“Profitability Wasn’t the Question;” Roger Friedman Explains NRN Sale
Exec says publishers may improve but non-compliance overshadows gains.
Traditionally, media companies start as entrepreneurial efforts, very often family-owned, and then, as they grow, they are acquired and absorbed by larger, more corporate businesses. Not so Lebhar-Friedman, the venerable, 85-year-old trade-publisher run by the second-generation owner, Roger Friedman, who, coincidentally, is one of the best known and wittiest people in the industry.
So it must have been a difficult time for Friedman when he was forced to sell off Nation’s Restaurant News to Penton Media in order to satisfy the demands of a creditor. The brand, which was founded in 1967, was the company’s flagship in the food-service market, which, along with retail and medical media, has been its long-time focus.
The NRN sale, as well as the reported shopping of Lebhar’s Dowden Health Media, is seen as part of a plan to pay back GE Capital, which financed Lebhar’s estimated $40 million acquisition of Dowden Health Media in 2005. In 2006, Dowden Health Media founder Carroll Dowden bought back the consumer magazine division of Dowden Health Media (which included four regional titles with combined revenue of under $10 million). Last year, Lebhar-Friedman sold Dowden Professional Publications to Quadrant HealthCom Inc.
With the sale of NRN, Lebhar-Friedman retains four retail-focused publications: Home Channel News, Chain Store Age, Retailing Today and Drug Store News.
FOLIO: Alert spoke to Friedman on Wednesday. "We had just had financial pressures," he said. "We owed money from the Dowden purchase, and with the downturn, we just wanted to straighten out our debt structure. We were always making money, so profitability wasn’t the question. We were in violation of some of our covenants with GE."
Asked if he regretted taking on debt with the Dowden acquisition, or whether he would have done anything differently, Friedman was frank: "I would have still bought Dowden. It was a good company. But I would have sold off a major piece of it earlier to make the debt go down earlier. So even if there was a downturn, we would have been okay."
And he offered some perspective as well. "Things aren’t good. There may be some green sprouts here and there, but everyone’s out of compliance right now. You know who they are. Are there gains in pages over the prior year? Yes, but you don’t know what they’re getting for the pages. There’s price cutting all over the place."
As mentioned above, speculation remains in the industry that Lebhar-Friedman will need to do more, possibly including the divestment of its Dowden Health Media custom-publishing unit.