New York: With its yearly list of the most fabulously wealthy and legion of articles lionizing business leaders, Forbes magazine has long been a synonym for riches, success and a belief that business, left to its own devices, will create a better world.
That last part has not worked out so well lately.
If there ever was a bad time to be named Forbes—and there probably is not—now might qualify. The signature magazine, founded on the words of Bertie Charles Forbes, “Business was originated to produce happiness,” is struggling in an age of financial misery.
Ad pages are down 15% in the first quarter, compared with the period a year earlier. Forbes.com, one of the top five financial sites by traffic, throws off an estimated $70-80 million (Rs335-380 crore) a year in revenue, but never yielded the hoped-for public offering.
Dwindling riches: Steve Forbes (in picture) and Tim Forbes conceded that the last year had been a difficult one for the magazine. Ashesh Shah / Mint
Out of its 1,000 employees, it has laid off about 100 since November, including 20 people in January, and has announced an unpaid five-day furlough for employees.
In 2006, 40% of the enterprise was sold to Elevation Partners, a private equity firm, for a reported $300 million, setting the value of the enterprise at $750 million. According to Mark M. Edmiston of AdMedia Partners, “It’s probably not worth half of that now.”
Forbes’ misery certainly has plenty of company among its competitors. Ad pages have declined even more at Fortune and BusinessWeek. Revenue figures from the Publishers Information Bureau, a generally inflated index, listed revenue of at least $338 million for Forbes, $276 million for Fortune and $236 million for BusinessWeek.
Forbes’ competitors have had significant layoffs as well. Many magazine industry experts expect that Portfolio, Conde Nast’s costly and abortive effort to gain a foothold in the category, will not be the last business magazine felled by the current recession.
Dennis Kneale, a former managing editor at Forbes who now works at CNBC, suggests that the magazine will be tested as it never before has been.
The brothers Steve and Tim Forbes, the third generation to run the magazine, “have never been through anything like this, and they will find out if they have the management talent on hand to publish a magazine in this environment”, Kneale said.
In a conference room in their Manhattan headquarters, Tim and Steve Forbes conceded that the last year had been a difficult one for a magazine marketed as the “Capitalist Tool”. But, sitting side by side in room dappled with all the iconography of wealth—pictures of a yacht, several estates and the men who acquired them—they also said that, while the economy may cycle, what it means to be a Forbes does not.
“On many occasions, we’ve been materially out of sync with the prevailing wisdom of the moment and where the world was,” said Tim Forbes, the president and chief operating officer of the company, which is privately held. “The tide seemed to be going the other way, but we don't change our fundamental view.”
But the downturn—both in the economy and in the Forbes philosophy—is felt particularly sharply here. Often thought of as a wealthy family that happens to own a magazine, the family is actually wealthy precisely because it owns a magazine, and the business decline of the magazine comes right out of the family’s pockets. And there is another generation that expects to inherit more than a once-gilded family name.
So while the Forbeses’ view on making money may not have changed, their view on spending has.
Until his death in 1990, the brothers’ father, Malcolm S. Forbes, embodied living large.
There were hot-air balloons, a palace in Tangiers, an island in the Pacific, Faberge eggs, an extensive art collection, a Boeing 727 (also christened the “Capitalist Tool”) and a 151-foot yacht named “The Highlander” as homage to the family’s Scottish roots. As young men, his four sons would play the bagpipes to welcome guests—mainly prospective advertisers—aboard.
In the last few years, the palace and island have been sold. A collection of tin soldiers was put on a forced march, $27 million worth of Victorian art was peddled, the eggs were bought by a Russian oligarch, and the jet is gone.
They still have the yacht, but the crew has been let go and it has been docked in Miami.
“We thought it would be inappropriate in this environment to run around in the boat,” said Tim Forbes. “So it seemed like a natural thing to put it on hiatus.”
In 2007, the family even tried to sell the company’s ornate headquarters on Fifth Avenue and move to a less fancy address, but the souring real estate market stopped them.
Malcolm Forbes made working at the magazine seem like a kind of mad caper. His sons share the congenital optimism, but the magazine was deeply invested in the dot-com boom. After that burst and now the credit crisis, working at Forbes could seem more like a grind.
“Everyone here likes the magazine, the people who run it, and most of us believe in the mission,” said one editorial employee who asked not to be identified because he was not authorized to speak with a reporter. “But that sense of mission is sort of hard to sustain when most of the news is bad. Capitalism is a less sexy topic for everyone, including us.”
Leonard Lauder, chairman of Estee Lauder Co., has known the family for some time and said that the Forbeses are a reflection of a shift in the culture. “Malcolm Forbes lived life to the fullest and took obvious pleasure in his wealth and influence, but the sons are living in very different times,” he said.
It is not as if the family's back is against the wall financially, even after having divested many of the assets. The company is still expanding aggressively internationally through licensing agreements that export the Forbes way.
Steve Forbes recently returned from opening up a Forbes magazine in India, bringing the number of foreign editions to 10.
In addition, this year the company began publishing ForbesWoman, a quarterly magazine with a companion website.
Mortimer B. Zuckerman, the owner of The Daily News in New York, thinks the franchise and the aspiration that drives it will survive, as long as the market rebounds. “There is still a lot of aspiration out there, which the Forbeses have tapped into. The question for them, for a lot of people in publishing, is can we last until things turn around?”
©2009/THE NEW YORK TIMES