Why huge corporations have touble publishing newsletters--or "why elephants don't tap dance".

I wish R.R. Bowker success in resuscitating some of the newsletter properties that were once part of Simba Information--as reported in the September 30 issue of NL/ NL.

I've been involved in newsletter publishing since 1968, much of the time with a front row seat, and I have to observe that, as a general rule, acquisitions of owner and entrepreneur-developed operations by very much larger publishing companies or other conglomerates usually don't have happy endings.

If I follow the bidding, Simba (founded by Alan Brigish, whom I knew and respected when I was at the newsletter association) was sold for a figure reported to be "much more than $5 million" to a publishing conglomerate.

That buyer, in turn, acquired a much larger newsletter firm and then sold the whole shooting match to a $1.6 BILLION operation--and one 50 percent owned by investment bankers.

Let's guess that the sale price of Simba was somewhere around the industry benchmark of one times gross. That means that the former Simba properties in total represented a bit less than one half of one percent of the total operations of the conglomerate.

And, not only was Simba such an insignificant part of the company, but Simba consisted of about a dozen titles, each with its own very specialized niche, its own history, and its own prior marketing successes and failures.

And I'd guess that Alan Brigish had all of that information available on the tip of his tongue or at his fingertips. I'd further guess that no senior executive at PrimeMedia, the conglomerate, was more than vaguely aware that they even owned the Simba titles.

When synergy isn't synergy

And they "achieved efficiencies" or "synergy" by eliminating Simba's marketing department and combining it with their central operations. Almost always the kiss of death.

I'm not saying that huge conglomerates don't have their virtues. But from my point of view, publishing a number of (by their standards) ridiculously small newsletter titles just is not something they do well. It's a bit like asking an elephant to tap dance.

The publisher-CEO of a successful newsletter firm with a seven-figure or even eight-figure annual revenue probably still spends time considering whether the new special report for Title A will cross-sell with inserts in Titles B, C, and D.

At "Megacorp," however, the focus is on the stock market price (or whether hundreds of thousands of AOL members will rush to subscribe to its flagship magazine now offered online).

Happy exceptions

There are, to be sure, many exceptions to this "rule." American Health Consultants comes to mind. It is a subsidiary of a large publisher which is, in turn, owned by a still larger one. But AHC was allowed to remain in Atlanta, doing what it knows how to do, publishing medical newsletters.

And even in that case, acquisition is not always the happiest of circumstances for the staff of the acquired company. In an interview with NL/ NL, Robert Williford described the experience this way: "Leslie Norins [AHC's founder] got to be rich and I got to be president of the company. All in all, I'd have changed places with him."

On the other hand, Mealey's big stable of litigation newsletters also comes to mind. It was acquired a few years ago by LexisNexis but also "left in place" with its own editorial and marketing team--not only left in place but greatly enhanced by LexisNexis' marketing team and deep pockets. The acquired staff seems very happy with the results.

Is the acquisition an investment or part of a strategic plan?

The defining difference between, say, the earlier Simba acquisition by Primedia and its current one by Bowker (or Mealey's by LexisNexis, for that matter) is that the former was made for investment purposes and the latter as part of a strategic plan.

You, the seller, have that choice:

* Sell to an investment group for perhaps a higher price and then see your beloved titles absorbed, squeezed or otherwise eliminated, or

* Sell to a publisher whose strategic plan includes building on the titles acquired from you.