Tuesday, May 04, 1999

F&W Publications looking for buyer

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Family business started in 1913

BY JOHN ECKBERG
The Cincinnati Enquirer

R. Rosenthal

        Richard H. Rosenthal, president and owner of F&W Publications Inc., shocked 300 employees at his Evanston how-to publishing empire Monday by announcing that the family-owned company is for sale.

        During a morning meeting that moved some employees to tears, Mr. Rosenthal said he has decided to retire to devote more time to philanthropic causes and will ask business broker Veronis, Suhler & Associates of New York to find a new owner or investor.

        “My intentions are to work on my (tennis) net game and my overhead,” Mr. Rosenthal said. “I would like to deepen my work on the board of the Insti tute of Fine Arts. I am on the building committee of the Contemporary Arts Center and am very excited about that new building.”

        The decision to retire comes after a heady two decades of growth for the historic Cincinnati publisher of do-it-yourself woodworking and craft books, and writing, graphic design and photography guides. F&W Book Club Director Jennie Rosenthal Berliant, Mr. Rosenthal's daughter, will also leave the company after a new owner is located, to spend more time with her children and to pursue civic, arts and educational interests.

        Under Mr. Rosenthal's direction, the family-owned firm grew from 29 employees and sales of about $4 million in 1978, when Mr. Rosenthal took over, to $65 million in revenues and 300 employees in 1998.

        Analysts declined to estimate the value of F&W without examining the company's financial statements.

        With headquarters in an art-deco former Coca-Cola bottling plant in Evanston, the company publishes 125 new titles a year, has 750 titles in print and 900 titles from other publishers that are sold to book clubs.

        Another 450 titles are distributed to bookstores from other publishers. Top imprints include Writer's Digest Books, North Light Books, Betterway Books, Popular Woodworking Books and Story Press.

        Directories are a revenue backbone: Photographer's Market, started in 1979; Poet's Market (1986); Artist's Market (1975); Writer's Market (1921); Songwriter's Market (1980) and Fiction Writer's Market (1983).

        Mr. Rosenthal, whose grandfather Ed Rosenthal founded the company in 1913, came to work in June 1957 as marketing manager for Writer's Market. At the time, the book billed itself as offering a door to 4,000 writing markets. The publication today lists 8,000 editors, 1,000 markets for writers, 1,500 consumer magazines, 2,000 e-mail addresses and 2,000 Web sites as well as trade magazines, pay rates and submission guidelines.

        “There's a bit of shock and surprise here,” said Peter Blocksom, the editor at Fiction Writer Magazine, which targets budding authors and is a recent addition to F&W.

        “The entire family is much loved, and we certainly feel a connection with them. ... It was always positive to see the Rosenthals here every day — to see their philosophy of managing by being around.”

        Steve Barlow, vice president and media analyst for Credit Suisse First Boston based in New York, said one potential buyer is British publisher Emap Plc, which waded into the U.S. magazine industry in December by acquiring the Petersen Cos. Inc., publisher of Hot Rod, Motor Trend and scores of other special-interest titles.

        That $1.2 billion deal created one of the world's largest magazine publishers, with about 360 titles geared toward car lovers, teens, gun collectors, surfers and businesspeople. Petersen, founded 50 years ago with the launch of Hot Rod, published 132 magazines.

        The F&W empire is a plum holding, Mr. Barlow said, because many of the properties are in an extremely hot topic area: self-improvement.

        “I bet F&W can find a ready buyer,” he said. “Everybody loves content, and there will be ready buyers for content that is targeted toward specific end users like the gardening and home repair market.”

        Reader's Digest, McGraw-Hill and Harper Collins are other likely buyers, Mr. Barlow said, because those firms are regularly bidding on smaller publishing groups. F&W has not limited its mission to publications in recent years.

        The company has encouraged clubs, newsletters, Web sites and design conferences. Its HOW conference annually invites the world's experts on graphic design — from designing book jackets to fee structures — to a three-day event.

        About 2,000 attendees pay $795 a person. The next HOW conference is planned for May 23-26 in Dallas.

        The company differentiated itself by tackling books that appealed to the smallest of do-it-yourself niches. Its Painting Animals on Rocks was described by Mr. Rosenthal in November as a “fly-away best seller.” The Crafts Supply Sourcebook is in its fifth edition and has sold 92,000 copies for $18.99 under the F&W nameplate Betterway Books.

        Last year, the company went on a shopping trip of its own. It bought book clubs from Rodale Press — the Successful Sewing Book Club and the I Love Quilting Book Club — to join five other book clubs owned by F&W. Combined revenues of the sewing and quilting clubs are about $1 million annually.

        Mr. Rosenthal said the business strategy — that is, combining books and magazine sales with clubs — is likely to continue with any new buyer because it makes good business sense. “If you remove a link in a chain, your chain becomes two chains, and the strength is lessened.”

        The firm in October also bought I.D., a design trade magazine circulated to 27,000 subscribers eight times a year, for an undisclosed price. With revenues of $3 million, which includes advertising sales of $1 million, the publication fit with two other graphics magazines associated with F&W — HOW and Print.

        Internet sales have been robust, he said, with annual profits projected at $250,000 three years from now. “We are seeing some very good results from our Web sites,” he said.

        Thousands of Greater Cincinnatians are familiar with the company because of the annual pre-Christmas book sale, which celebrated its ninth year in December. Lines of buyers gathered hours before the warehouse opened, and at its peak, 1,700 books an hour were sold for prices ranging from $3 to $5 for books that might otherwise retail for $35 to $50.

       

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