Ad pages decline: Forbes parent feels sting of recession

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Forbes Inc., the closely held, family-run publishing house still reeling from the sustained ad recession, may have more changes in its portfolio.

The 512,000-circulation American Legacy, a quarterly focused on African-American history and culture that Forbes co-owns, is seeking additional investors.

Rodney Reynolds, founder and publisher of American Legacy, said his RJR Communications "is looking for a partner," and that he wasn't sure how the process might affect Forbes' stake. Forbes has held that stake since American Legacy's 1994 launch. A Forbes spokeswoman said the magazine "is not for sale now."

In what would be a more seismic shift, the company is also said by one media executive who claimed knowledge of the plan to be quietly seeking a minority investor to take up to a 25% stake in its flagship Forbes. Through a spokeswoman, Steve Forbes, president-CEO, denied the company is seeking to sell any part of the magazine or its parent.

Earlier this month, Forbes shuttered Forbes ASAP, an every-other-monthly tech publication.

A quick back-of-the-envelope calculation by deal-side executives-who stressed they were unfamiliar with the magazine's current revenue or profits-suggested that selling up to a quarter of Forbes could net the company between $225 million and $300 million. That's a rough estimate based on traditional industry multiples. According to Ad Age data, Forbes had $363 million in gross revenue in 2001-down 26% from 2000.

containing costs

Forbes' spokeswoman would not comment on the company's financials, but it has taken steps to contain costs. The company stopped matching employee contributions to its 401K program and cut the salaries of some executives. The Forbes family sold off chunks of its substantial art and manuscript holdings, pulling in about $30 million for historical documents and about $5 million for assorted Faberge objects, the spokeswoman said. (She declined to comment on whether the objects sold were owned by the family or the company, or on the relationship between the family's finances and the company's.)

Like its business-title peers, Time Inc.'s Fortune and McGraw-Hill Cos.' Business Week, Forbes suffered severe hits from the crashes in tech and telecom and the stock market's waning fortunes. Last year, its 38.6% ad-page decline was the worst in the category, and its volume slipped below that of its rivals. Through September of this year, its ad pages fell 16.6% to 2,257.9. Among other things, the company has been hard hit because it has only a handful of titles and can't compete with multiple-title packages pitched by companies such as Time Inc.

The company spokeswoman pointed out that Forbes clawed its way back to the No. 2 book in the category in ad pages, and added that Forbes FYI, its upscale lifestyle title, will publish a 132-page November issue after publishing 88-page issues for much of the year.

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