The former chief financial officer for Penthouse parent General Media International, Mr. Prebich left New York's glamorous and glossy publishing circles behind in September 1990 and moved west to Missouri. He and wife, Carol, took out bank loans to acquire full ownership of a tiny Midwestern publishing house then called Modern Handcraft.
What they bought, Mr. Prebich said, was "an invisible, stodgy company that was plodding along," losing nearly $3 million a year.
What they created was a lean, profitable organization that stayed true to its homespun editorial roots while adding some decidedly professional publishing touches.
Mr. Prebich, 47, said the privately held company had a profit in 1992 of $2.5 million on sales of $20 million and that both figures were up in '93.
Last month, Mr. Prebich ended a yearlong search for a partner when he sold for an undisclosed sum a substantial minority stake in the company-now known as KC Publish ing-to BT Capital Corp., a subsidiary of Bankers Trust New York Corp.
The deal al lows the husband-and-wife team full control of the company while eliminating the debt from the original buyout. More significantly, it establishes what Mr. Prebich called a "sizable" fund for acquisitions.
Mr. Prebich's seeming success has as much to do with his willingness to employ draconian cost-cutting measures at KC Publishing as it does with his business savvy.
Soon after taking control of the company-as ceo of Flower & Garden, Workbasket and Workbench-he reduced the payroll from 138 to 28, including himself and his wife. He closed an in-house subscription fulfillment department that employed more than 60 people. He gave 35 ad sales staffers-all of whom were salaried with no incentives-the option to become independent reps, earning commissions that doubled the pay for some.
He renegotiated contracts with printers and distributors. He upgraded the magazines' quality, adding glossy pages and cover lines to build newsstand sales, and raised subscription prices. He built up ancillary revenue streams to lessen the dependency on advertising during a soft period.
Said one press-shy publishing industry executive who has kept close tabs on Mr. Prebich: "He's done a very good job with this group, and it's reflected in the cash flow and profits. What he did was unique, because he found a company that was 30 years behind the times and had the skills to turn it around."
KC Publishing's magazines all have frequencies of six times yearly. Workbench is the largest, with a paid circulation of 816,700, followed by Workbasket at 790,200 and Flower & Garden at 738,300.
Ad pages in the three rose to 968 in 1993 from 572 in 1990, a 69% gain, Mr. Prebich said. Ad revenue climbed 38% to $7.9 million.
Ancillary revenue more than doubled during that period, to $1.06 million from $420,000. Ancillary products include sewing patterns, do-it-yourself project plans and how-to books.
A needlework club formed by Workbasket last year has 12,000 members who pay an annual fee of $14.95. In November, Workbench went on home shopping's QVC, selling more than 7,500 $14.95 building project plans in 2 hours.
"These ancillary products are their own profit centers," Mr. Prebich said. "We're not dependent solely on advertising and circulation revenues now."
Mr. Prebich said he is serious about growth through acquisitions and has identified 62 companies "that do what we do and that we want to take a look at. We're looking at some companies that are pretty substantial, that could double or triple the size of our company. The game plan is to have something done by May 1."
Mr. Prebich travels to New York several times a year for business meetings and attends the Magazine Publishers of America's annual conferences. But he said he has never missed big-city publishing and will never return to it.
"We have no secretaries out there," he said. "You could never survive that way in New York."M