Dick Eastman posted a blog about the upcoming demise of F&W on the 15th. Reading his article was like a punch in the gut. I’m way too familiar with the economics of magazines, the book publishing industry, the decline of print advertising, and the attempted shift to digital products.
From my perspective, as a former magazine publisher, as well as managing editor for many years, I know the hazards of the business. I had to give it up with Heritage Quest Magazine in early 2006. Everton’s Genealogical Helper bit the dust in 2009. F&W Media published numerous magazines, including Family Tree Magazine (not to be confused with the British publication by the same name). It’s reported that their overall number of subscribers dropped from 33.4 million in 2015 to 21.5 million in 2018 with advertising revenue dropping to $13.7 million last year (2018) from $20.7 million in 2015. The magazine business has the inherent liability of collecting the subscriber’s money up-front, and then being forced to fulfill the obligation over one, two, three or maybe even up to five or ten years. While operating Heritage Quest, I picked up the subscribership of several magazines whose owners could no longer fulfill their obligation. Everton’s Genealogical Helper picked up the subscribers to Heritage Quest Magazine. This subscriber obligation is called “unearned income” and if management isn’t careful they can find themselves forced into operating on money that isn’t rightfully theirs… Did you ever wonder why you keep getting renewal offers (some of them rather unbelievable) from the publishers of the magazines you may love? I’m not saying all magazines are in trouble. They are not. But I can state that that no magazine publisher has too much money.
To make matters worse for F&W, their online digital efforts were largely unsuccessful, with many customer service issues. So while the magazine subscription business was declining, they were not able to get a return on investment through online sales. CEO Osberg said that the company entered into various technology contracts that increased capital expenditures by 385% in 2017 alone. He went on to say that “In those six (6) months, the Company’s management dramatically increased spending on technology contracts, merchandise to store in warehouses, and staffing, while the Company was faltering and revenue was declining… The Company’s decision to focus on e-commerce and deemphasize print and digital publishing accelerated the decline of the Company’s publishing business, and the resources spent on technology hurt the Company’s viability because the technology was flawed and customers often had issues with the websites.”
F&W Media is said to produce about 120 titles a year. Their Family Tree Books division produces excellent books – maybe a dozen or two a year – many of which Family Roots Publishing attempts to market. I say “attempts,” as we aren’t all that successful at it. F&W pushes so hard, trying to sell online, that more often than not they discount their books from 20 to 50%, selling directly to the public. In many cases, FRPC could buy the guidebooks during one of their online sales for less than what I can get them from Ingram (their distributer) for – and that’s buying them in large quantities from the distributer. Without meaning to, F&W Media set a new paradigm for the genealogy book industry. Either we discount by 20% or more – or we don’t sell many books of any particular title. I don’t care how good or popular the book is, heavy discounting has become the standard. We (and several other genealogy book publishers) have been forced into this position by F&W Media’s sales tactics. With this latest announcement of bankruptcy, it all makes sense. For the last couple years, I thought they’d just lost their minds. I was wrong. They were struggling for survival. Sad…
I have numerous friends who either work for or have books published by F&W Media – dba Family Tree Books. I’m praying that they all have a soft landing. Having your employer or publisher in financial straits can make for sleepless nights. I see that F&W has placed its parts up for sale, and they are hoping to have the sale of these parts consummated by the end of May. Let’s hope there are some companies with deep pockets that can pick up the parts. I know there are, but the $105.2 million in outstanding debt could make that a challenge. I understand that negotiations have been taking place with about a dozen potential buyers. According to the bankruptcy filing, F&W has creditors numbering between 1,000 and 5,000. “They include literary agencies, small author-service providers, and authors.” I don’t like the sound of that last line. The list of creditors runs to 16,220 names, including those of many genealogists – authors who’ve written books for F&W. That’s more than 5000, as stated in the petition for relief. Also, I haven’t been able to locate a list of magazine subscribers or even an associated dollar amount in unearned income. There seems to be somewhere around 20 million subscribers to magazines across all titles. That figure seems awfully high to me, but that’s what has been reported thus far.
Read Dick Eastman’s blog article.
Read the filing info at www.csbankruptcyblog.com. This includes the petition for relief, and the list of 16,220 creditors.
Read the article at Forbes.com.
Read the article at publishersweekly.com.
Read the article at USAToday.com.
I agree Leland – very sad. Thanks for your thoughtful perspective!