A Death in the Family

Folio: The Magazine for Magazine Management, June 15, 2001 by Whitney Joiner

CLOSING DOWN A MAGAZINE IS NOT A VERY PLEASANT TASK, BUT ONE THAT'S UNFORTUNATELY BECOMING MUCH MORE COMMON. THREE MAGAZINE EXECUTIVES WHO'VE SUFFERED A LOSS SHARE THE PAINFUL LESSONS THEY'VE LEARNED.

"There's no good way to close a magazine."

Those words from Frank Lalli, the editor in chief of the now-defunct George, may seem painfully obvious. But given the current economic climate, the magazine industry is going to get a lot more practice at closing up shop in the coming months. Whether you're a big publisher or small, the inexorable logic of higher paper and postal prices, a painful direct mail and newsstand environment, and a drooping advertising market will lay low its share of victims.

Knowing publishers' capacity for denial-- magazines are often more than just a business, they are a calling, and a turnaround is just a sales call away--how do you know when it's time to walk away? And how will you pay for it? Folding a magazine or a company can be more expensive than you'd think; it's not a matter of just turning off the lights and going home.

Dads founder Eric Garland experienced no earth-shattering epiphany earlier this year--just a simple, clear-eyed realization: "We had our fourth issue completed, but there was no way we could afford the printing cost," he says.

A former editorial director of Adweek Magazines who's also worked at Money and Brill's Content, Garland launched his independent parenting magazine aimed exclusively at fathers last fall. Funded with Garland's own money and investments from Palisade Capital Management, as well as individual investors such as Wired founders Louis Rossetto and Jane Metcalfe, Dads--it quickly became clear--would be a victim of bad timing: The media recession was already taking down established magazines like Mirabella and Life, making an already difficult task for independents that much harder. VC money shied away from a second round, and bigger publishers were in no mood to invest in a start-up in a niche that had not previously been successful. (An earlier entrant, Fathers, had folded in the late 1980s.)

Speak, a San Francisco-based arts and culture quarterly, was forced to close once editor and publisher Dan Rolleri realized that 2001 wasn't going to be a better year for advertising than 1999 or 2000. "Advertisers never took an interest in the magazine, even as we were selling more issues," he says.

But liquidator's remorse can easily set in, cautions Rolleri, as doubt can be a powerful emotion. "In the back of your head you think, maybe someone will call and want to buy ads for next year," Rolleri says. "You never quite get to the point where you say, this is it. Even today I think, maybe someone will call and want to relaunch it." This is when a sober accounting of the true state of affairs becomes a necessity--otherwise, bankruptcy can be the result.

In any business, there are financial and emotional issues to be dealt with upon closing, and folding a magazine is no different. You'll need to inform employees and cut severance checks; sell the computers, equipment and office space; negotiate a broken lease.

First off, says Lalli, tell your staff immediately. Even though subscriptions for the John F. Kennedy Jr.-founded George were trending upwards, and Lalli says renewal rates were strong, George's advertising outlook was dire. Lalli had known there was a chance that George's parent, Hachette Filipacchi Magazines, might decide to close the magazine, but the ultimate decision took him by surprise. Within a half hour of being informed of the final verdict in early January, however, Lalli quickly gathered his staff to deliver the bad news.

"I certainly didn't want to be in a position where people thought they had jobs when I knew for a fact that they didn't," says Lalli. Over the next two weeks, while assembling the last issue of the five-and-a-half-year-old magazine, Lalli spent a lot of his time trying to find his co-workers new jobs.

"There'll be a burst of publicity about the magazine folding," adds Lalli, "and out of that burst, there's an opportunity for people to have some visibility"-- visibility that will help them find new jobs. Prepare to act as a kind of reverse recruiter, he advises. "I made a lot of phone calls," he says. "My executive editor went to People; another writer went to Philadelphia Magazine."

The staff of a start-up might be more prepared for the folding of a magazine, if they know what they're risking when they come on board, says Dads's Garland. "They were willing to hang in until the end," he says. "There were no dramatic scenes of standing on top of a table addressing hundreds of troops and people sobbing. It was more, sorry, it didn't work, we can't keep going."

After delivering the bad tidings--and in the case of the larger publications, severance checks--there are more prosaic issues that will need attention. What do you do with the equipment, your office lease, even your subscription list?

Speak's Rolleri is still battling his landlord. Last year, before the bad times began depressing the San Francisco real estate market, Rolleri was informed that when his three-year lease was up the next summer, the rent would quadruple. Rolleri says that his landlord agreed to allow Speak to vacate its office early, but when the market softened, Rolleri says the landlord did an about-face and is demanding that he pay out the rest of the lease. "They're threatening to sue," he says. "It has not been resolved."