F&W Publications, Inc.
F&W Publications, Inc.
Sales: $300 million (2004 est.)
NAIC: 511120 Periodical Publishers; 511130 Book Publishers
F&W Publications, Inc. is a Cincinnati, Ohio-based publisher of about 60 special interest magazines and books, 3,000 of which are in print, focusing on hobbies and other "consumer enthusiast" categories. The private company also runs a dozen niche book clubs, maintains about 30 free and fee-based web sites and produces conferences, trade shows, contests, and education programs. F&W's oldest periodical and flagship publication is Writer's Digest, offering instruction and other information to aspiring writers. Other major F&W subject areas include antiques and collectibles, art, automobiles, crafts, gardening, genealogy, outdoors and hunting, sports, toy collecting, and woodworking. The key to the company's success has been the ability to combine magazine and book publishing with clubs in its various niches, with the business of all three supporting one another. For most of its history the company has been run by the Rosenthal family, but since its sale to outsiders in 1999 F&W has enjoyed dramatic growth.
Heritage Dating to the Early 1900s
F&W was founded in Cincinnati in 1913 as a publisher of automotive periodicals by Edward Rosenthal, who three years earlier had launched the magazine American Chauffeur, which later took the name Automotive Service Digest. The company soon branched out into other subject areas. In 1921 Writer's Digest was launched, proving so successful that the Writer's Digest Books imprint was created, initially to publish Writer's Market, and became the basis for the company's book division. Over the next 50 years the company moved in and out of a number of categories. One important publication during the early years was Farm Quarterly. The company's name actually stood for Farm Quarterly and Writer's Digest. Although Farm Quarterly was sold in 1970, the F&W name was retained.
F&W did not achieve significant growth until the third generation of the Rosenthal family, the founder's grandson Richard H. Rosenthal, took charge in the 1970s, at a time when annual sales were in the $4 million range and the company employed just 29 people. He had first joined the company in 1957 as the marketing manager for Writer's Market, and now expanded on the marketplace concept with the launch of a number of titles: Artist's Market in 1975, Photographer's Market in 1979, Songwriter's Market in 1980, Fiction Writer's Market in 1983, and Poet's Market in 1986. F&W also built upon the Writer's Digest franchise by introducing the Writer's Digest Book Club in 1979.
One of the most important events that shaped F&W's development was the 1982 acquisition of Fletcher Art Services, which took the company into the fine arts category. Fletcher adopted the name of North Light Books and was supplemented by North Light Book Club. In 1983 F&W launched The Artist's Magazine, a monthly targeting commercial artists, which became a major success. Later in the decade, F&W acquired another monthly, Decorative Artist's Workbook, geared toward decorative painters, followed by the purchase of HOW, dedicated to graphic design. This category was then fleshed out with the publishing of the Decorative Artist's Workbook and the launch of the Graphic Design Book Club and Decorative Artist's Book Club. Also of note during the 1980s, the company revived Story magazine after a 22-year absence. The publication quickly surpassed its former popularity, becoming the largest literary magazine in the country.
F&W continued to enjoy steady growth in the 1990s, adding woodworking as one of its niches by publishing Popular Woodworking magazine and launching the WoodWorkers Book Club. The company also added to its slate of fine art publications with the introduction of Watercolor Magic. A children's magazine, Spark!, also was launched. According to Cincinnati BusinessCourier, F&W generated about $38 million in annual revenues in 1991, making it one of the 100 largest private companies in the Cincinnati area. Despite difficult economic conditions, the company was growing revenues and income at a healthy 20 percent clip in the early part of the decade. Rosenthal expressed no interest in selling any of his properties, despite occasional offers, nor was he interested in taking the company public, telling Cincinnati Business Courier, "Normally when a company goes public, they need cash, which we don't. Or sometimes the owners want to get out, and I have no interest in that." As far as his lack of interest in leaving Cincinnati for a larger media market, he explained, "We get a better handle of who our customers are by being here.… Really, the only con about being here is that we have to train virtually everyone we hire. There isn't that reservoir of experienced people in the field in Cincinnati."
In 1998 F&W acquired I.D., an international design magazine with 27,000 subscribers published eight times a year catering to design and technology professionals that fit in well with two other F&W publications, HOW and Print. F&W also added a pair of book clubs from Rodale Press: the Successful Sewing Book Club and the I Love Quilting Book Club. In addition, the company also took advantage of the opportunities presented by the Internet in the latter half of the 1990s to establish supporting web sites. Sales reached $65 million in 1998.
Founding Family's Sale of the Company
in the Late 1990s
Rosenthal told the press in 1999 that he felt F&W was on the verge of another major growth spurt, but because he wanted to retire to devote more time to his philanthropic endeavors, and neither of his two children were interested in running the business, he decided it was time to sell the company. Thus, in May 1999, he contracted New York investment banker and business broker Veronis, Suhler & Associates to find a buyer, although he wanted to retain a minority stake in the business. There was no lack of suitors, with some 70 parties expressing interest. From this list Rosenthal took his time in selecting a buyer. In December 1999 he finally settled on Citicorp Venture Capital, which was willing to meet his conditions that the company remain in Cincinnati and the buyer commit to growing the business. Moreover Citicorp, which paid a reported $111 million for the company, agreed to Rosenthal's handpicked successor, Stephen J. Kent, an acquaintance for several years and a man that Rosenthal believed was well suited to growing a company through acquisitions. The 46-year-old Kent held an MBA from Harvard Business School and moved to Cincinnati to became a Procter & Gamble brand manager. He struck out on his own in the early 1980s, building up several local companies, including the EyeWorld chain of optical stores.
Soon after taking charge, Kent met with his managers and told them he projected taking F&W to the $100 million mark within a year. "People looked at me with faces that suggested I had just landed from some planet," he later told Cincinnati Business Courier. It actually took F&W two years to reach that target, but Kent was quick to begin making acquisitions to position F&W to enjoy dramatic growth. The first deal was the June 2000 purchase of U.K. publisher David & Charles Group, which was a like-minded enthusiast book publisher that also ran several book clubs, focusing on arts, crafts, hobbies, and gardening. In addition to the David & Charles assets that complemented F&W's existing program, the acquisition provided F&W with an opportunity to grow its business in the United Kingdom and Europe. David & Charles also brought with it a children's unit, which did not fit in with F&W; it was sold to Gullane Entertainment in 2001. Also in 2001, the company added to its craft holdings by acquiring Memory Makers, a Denver-based publisher devoted to the increasingly popular scrapbooking hobby. Despite the emphasis on external growth, F&W did not lose sight of internal opportunities. In 2001 it became involved in custom publishing by taking over the in-flight magazine of Comair, Comair Navigator. Not only did F&W get a toehold in custom publishing, an area that was worth more than $1 billion and growing, it found a way to repackage material originally used in a specialty magazine for a general audience. As a result of the additional business, F&W grew sales to $106 million in 2001, and net income approached $20 million.
Ownership of F&W changed hands again in 2002, as Kent and other senior executives along with William F. Reilly and the financial backing of Providence Equity Partners paid $130 million to Citicorp Venture Capital for the company. Reilly took over as F&W's chairman working out of New York, while Kent stayed in Cincinnati to run the company as president. Reilly was a seasoned executive in media and publishing, the former president of Macmillan, Inc. After taking that publisher to new heights, in 1989 he founded K-III Communications, later renamed Primedia, funded by investors Kohlberg, Kravis, Roberts & Company. Primedia published more than 200 specialty magazines, including New York, Seventeen, and Motor Trend. Over the course of a decade Primedia grew into a $1.5 billion publisher. But Reilly was ousted in 1999 after the price of its stock faltered and he fell out with his backers over the direction to take the company, in particular his reluctance to more fully embrace the Internet. He signed a noncompete agreement to receive a $1 million per year severance package, and was attracted to F&W because he believed as a niche publisher it did not violate his agreement. Primedia was not in complete accord, but the two parties eventually worked out an arrangement to release both of them from their obligations.
F&W Publications offers an engaging mix of books, magazines and book clubs for the life-long learner.
Acquisition of Krause Communications in 2002
Reilly expressed no interest in turning F&W into a company the size of Primedia, opting for a still challenging goal of growing F&W into a $500 million company within five years. The new regime wasted little time in aggressively building up F&W. In 2002 F&W completed the $120 million acquisition of Krause Communications, a deal that Reilly had been pursuing the past two years. Based in Wisconsin, the employee-owned company had been founded in 1952 by Chet Krause, a hobbyist who launched a publication aimed at coin collectors who wanted to trade through the mail. He ventured into other specialty interests over the years, including arts and crafts, antique cars, comics, firearms, music, sports cards, and toys. By the time F&W acquired the company it was publishing 46 periodicals as well as 750 reference and how-to books. There were few redundancies with F&W, making Krause an excellent fit. Two divisions were formed, with the Krause president, Roger Case, taking over as president of the magazine division for F&W, and F&W's Budge Wallis serving as president of the book division. Both men reported to Kent. Thus, in one stroke, F&W greatly expanded its slate of magazines and reached the $250 million level in annual revenues. Moreover, the additional titles provided F&W with a platform for future growth, as it was able to apply its successful formula of growing categories by developing synergies between magazines, books, and book clubs. In separate transactions in 2002, F&W expanded into the gardening subject by acquiring the 100-year-old Horticulture magazine and covered graphic design by adding Print–America's Graphic Design Magazine.
F&W continued its momentum in 2003, acquiring Pastel Journal, a magazine serving pastel artists. More important, F&W completed another major acquisition, adding Adams Media Corp., a 24-year-old Avon, Massachusetts-based publisher of 140 lifestyle, self-help, and inspirational books each year and a backlist of 750 titles. Adams published three popular series that employed the phrases "The Everything" (The Everything Get-A-Job Book ), "Cup of Comfort" (A Cup of Comfort for Friends ), and "Knock 'Em Dead" (Knock 'Em Dead Business Presentations ).
F&W continued to add magazines in 2004, picking up Scuba Diving Magazine as well as Country's Best Log Homes. At the end of the year F&W's revenues reached $300 million, on pace to achieve Reilly's ambitious goal of $500 million within five years.
Book Division; Magazine Division.
Martha Stewart Living Omnimedia Inc.; Meredith Corporation; The Reader's Digest Association, Inc.
- Edward Rosenthal founds the company, publishing automotive magazines.
- Writer's Digest and the book division are launched.
- Artist's Market is started.
- Fletcher Art Services is acquired.
- The Rosenthal family sells the company.
- Krause Communications is acquired.
- Adams Media is acquired.
Barker, Beth, "Writing the Book on Publishing," Cincinnati Business Courier, September 30, 1991, p. 1.
Boyer, Mike, "Citibank Arm Buys F&W," Cincinnati Enquirer, December 3, 1999.
Eckberg, John, "F&W Publications Looking for Buyer," Cincinnati Enquirer, May 4, 1999.
Manly, Lorne, "A Primedia Founder Is Going to a Smaller Magazine Venture," New York Times, March 4, 2002.
Sims, Rebecca, "Fast 50: F&W Publications Inc., F&W Revenues Soar on Acquisitions," Cincinnati Business Courier, December 3, 2004, p. B9.