But investors in the company, while denying it is "on the brink of insolvency," admitted Meigher could seek strategic partners going forward. Meigher is reportedly in talks about an alliance with designer Ralph Lauren; company executives declined comment on those discussions.
Joe Armstrong, who had served as publishing director of Meigher, left last week to become senior VP-group publisher at Capital Publishing, another small upscale publisher. Meigher executives believe Mr. Armstrong has had a hand in recent negative media coverage of the company, a charge Mr. Armstrong emphatically denied, calling it "outlandish."
But Meigher CEO S. Christopher Meigher III and Chief Financial Officer A. Douglas Peabody last week took aim at the veteran publishing executive.
"We were very happy in the beginning. Joe made us look bigger than we were and gave us a presence we needed with advertisers," said Mr. Meigher. "But in the past 10 to 12 months, the trust we had placed in him . . . was eroding pretty rapidly."
Messrs. Meigher and Peabody said they realized in the middle of the year they were going to have to make tough decisions about staffing since the company was not adding new titles as quickly as originally planned. They decided to eliminate the publishing director position, they said, adding the need for the job had been a source of contention between them.
Mr. Armstrong was told of that decision several months ago, they added.
But Mr. Armstrong said he was not informed his position was being cut until after he made the decision to leave.
"He did tell me he was eliminating the position, but it was only after I was in final negotiations with two other publishers," Mr. Armstrong said last week. "He may have said it because he knew I was leaving."
STILL AN INVESTOR
Mr. Armstrong said he is still an investor in the company and would like to see it do well so that his investment does well. Earlier last week, though, he was quoted in The Wall Street Journal saying his stock warrants were "probably worthless."
Meigher investors have clearly been pressuring the company to keep costs down, and they said last week cutting staff costs was the right move.
Nancy Peretsman, managing partner of investor Allen & Co., said Meigher had invested in staff that exceeded the current needs. She and Scott Perper, managing partner of First Union Capital Partners, another Meigher investor, also said the company could seek partners to help it grow.
`NOT ON THE BRINK'
"The magazines aren't going away. The company is not on the brink of insolvency," said Ms. Peretsman."The question ultimately is if you've got these two good assets . . . what ultimately makes the most sense for the company? At some point in the next couple of years, we could combine with someone or do something with a strategic partner to grow the company.
"If you don't have a strategic partner, you still have two good magazines" in Garden Design and Saveur, she said.
Meigher has had to borrow money, including a $5 million loan earlier this year from Allied Capital Corp. Meigher is not yet profitable on an operating basis, but will turn its first profit this year due to the $5 million sale of Smart Health.
The Allied loan, said Ms. Peretsman and Mr. Perper, underscores the solvency of the company, since it has reached a point where it has built assets that are creditworthy.
"This company has been self-funding," said Ms. Peretsman. "When a company is in trouble, they come to their investors and say cough it up. Meigher has not asked us for money for 21/2 years."
Meigher's titles are respected for their editorial quality. But as a small publishing group whose magazines don't have a combined circulation of even 1 million, it is difficult for the company to compete with much larger rivals able to offer multiple-title ad packages. Meigher's magazines both failed to meet their rate bases for certain months in the first half of the year, but met the average circulation guarantees for the six-month period overall.
That shortfall has concerned some advertisers, although Mr. Peabody said it was a result of a company decision to avoid delivering bonus circulation because of high production costs.