'Inc.' owner has his work cut out

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With a $35 million offer and a still-unofficial victory at press time in the auction for Fast Company and Inc., Gruner & Jahr USA's last remaining magazines, Joe Mansueto is expected to jump into the publishing business with both feet-but not much experience.

His first magazine investment, a 50% stake in Time Out Chicago, came two years ago. The title began publishing in March.

Now Mr. Mansueto, the 48-year old founder and chairman-CEO of financial-information giant Morningstar, looks likely to gain control of two titles with recognized brands and equally evident challenges.

He plans to operate as something of a silent investor, leaving management in place and in New York, according to executives who have been informed of his plans.

That fits his profile, said Cyndi Stivers, an exec VP at Martha Stewart Living Omnimedia and formerly president-editorial director of Time Out New York. "He was an extremely benevolent investor," she said. "He was surprisingly unflappable. You might have expected at least a bead of sweat on the upper lip, but no."

Although Inc. has a distinct audience of small-business owners that advertisers covet, Fast Company's readers are harder to define, said Jackie Seligman, senior VP-director of strategic print services, Universal McCann, New York. "I don't think it really stands out in its field."

Fast Company had 594.78 ad pages last year, down 72% from 2,126.17 in 2000, according to the Publishers Information Bureau. Inc. had 927.82 ad pages last year, down 46.5% from 1,735.30 five years ago.

Mr. Mansueto will also face the challenges of operating as a small, independent magazine owner. G&J sold its other U.S. magazines-Parents, Child, Fitness and Family Circle-for $350 million to Meredith, where they complement books like American Baby, Better Homes & Gardens and Ladies' Home Journal.

"We are now in a position to offer the advertising community the opportunity to reach large numbers of women at various stages of their lives," said Stephen M. Lacy, president-chief operating officer at Meredith, during a meeting last week with analysts.

Mr. Mansueto will not have a similar luxury. Nor will his ownership of the business titles soothe jitters about G&J's checkered circulation history the way Meredith's takeover has. He is, after all, a relative unknown in magazines, not a conglomerate staffed with publishing professionals.

"History shows that those kinds of situations are fairly tough propositions," said Charles G. McCurdy, a co-founder of Primedia and now the CEO at Apprise Media. Securing newsstand space, luring business-side talent and negotiating with advertisers is harder for smaller players, he said.

* Mr. Mansueto has a 50% stake in Time Out Chicago

* Those close to him say his plan is to operate Inc. and Fast Company as a silent partner

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