company’s advisory services, while media operations were taken over by Stagnito Media CEO Harry Stagnito. This week, Zweigwhite announced it has a completed a restructuring that includes a new round of investments and transfer of CE News and Structural Engineer to Stagnito.

In the short term, this means many of these companies can stave off declaring bankruptcy. But in the long run, it could mean these companies will get whittled down and sold off as shells of their former selves. “In the current economic and M&A environment, we may see some more of these distressed situations in which there is a limited market for assets and companies have challenges keeping current on covenants and/or debt service,” one industry observer told FOLIO: regarding the takeover of Douglas. “It is not a good thing for the industry, but one of the outcomes of a severe economic downturn and the effective closing of the capital markets.”

Matt Kinsman

'We're Not Hearing Anybody Walking Away From Print'

Matt Kinsman Sales and Marketing - 12/18/2008-12:15 PM

It may seem as though advertisers are trimming print budgets left and right (Macy's recently said it was dropping print in the first quarter of 2009) but at least one major media buyer says print will still has some legs in the new year.

"We're not hearing anybody walking away from print," says Roberta Garfinkle, senior vice president and director of print strategy at media buyer TargetCast. "In fact we have one client who hasn't done print in a while who's coming back to it. They think it's a viable medium and the message they want to convey for 2009 is a perfect fit for magazines."

Still, magazines will be put under the microscope. "Advertisers are looking to us to be more vigilant about how we spend print dollars and really scrutinize ABC or BPA statements," says Garfinke. "We're talking to magazines more about their plans for coming years--changes in circ and the editorial product in a down economy--but we're not hearing anybody say, ‘we're not doing print, print is in trouble.'"

While Garfinkle wonders why a publisher would launch a new print title right now, she does say startups will get consideration too. "What attracts the advertiser is what always attracted advertisers--edit synergy. How is this advertiser's message going to fit in edit environment?" she adds. "We always do a deep dive on numbers, audience, circulation. That's not changing in any way. Convince me you've done your homework and you've got enough money to support this magazine until it finds its legs."

Still, Garfinkle says one recent launch is getting all the buzz: Food Network Magazine, the collaboration between Hearst and the Food Network. The premiere issue hit newsstands in October with a follow-up planned for January.