Riordan and McPherson: the magazine doctors

Folio: The Magazine for Magazine Management, April, 1989 by Amelia LaRoche

Riordan and McPherson: The magazine doctors

New York City--Pinning down magazine magnate Robert Riordan gets harder every day. If he's not fielding phone calls in Miami Beach, where he winters in a mansion and docks his 104-foot yacht, The Savvy Lady, he's running the show in Manhattan at Family Media Inc., where his 10 consumer magazines grossed well over $50 million in ad revenues in 1988, according to Publishers Information Bureau.

Success breeds success and Riordan is now looking toward another major breakaway with business magazines. In December, he started FM Business Publications in partnership with Paul McPherson, former McGraw-Hill executive vice president.

Just weeks later, Riordan combined several of his other operations--printing, fulfillment, distribution and so on--under the new title Riordan Publishing, Inc. He reassigned Family Media president Jeremy Grayzel as executive vice president of planning and development for the new conglomeration and named Michael Brennock, formerly chief financial officer, Family Media's new president.

Top-level personnel shifts are not uncommon under Riordan, who searches relentlessly for the best use of executive talent. In part, it's that willingness to overturn the staid and to keep a keen eye for detail trained on an ever-broadening company that's won Riordan, 58, his reputation as a publishing wizard--one who has a knack for bringing wonder cures to ailing consumer magazines. It's a reputation established only relatively recently when he bought Ladies' Home Journal for $12 million from the bankrupt Charter Company in 1982. He sold it just three and a half years later for $92 million.

Riordan's Family Media is a tight operation, willing to take a calculated chance, with the resources to cover all the bases and ensure a project's best opportunity for success. "We're a relatively lean organization, which is why we can make some books successful when other companies might not," points out Family Media's vice president of corporate communications, Phil Titolo. "Each magazine (of the company's 10 titles) has its own advertising and editorial staff, but all the other functions are shared--production, research, accounting, circulation," explains Jeremy Grayzel, Family Media's former president and chief operating officer.

Discover is an example of a title salvaged by Family Media efficiency. The science magazine was losing money under Time Inc., Grayzel says, because it had a huge staff and high overhead. After being purchased by Family Media in July 1987, its rate base rose from 925,000 to one million, and Grayzel claims it's profitable--although Publishers Information Bureau statistics show that ad dollars dropped 15 percent in 1988 over 1987.

The fact that Riordan is part or full owner of Family Media's printing, distribution and fulfillment services has unquestionably enhanced the bottom line for each of Family Media's 10 titles.

Now Riordan, best known for his paid circulation expertise, is venturing into unknown territory with his purchase (for undisclosed prices) of three trade journals: former McGraw-Hill title Fleet Owner, its sidekick Small Fleet and Computer Decisions, late of Baetech Publishing Company in Teaneck, New Jersey.

Riordan contends that business magazines are a bit out of his realm for now, but the street smarts that turned the former Newsday senior vice president/circulation director into his own boss have also guided Riordan in choosing his minority business partner--neither partner would disclose the distribution of shares.

Paul McPherson's 33-year career at McGraw-Hill ended abruptly last year when the New York City-based company combined several departments and jettisoned an upper tier of expensive executives. However, it was his inside track on McGraw-Hill (where he maintains a temporary office) that presented FM Business Publications with its first opportunity: Fleet Owner, whose small and large fleet editions deliver a controlled circulation of more than 114,000 and--depending on the fortunes of arch rival HDT (Heavy Duty Trucking) of Newport Publishing--the largest market share in the field. "For years, it's been nip and tuck," says McPherson. "It's been intensely competitive."

Meanwhile, it's a good bet that McPherson's relations with his former employer will continue to come in handy. As of 1987, eight of McGraw-Hill's business titles have been sold, and more are rumored to be on their way to the block. McPherson is also well connected outside of his former employer, through years of high-level involvement with several professional organizations: He's the only publishing executive to be chairman of both Magazine Publishers of America and the Association of Business Publishers. McPherson has recently slowed his work with those groups to make more time for FM Business--a sacrifice he didn't make as a McGraw-Hill executive, which may have been a factor in his dismissal there, according to speculation by several insiders.

For their second purchase, the partners took on a far riskier venture than their first. Baetech's Computer Decisions, a monthly sent free to some 100,000 management information systems and data processing managers, sank into a financial morass last year along with several others in its industry. Revenues dropped from more than $7 million in 1987 to some $3 million in 1988. But McPherson is confident that he and Riordan can reverse the trend. "We're both magazine doctors, and we see this as a very recoverable patient."