Power Failures

The blackout has gotten me thinking about the good life.

The line between good times and bad is really only a thin one. It looks like a major gulf, but it is really only as wide as our own optimism/pessimism gulf.

In optimistic times, disruptions like power failures are mere bumps in the road. We go over or around them with hardly a thought. In pessimistic times, the same kinds of disruptions become a symbol for all that we perceive to be wrong with the world.

In the dark days of the media recession of 1990, I was CEO of ADWEEK and its assorted properties. I had been leading the company on some very ambitious expansion efforts during the 1980s, including a handful of new magazines, new conference/seminar programs and assorted other non-publication new business startups. Plus, I was expanding personally as well, with a major construction project about to begin on my home.

Media investment banker John Suhler told me one night at the opera early in 1990 (our company shared a box with his), "You are the last person in the media business still starting new publications. I hope you know what you are doing."



Then, quickly, a handful of other ominous portents appeared before me in a few short weeks that convinced me I had been all wrong in my optimistic expansion ideas and that the time had come for a dramatic retrenchment. Talk of recession -- or at least a slowdown -- was in the air. And, ADWEEK's booked ad pages for future issues started out the year 40% down versus the prior year period. This was worrisome, but ad pages early in a year often start slowly and can swing back upward as advertisers release budgets. However, I was a highly-leveraged customer of several banks that required steady and escalating debt service as the year went on and I already knew I would have to refinance my debt to meet my obligations even if ADWEEK's advertising revenue were "normal." There was no way I could survive a substantial downturn in pages.

Then, I had lunch one day in March of 1990 with Alan Patricof, an old friend who was also a prominent investment banker. I hadn't heard from him in years before he had called me out of the blue a month earlier to inquire about buying one of our properties, a jewelry magazine. When we actually got together he told me he had just returned from Europe and that there was some kind of credit crunch brewing. He had not been able to raise the anticipated money for a venture he was attempting to finance. "I've never seen anything like it. They've slammed the window shut at the banks," he told me.

So, I decided to investigate putting up for sale one of our most profitable magazines, Photo District News, which is a trade magazine for professional photographers. One day while at the offices of Veronis, Suhler & Associates on Park Avenue in New York, I ran into Owen Lipstein. He was trying to sell American Health to Reader's Digest Association. He looked haggard and beaten. He said: "They just keep coming back to me and lowering the price. There are no other companies out there buying these days, so I just have to accept what they offer. At this rate there won't be anything left over after the debt is paid."

Now, I was panicked. The same thing would surely happen to me trying to sell the ADWEEK Group through the normal investment banking route.

I put in a call to Jerry Hobbs of BPI Publications. He had inquired about our interest in selling the group on several occasions during the good times of the 1980s. I told him I'd like to talk. Jerry acts very quickly when he knows what he wants. We made a lunch date. I outlined the company's metrics to him over lunch at Lola's and he made a very generous offer to buy the whole group. I accepted. Over a few weeks all the due diligence was done and I sold in June of 1990. BPI still exists in the form of VNU Business Media and still owns the ADWEEK Magazines Group.

So, what kind of portent is the power failure of 2003? Is it merely a bump in the road of rising fortunes in the growing expansion? Or, is it a sign of something more deeply wrong with the nation's infrastructure which will add to the depressing hangover of our jobless recovery and drag us backward?

It's all in how we look at it. Power failures will happen in good times and bad. Whether they depress us or give us renewed determination has always been inside of us and not in the external thing itself I'm betting this time that it won't get us down. We are on the road back and power failures and other distractions won't be enough to sidetrack us.

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