Forbes (reduint despeses) del New York Times

Even Forbes Is Pinching Pennies


By DAVID CARR
Published: June 14, 2009
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.



Steve Forbes appeared on the November 2008 cover with a defense of capitalism.



If there ever was a bad time to be named Forbes — and there probably is not — now might qualify. Their signature magazine, founded on the words of Bertie Charles Forbes, “Business was originated to produce happiness,” is struggling in an age of financial misery.

Although circulation has been basically stable at about 920,000, the average price per issue on subscriptions has been dropping steadily, which means Forbes — like a lot of magazines — is fighting to hang on to its subscribers.

Ad pages are down 15 percent 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 million to $80 million a year in revenue, but never yielded the hoped-for public offering.

The company, historically benevolent to employees, has ceased matching contributions to its 401(k) program. 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 percent 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’s 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 over $338 million for Forbes, $276 million for Fortune and $236 million for BusinessWeek.

Forbes’s competitors have had significant layoffs as well. Many magazine industry experts expect that Portfolio, Condé 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,” Mr. 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, Fabergé 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 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 Estée Lauder Companies, 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.

And they are very different men. While his father swanned about in the company of Elizabeth Taylor, Steve Forbes has a lifelong crush on federal fiscal policy. Even after two failed single-issue presidential bids, he will embark on long soliloquies about the flat tax. In November last year, he appeared on the cover of the magazine over a headline, “How Capitalism Will Save Us.”

“When things go your way, it’s easy to think you’re a genius,” said Steve Forbes.

Tim Forbes is Steve’s opposite in many ways — chatty and personable with a soft spot for the latest in rock music. Since his brother became involved in politics, he has run the day-to-day operations of the magazine.

“Look, at times like these, you might wish you’d done something else,” he said. “But the trick is to get through it and put yourself in a position so that as things recover, which they will, you can take advantage of it.”

It should be remembered that while Forbes magazine epitomizes self-made success, it does not like to show the sweat on anyone’s brow. B. C. Forbes began the magazine in 1917 by using most of his $25-a-week salary as a financial columnist to rent a suite at the Waldorf-Astoria to bump knees with the captains of industry and begin publishing a magazine.

The gambit worked, but during the Depression, the magazine suffered along with the rest of the economy, leaving the founder to pay employees out of his earnings as a newspaper columnist.

But the magazine eventually prospered and the family along with it. In 1954, B. C. Forbes died, and his first son, Bruce, became president while the second, Malcolm, took over as editor in chief. Under Malcolm Forbes’s hand, the magazine flourished almost as a religious tract. It still is ferociously free market, unapologetic and given to outré displays of the spoils of success — traits that seem acutely out of step in 2009.

Fran Lebowitz, the author who was friendly with the father and continues that friendship with the sons, says that the Forbeses still believe in their own message.

“Rich people always have to believe that government is the problem and that they have the answer,” she said. “The boys are much less playful than the father. They have less fun, but they certainly share his view of business.”

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 expanding aggressively abroad 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 Web site.

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?”

Fewer Americans may share the Forbeses’ aspirations now, although Ms. Lebowitz certainly disagrees.

“Oh, please, Americans do not hate the rich; they want to be them,” she said. “Every American believes that they are the impending rich, and that will never change.”