Reasons to remain independent

Folio: The Magazine for Magazine Management, Oct, 1987 by Gerard G. Leeds

Reasons to remain independent

Selling a publication is an intensely personal decision that can have more impact on your life and lifestyle than most others. Selling a publication can be the beginning of being very rich or very bored. It can free you from the hassles of running your own company, or tie you to the hassles and stress of being part of someone else's large company. It can be the fulfillment of a dream, or the end of one. Whatever it is, selling is a personal decision that requires long and careful thought.

Although selling your company or publication may be important to you financially, and although there may be excellent business reasons to do so, there may also be excellent personal reasons not to sell. As you work toward a decision, keep both the business and personal consequences in mind.

Because virtually all my experience is in business publishing, most of what I plan to discuss is derived from exposure to that market. But my conversations with others indicate that things are not so very different in other fields (except that the stakes, risks and changes are probably greater in consumer publishing).

CMP Publications is a fairly major business magazine publisher. We publish 11 business-to-business newspapers and magazines in the electronics, computer, manufacturing, travel and health fields, with annual sales in excess of $100 million. All of our most recent publications are listed in "Gallagher's Top 100.' Most of the ones that are not current start-ups have very substantial sales--$10 million to $20 million per year. We haven't spent much time contemplating selling-- we've been too busy growing and having a good time. In fact, we've gone on record that we don't want to sell, and we don't want to become part of a big corporation.

Although some people point out to us that, at $100 million, we are getting to be a pretty large company, we think of ourselves as an independent one, with our own culture and goals. There are a few other substantial independent companies in business publishing: Pat McGovern with Computer World, Bill Ziff with Ziff Publications, and the Crains of Crain Communications. These three companies, each with sales of over $100 million per year, have total sales of over $500 million. They show that you can, indeed, remain an independent company and grow--if you want to.

Understanding the attraction

To understand the reasons not to sell, it's helpful to look at the reasons why people become independent publishers in the first place. Becoming a publisher of a start-up is not a rational decision. No rational businessman would go through the hours, risks and deprivations involved in a start-up.

People come into publishing because it is exciting, it is a lot of fun, it is intellectually stimulating, it is risky, and it can be rewarding. It is an outlet for all your energies and it's one of the businesses that does not get boring-- because when you get bored, you can always start another publication.

So, one reason to get into publishing is excitement. Another is greed. Publishing can be a very profitable business if it is successful. But start-ups are high-risk exercises--and that is why many people prefer to buy publications rather than start them. It removes some of the risk.

Another reason people get into publishing is that at the beginning at least, it looks as if it doesn't take a lot of money. However, that's usually not true anymore, in real life. Hardly anybody gets a publication off the ground these days for less than $1 million to $5 million. Time Inc. has been known to put 10 times that amount in new publications.

People also go into publishing because they like the freedom, and because they like the potential influence they can have on a market, on an industry, on the public.

Actually, when we started CMP in our living room 16 years ago, we considered all these reasons, plus one more. I just liked the idea of being a publisher. It seemed like a nice business to be in--and it still is.

The point of this recitation of the reasons for going into publishing is that the reasons for not selling--the reasons for staying--are usually the same. Publishing is fun. It is exciting. It is never boring. It is challenging. It's rewarding. Those are good reasons nor to sell. And it's why many publishers who sold their companies recently now want to return. They miss the stimulation, the excitement, the risk-taking.

Still, there are business reasons for selling: The business is too competitive; you are overextended; or you are hassled by too much work. Even so, this doesn't mean you have to surrender and sell.

Given a little time, one can often straighten out a company and make it fun again. After all, if the buyer didn't think he could make the publication work, he wouldn't be interested in buying it.

You may say, "I am going to sell my most profitable, but stagnant, publication to generate cash for a potential winner in the future.' Or, you may say, "I am going to have to kill or sell my most promising one because I can't afford it--but, I will keep my most solid one or ones because that way I can stay in a business I enjoy.'