An Alternate Ending for F+W Media

1507_dana

F+W’s old building on Dana Avenue. They owned it outright. Then….

F+W Media Inc., the parent of my beloved Popular Woodworking Magazine, filed for bankruptcy protection under Chapter 11 on Sunday, reporting it has more than $100 million in debt and a host of problems with its e-commerce business.

You can download the entire filing here.

It will be easy for people to shrug their shoulders at the bleeding out of another mid-level media business. After all, who subscribes to magazines anymore? Or reads physical books?

I, however, would like to paint a different picture for you. Imagine the rest of this blog entry in the voice of Bob Ross.

It wasn’t the changing economy that (perhaps) mortally wounded this once-magnificent company. It was debt and venture capital, plain and simple.

When I started at F&W Publications Inc. in 1996, it was owned by the Rosenthal family, which started the company in 1913 around two magazines: Writer’s Digest and Farm (writing and farming were the “F” and the “W” in the name). The company owned its building outright. It had no debt. It had a fully functional warehouse. Its biggest weakness was it was a technological backwater. (When I left seven years ago it was, ahem, still a technological backwater.)

In 1999, we were told that the third generation of Rosenthals didn’t want to run the business, so we were being sold to a group of investors.

First order of business for the investors: Sell the building, grab the cash for the investors and sign a lease on a building in the suburbs. Borrow money to buy up other companies. Sell their assets (buildings, cars, coins). Reduce the workforce to pay the loan that you took out to buy the company. Pay the bankers.

With what money is left, try to improve the business.

When that doesn’t work, sell it to a new group of bankers. These specialize in cutting costs. Fire the experienced managers. Reorganize the way the company works. Borrow more money to buy even more magazines and websites. Cut their costs. Fire their people. Then sell the limping company to another group of venture capitalists.

And repeat until you end up in the United States Bankruptcy Court for the District of Delaware.

As a publisher who sells old-fashioned books, I can tell you there is still a healthy appetite among people young and old for physical products. But they have to be products that are worth buying. That are made with great effort (and, at times, expense). And you have to protect your business by avoiding debt. When the bankers start running a publishing business, it’s game over. The only thing they are interested in printing is money.

My heart breaks for the poor SOBs who have been keeping the lights on at Popular Woodworking Magazine and all the other magazines under the F+W umbrella. Unlike me, perhaps, they stayed on out of loyalty (or desperation, perhaps) to make it work. The deck was always stacked against them because most of the revenue they brought in went right to the banks to pay the debt service.

My hope is that Popular Woodworking and the other magazines will end up with new owners – perhaps ones who love publishing more than they love insane margins.

Crazier things have happened.

— Christopher Schwarz

P.S. I know someone will ask, but we are not buying Popular Woodworking. I think the future is in scrolls of some sort. Or painting animals on rocks. Maybe gourds.

About Lost Art Press

Publisher of woodworking books and videos specializing in hand tool techniques.
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67 Responses to An Alternate Ending for F+W Media

  1. Steve C says:

    **but we are not buying Popular Woodworking**

    Bummer. I’m sure you could run it.

  2. Bob Parsons says:

    I’m English so forgive me if the Bob Ross reference went way over my head. But I thought I detected the voice of Ron Swanson in there? – top man!! P.S. Keep up the great work Christopher.

    • Bob Easton says:

      Bob Ross was an American painter (mostly landscapes) who had an instructional TV show for years. He used a pleasant, overly tranquil (pour some more syrup on me), speaking style. I’m sure you can find some examples on YouTube. Watch one, then come back and re-read Christopher’s story.

    • Allan says:

      Check out some of his old shows on youtube. You will not be sorry that you watched a few episodes. I don’t even paint…not an artistic bone in my body, but I enjoy watching him.

  3. Wonder what this may mean for us authors who get semi-annual royalty checks. It’s that time of year right now. And more importantly, what will it mean for the immediate future of Pop Wood and the folks who work there. Hopefully not more sackings.

    • Shawn Graham says:

      Filings state 105+ million in debt and an estimate of 1000-5000 creditors (how would they not know unless they are counting all the authors over the years.) Sad is even with all that lost money even more will be lost if buyers don’t come along to buy up all the craft educational stuff. Opportunity loss for future generations.

  4. steverennells says:

    Maybe this is an opportunity for you to buy the rights to your workbench books and “Handplane Essentials”

  5. Josh says:

    I wondered about the recent change in cover style and shift in advertisement targeting. Damn shame. Here’s hoping the magazine continues, at least.

  6. John says:

    Sad.
    Happens all the time.

  7. Alan says:

    I would by a gourd made using one 18th century tools

  8. shopsweeper says:

    Bankers can’t run any sort of company (banks MAY be the exception – but judge for yourself in this era), and when they try smart people should flee (Paul Grangaard is the exception and I don’t think he is a banker anymore). Really, running any kind of business that you don’t understand or care about it is a recipe for disaster unless you are a quick study.

    I hope that all the talent lands on their feet. Quality content is still king and anyone who says otherwise is trying to pick your pocket. Forget buying the company – I say pick up (or just enable) a few great folks if you can.

  9. Alan T says:

    I would buy Lost Arts Press 18th century gourds…. sounds promising

  10. miathet says:

    I would buy a Lost Arts Press 18th century gourd …. Sounds like a plan 🙂

  11. Mike says:

    This really doesn’t surprise me at all. I have hung in there with Practical Woodworking for the last few years. In reality it has been since you departed the staff. I know they tried with some really good people, some of whom now work with LAP. But it has been going down hill and I will no longer renew my subscription. I do not feel like I am abandoning the ship, so to speak, but rationalizing my options in relation to quality material. Interesting that FinecWoodworking is now courting you. It would appear that they remain the last quality magazine in woodworking. They will now get my secondary funds after LAP of course. Kind regards from NZ.

  12. James D. Maher says:

    “you have to protect your business by avoiding debt”

    I believe you have to protect your SELF and anything / anyone you care about by avoiding debt.
    Many more PEOPLE than businesses have been and are being destroyed by debt. Unfortunately, individuals no longer have bankruptcy comparable to businesses.

    All one can do is work as hard as they can to avoid debt.

    • Monte C Bell says:

      Amen. It has been said that the hardest thing to do in America is to stay out of debt.

      • Alan R Garner says:

        Monte, I would suggest it is not hard to stay out of debt — it is greed on each individual’s part who wants an easy way of buying tools/toys/shining things, which is debt via credit cards.

        • Jon says:

          Not always is debt the result of greed. Almost all of my debt was to purchase the education and various certifications in order to pursue the occupation (a low paying service occupation, at that) I love. If pursing your passion by pursing a career in it is greed, then yes I’m greedy.
          My student loans, when combined with my wife (same story, low paying career choice prereq is advanced degrees) our student loans started out triple our mortgage. I don’t borrow to buy tools, cars, clothes, vacations, or anything else, only school and house.
          Too bad about Pop Woodworking. I let my subscription lapse after you and Megan Fitzpatrick left; why do I want information on how to use a computer to automatically shape waste tree byproducts?

  13. Lawrence Wiesner says:

    Sorry about Popular WW’s demise. Can’t imagine life without FWW or Mortise and Tennon. I’ve subscribed to the former for forty years. The later since it started. The woodworking Renaissance was was documented by FWW over the years. Without dedicated woodworking journalists we’d have lost a lot knowledge.

  14. johncashman73 says:

    That’s very sad. I knew little about what was going on with the business, but could see very clearly what was happening on the consumer end — and none of it was good.

    I hope the pain felt by their workers is somehow minimized.

  15. Richard Mahler says:

    I worked for nearly two decades for a great corporation that was majority owned by a small board of directors, had brilliant creative business minds at the helm, made literally blue millions in profits because they were not greedy or stupid, was admired in the industry for all those reasons – until the decision was made to sell in order to gain more capital for greater/faster expansion. Thus began the spiral of destruction: changing hands several times, run by idiots who reorganized repeatedly and had no basic understanding of the business or why it had been successful in its past history. I had no patience with the amoral treatment of employees, so I retired at 60 because I could (exercised stock options and sold before it all went in the can!) This is the story of capitalism in America in the past four decades: making a decent profit with good products while serving the real needs of consumers and employees is no longer good enough. Greed Rules!

  16. Bob Easton says:

    You’ve always advocated for no debt. Damned smart!

    • Lost Art Press is only 12 years old, but we have never taken a penny of debt. And we have managed to buy multiple huge press runs that cost more than $100,000 each. You can run a small business without “capital investment” (i.e. debt). It just takes time and patience.

  17. auswimkc says:

    I echo the above: Maybe a buying opportunity for your Workbench books.

    I actually came here to implore you to buy the rights to your blog and fold them into your website. But then again you would have to pay for that purchase somehow and I am guessing hosting a banner advertisement on your blog is a no go.

  18. Sad. Same thing happened to the history magazine I was once proud to be the editor of. And you’re right, the demise of publishers like F&W has got very little to do with new technology and everything to do with greed. Can’t say that this will be the last closure of its type.

  19. Tom Bittner says:

    Unfortunately this phenomenon has been occurring in all fields and trades.
    Fortunately there are people like yourself who will keep the knowledge flowing to people who can use it and are willing to support the cost for the information.
    I’m only in my early 60s and the trades that I made a good living on in my 20s are now obsolete.
    Such is the price of technology.

  20. I’ve heard this described as the IOU cycle. Innovator starts a business and runs it healthily then, for whatever reason, decides to sell. Operator buys it, keeps it going with no real sense of vision, and extracts assets. Lastly the Undertaker buys it, sells off whatever’s left, and buries it. Meanwhile, the rank and file gets mostly crapped on.

    • johncashman73 says:

      The wheels of capitalism are greased with the blood of the workers.

      Our economy is becoming a game of musical chairs. Lots of people, only one chair. And it’s been reserved.

    • Richard Mahler says:

      The employees whose talent, labor, belief and loyalty – the people who made it all once profitable and successful – are the losers, the ones who end up on the scrap heap wondering where it all went and where they go now!

  21. Andrew Brant says:

    I did not realize they published Sky and Telescope too. I always have liked that one.

  22. Matthew Holbrook says:

    Read the first 6 chapters of the Book of Daniel in the Old Testament. You will see there that when arrogance and greed are present, the Lord Almighty puts the handwriting on the wall. And the end comes swiftly.

    Chris, think about buying the rights to your PWW and workbench / hand tools books. Let LAP be the curator of those valuable resources.

  23. Steven Poetzl says:

    What a sad tail of being “flushed” for a quick buck.

  24. Gregory Lee says:

    Today in Forbes magazine on F&W. “The New York-based company, one of the country’s largest publishers of specialty and enthusiast media, said it plans to sell its businesses while continuing to operate, in order to “maximize the value of their estates for the benefit of all their stakeholders.” Nothing on providing for the consumer or protection for the employees. Screw the public, protect the investor.

  25. Karen says:

    Fun fact: they were part a revenge purchase by F+W: a former CEO of F+W started his own rival magazine company (I left F+W to join him). I was really happy there, but, unfortunately, that company was also owned by a private equity firm, and when they wanted to liquidate their investment, F+W swooped in, bought the company, and tore it apart. All former F+W employees (and there were a lot of us) were immediately slated for layoffs (they literally did a head-count at one of the staff meetings, lol). Only a couple of magazines have remained intact, and I hope the right buyers find them. As for F+W, it’s a mercy killing at this point.

    • Amy Tirk Seigle says:

      I worked in both the Books division, then the Magazine division of F & W in the ampersand days of the early 90s. My first job out of college and I learned so much. Mostly great people, and a terrific cameraderie in the trenches. It was a wonderful start to my career.

  26. schmidtwj says:

    Figures, I just sent in my renewal check.

  27. Keith says:

    I was acquainted with F+W when they were doing feasibility studies for “Woodworker’s Book Club” before they even acquired PopWood magazine. Sad to see the bean counters and venturists run things into the ground. Feel sorry for my friends that still work (ed) there.

  28. Brian Smith says:

    For me, back in the early 90’s, II hated PW, just bought it once in a while to see what they had to say. Then some time after you joined, my interest level went through the roof. I kept following stuff you edited or wrote where I could, and you kept anticipating what I wanted. And mostly you keep doing it. Don’t stop what you’re doing.

  29. Chuck says:

    Chris — if you want a deeper, darker understanding of all this, I highly recommend Tim O’Reilly’s book ‘WTF — What’s the Future’. Scroll to the part about our ‘Skynet Moment’. For those that don’t remember, the Skynet moment is where the machines take over. Tim, as astute as any observer of our current milieu (and a fellow publisher) will tell you it has already happened. 1983, as a matter of fact, when algorithmic stock trading was introduced.

  30. Say what you want about their demise, but print media has been in big trouble for the past several years. My Cincinnati Enquirer newspaper is a lot thinner and smaller than it was ten years ago. And now it costs $2.50 for the daily edition.

    • Steven E Skwara says:

      You’re right about the Enquirer. It’s almost as thin as the suburban newspapers now, the demise of which is a whole ‘nother issue when it comes to local gov’t accountability. All that said, I think there would still be a market for a thick, quarterly, high-quality woodworking periodical. Something like the Claremont Review of Books but for woodworking plans, etc.
      .

  31. Jim Holladay says:

    Very sad!

  32. Judith Katz says:

    we live in a “capitalist” society and we let bean counters run it. Money, money, money is the name of the game. I am sorry to see P&W go but like you am not surprised.

  33. Sad. I guess this makes my renewal decision easier.

  34. Mike says:

    I can see that most of the commentators here think capitalism is a dirty word, or at least the part of capitalism made possible by private equity investors. Here is an alternative view – private equity kept Pop Wood alive for 20 years after the founding family decided they wanted to cash out.

    • johncashman73 says:

      Not all capitalism is bad. Capitalism created Lost Art Press. It creates things, makes money, grows. But when the entire goal of your enterprise is to destroy something valuable in order to enrich yourself, I would argue it is fundamentally evil. And harmful, both for individuals and our society as a whole.

      We should not accept “If God didn’t want them sheared, he would not have made them sheep” as valid philosophy.

      If they could have squeezed the last nickel out in fewer than 20 years, they would have.

  35. alexpukinskis2013 says:

    I agree with the key points of this piece. One small detail – the investors mentioned sound like private equity, not venture capital. Private equity investors extract wealth from companies by cutting costs and loading up debt, whereas venture capitalists pour gasoline (cash) onto growing companies in the hope of explosive growth.

    Private equity is more of a ‘safe’ bet since it’s extractive. Venture capitalists, on the other hand, make a lot of bets on different companies, knowing most will fail, but a few will grow exponentially and cover the cost of the gasoline for the others.

    It’s a nasty business, in both cases.

  36. virgil62 says:

    So, what happens to 37 years of Roy in their video library?

    • johncashman73 says:

      They will either reorganize and come out of bankruptcy, or the parts will be sold to pay those they owe. You could potentially own the rights to all of those Woodwrights Shop episodes. Start putting together a bid.

      When NECCO, a candy maker in Mass recently went bankrupt, their brands were sold online at auction. It sounded like buying a chisel on ebay. A local mom and pop store made a lowball bid to buy the rights and formula for Skybar, and won.

  37. John McColley says:

    The system may be flawed, but it’s better than living in China.

  38. Hank Mayberry says:

    Like everybody else I use the internet for much of my woodworking needs,but I still enjoy subscribing to a couple of woodworking magazines. I like to kick back in a comfy chair with a cup of coffee and fold the corners over projects I want to try or a tip I want to remember. I was just thinking the other day I might subscribe to P.W. again, since it’s been a few years. It does seem with most woodworking mags the articles tend to be on a kind of repetitive cycle. New tech continues to come out, but much of woodworking is the same similar processes and information that is re wrapped with some newer ideas or the latest products to make things easier and our results more professional looking. (In part this is necessary also because new people join the hobby everyday.) I am saddened to hear of any demise of a business that contributes to my hobby, but even more so I sympathise with the employees. Those that came to work everyday to make the business they work for the best it could be while supporting themselves and perhaps supporting a family. I hope they all land on their feet and see this as the start of a new tomorrow. My Aerospace company was bought and sold 3x’s before I retired and the parent corporation went out of business. I’m afraid it’s a sign of the times.

  39. holtdoa says:

    Hard to generate any sympathy for Popular Woodworking. They took what was, for a period time, a useful and interesting magazine and turned it into a clone of Wood magazine and managed to channel that banal content into a physically inferior product with terrible shipping. While not the best woodworking mag in the world, every issue of Wood mag arrives crisp and clean printed on sturdy stock. I seldom receive a copy of Pop Woodworking without some kind of damage, removing the mailing label often damages the cover, and I’ve actually gone to the trouble on three occasions of requesting a replacement. The replacements always came packaged the way the original should have been. I wonder how much money they bleed every issue taking care of similar problems.

  40. Haily's Coment says:

    I feel bad for Anne of all trades (anne briggs?). She finally make the cover and now everyone thinks it’s a a-hole magizine.

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