Tom Phillips reflects on his newsletter career, why he sold, and what his future holds.

Thomas L. Phillips' meteoric rise in the newsletter world from an initial $1,000 investment in 1974 to revenues in the hundreds of millions of dollars is an oft-told tale. Following the recent sale of the last of Phillips International Inc.'s three major newsletter divisions--effective January 31, 2007--NL/NL's Paul Swift sat down with Tom over the telephone and discussed his career, what prompted him to divest, and what's he looking to do with his current publishing operations.

PS: Why did you sell the bulk of your businesses?

TP: "We had reached a certain plateau--$300 million in sales. I built the umbrella organization, Phillips Publishing International, by continually reinvesting the capital--not the most prudent thing to do forever. I decided to sell when the time was ripe.

"At the time, Phillips Business was at about $110-120 million in revenues. My competition was the biggest in the business. How to compete with them? Launch new products or make expensive acquisitions? And end up with a lot of debt.

"I was facing head-to-head competition--I with almost $100 million in revenues, they with billions. John Suhler of Veronis, Suhler & Associates made a bid that was good enough for me to accept.

"Then 9/11 happened. It hit both travel and advertising. At the time we had a number of trade shows that took a hit."

Tom then looked to sell Phillips Health, with much of its $180 million in revenues coming from nutritional supplements. He worked with two private equity firms, ACI Capital Co. Inc. and American Securities Capital Partners LLC, for many months to complete the sale.

Most recently, he sold the last of Phillips International Inc.'s three divisions, Phillips Investment Resources LLC, to Avista Capital Partners, another private equity firm.

In each of the three sales, the Phillips staff remained in place. "My people were part of the assets. I did not want a break-down of my legacy. My legacy was to help the staff reach the next plateau."

Hiring and, occasionally, firing

PS: Speaking of which, you've often said that your employees are the secret of your success. How did you identify, train and retain such people?

TP: "We tried to hire the best. We looked for quality and intelligence. Are they 'growable'? Do they have the vision as human beings and employees? It's sort of an attitude. Bob King, who was president of our Consumer Division, is a good example. With an undergraduate degree from Dartmouth and a Harvard MBA, he was a very talented businessman.

"And we had a very good reward system.

"We always tried to hire business builders. Editors have to understand the marketplace. Don't promise A when the editors are delivering B.

"We had an extensive interview process, which was good for both us and the prospective employee. By the time the process ended, we both knew each other very well."

PS: Did you have to do much firing?

TP: "If problem employees didn't work out, we moved them to a different supervisor. After the third supervisor and they still weren't with the program, it was evident that they weren't working out."

Tom said that fellow employees were integral to this, that their complaints about a certain person weighed in the decisions to move and then move out a problem employee.

Phillips' biggest blunder

PS: What do you consider your biggest publishing blunder amid such a long string of successes?

TP: "We had a huge mailing for one of our health newsletters, a 150,000-200,000-piece test. We rolled out to 5 million. But then we decided to change things on the reply form. It lost lots of money. We violated our own basic direct mail principles. We tinkered with what was working. One little thing, the format of the reply form. And that was only about 7 or 8 years ago."

What lies ahead

Tom has retained ownership of his Eagle Publishing Inc., which publishes Human Events, "The National Conservative Weekly"; the $297/year newsletter Evans-Novak Political Report, and three $1,250/year weekly newsletters from Mark Skousen, plus his $199/year monthly, Forecasts & Strategies.

Eagle Publishing also has two divisions, Regnery Publishing and the Conservative Book Club--both of which, among other accomplishments, were influential in bringing about the impeachment of President Clinton. Regnery's Unfit for Command attacked Senator John Kerry's Vietnam War record during the 2004 U.S. presidential campaigns.

PS: Now let's look to the future, specifically Eagle Publishing. Just this week I read in the paper that the "right-wing" conspiracy, of which you can be assumed to be a leading player, has lost its punch. Surely the presidential candidacy of Senator Hillary Clinton must get your publishing juices flowing.

TP: "The next two years are a wonderful opportunity for Regnery Publishing. The years 2007-2008 offer great challenges and great opportunities for our country and our company.

"We have lured presidential speechwriter Peggy Noonan away from a big New York publisher to Regnery for her next book, Why I Am Still a Conservative. We also publish Dinesh D'Souza.

"We publish about 30-40 books a year, including ones by our 'PIG guys," politically incorrect guys.

PS: Are you directly involved in the creative process in, say, marketing and the development of new books titles?

TP: "Eagle Publishing has about 100 employees. Jeff Carneal is president with a very capable management team. I certainly trust what they're doing.

"I come up with ideas. Sometimes they aren't any good. I'm not going over our direct mail packages, but do provide an after-the-fact review of results.

"One idea of mine has become reality--one of our new book titles, The President, the Pope and the Prime Minister, by John O'Sullivan. The president is Ronald Reagan, the pope is John Paul II, and the prime minister is Margaret Thatcher."

PS: I understand you have a relatively new family, in your mid-sixties, with two young children. You must find the new time you now have on your hands to be, let's say, "family-friendly."

TP: "Yes, we have two young children, Reagan and Parker. Plus, I have a grown son and daughter. One has two sons and the other two daughters.

"I also have more time to devote to my philanthropic activities."

Eagle Publishing Inc., One Massachusetts Avenue, NW, Washington, DC 20001, 202-216-0600, fax [phone], [e-mail], www.eaglepub.com.