Faulkner & Gray banks on specialized markets - Faulkner and Gray Inc

Folio: The Magazine for Magazine Management, May 15, 1994 by Mona Alice Jean Newman

Once a sleepy journal outfit, F&G has quickly become a player to watch on the business publishing front.

Faulkner & Gray is a company with a short but complex history. In 1993, however, its future came into focus. The Manhattan-based publisher, a subsidiary of Canada's giant Thomson Corporation, has quietly emerged as a player to be reckoned with on the business publishing landscape. Last year's acquisitions of U.S. Banker and Accounting Today and the launch of several new titles highlight the company's rapid evolution from a primarily journal-based, subscription-driven operation to a diversified outfit poised to serve its markets with a variety of products.

"We're looking for markets that we have the potential to dominate," says Faulkner & Gray president John Love. In the case of Accounting Today and U.S. Banker, both of which face entrenched competition, that's going to take some doing. On most fronts, however, the company is targeting niche areas where growth is explosive but competition limited.

Only seven years old, F&G comprises 12 magazines and four dozen other related products (newsletters, conferences, directories, and so on) spread across five divisions covering the fields of accounting, banking, payment systems, healthcare and general business. Although the privately held company is tight-lipped when it comes to discussing financials, Love claims that revenues rose by 40 percent last year, following a 50 percent jump in 1992.

A good example of the F&G strategy in action is the evolution of Health Data Management, a title that focuses on automated healthcare claims and payments. Launched last year as Medical Claims Management with a largely controlled circulation of 15,000, the publication changed its name and upped its frequency from bimonthly to monthly in March to reflect its expanded coverage of the electronic processing and storage of patient records. The magazine, which had figured on about 55 ad pages in its 1993 business plan, actually ended up running 71 pages. "This market did not even exist three years ago," Love exclaims.

Health Data Management is part of the Chicago-based payment systems division, a cornerstone of the company dating back to the pre-Thomson days. Faulkner & Gray was founded in 1987 by Ted Cross and two partners. (Cross is envied in publishing circles for starting Warren Gorham & Lamont in the mid-1960s, selling it to Thomson in 1980 for $80 million, then buying Investment Dealers' Digest for $800,000 in 1983 and selling it three years later for $40 million.) In its first year of operation, F&G acquired Barlo Communications, a small Chicago publishing outfit. Love, a former senior editor at Business Week, had formed Barlo in the early eighties, launching first a newsletter covering the emergence of electronic banking and then adding sourcebooks and directories. A year after joining F&G, he introduced Credit Card Management, a title that broke even in its second year of publishing on its way to spinning off a fax newsletter and conferences.

From journals to magazines

By the time Love had become Faulkner & Gray president in 1990, the company had developed something of a split personality. While the payment systems division was thriving, F&G's law and tax journals were struggling against some stiff competition, namely from Warren Gorham & Lamont. When Thomson acquired Faulkner & Gray in April 1992, Love had already shut down nine of its 30 journals, and most of the rest were subsequently merged into existing Warren Gorham & Lamont products. (Ironically, Thomson's primary interest in the transaction was the Institute for Scientific Information, an F&G subsidiary with one of the world's largest databases of scientific abstracts.) The few journals that still remained--those that showed the most potential--were then repositioned to form the nucleus of the new business magazines division.

One of those titles was the Journal of European Business. Launched in 1988, the bimonthly JEB is aimed at high-level executives and examines the opportunities and pitfalls of doing business in Europe. Like most of the other F&G books, the publication was rather academic in nature, written by professionals in the field, and carried little advertising. At the beginning of last year, the two-color JEB was redesigned with an emphasis on more four-color, stronger graphics, eye-catching covers and better journalism. The changes helped the 11,600-circulation magazine (about 2,000 of that is paid) post an ad page increase of 77 percent last year, from 47 to 83 pages. Through the first quarter of 1994, the title had already reached about half of that.

A similar path has been followed by the Journal of Business Strategy, a title transferred over from Warren Gorham & Lamont in early 1993 and subsequently redesigned. The bimonthly, which has a combined paid and controlled circulation of 13,340, totaled 49 ad pages last year, more than double the previous year. This year, the publication had said 30 pages by March. "We're not looking to compete with Fortune or Forbes," says Mike Winkleman, group publisher of F&G's business magazines division. "We're looking for circulations between 15,000 and 25,000 for these titles."