by Anne Summers
‘Don’t worry,’ she said, ‘we are going to pull this off ’. ‘Or,’ she added, ‘we’ll be the best-dressed bag ladies in New York.’
However crazy brave the past six months had been, from getting Fairfax to buy Ms. to now being tossed overboard as casualties in a corporate war game, this next step was way bigger than anything we had ever done or I could even have imagined. It was just five months since Sandra had handed over the Fairfax cheque to the Ms. Foundation. They had reluctantly sold us their precious property because they had been assured we were a wealthy and established corporation that could ensure Ms.’s future, with management and editorial control in the hands of feminist women. We had worked hard to get Fairfax’s credentials established in the New York media world. Our energetic and super-stylish marketing manager Pat Cantor, who Sandra had recruited from Hearst, had used the Fairfax heraldic crest on all our stationery and other livery—‘that sort of thing impresses Americans,’ she’d assured us. Our media agent had planted stories in the business press that boosted the reputation of this old and established Australian publishing house. Now, suddenly, Fairfax was disintegrating and ditching all its overseas properties. On 17 March 1988 the New York Post reported that, once again, Ms. was for sale.
The offers poured in. Wilma Jordan reported that she had had ‘an extraordinary number’ of approaches from media groups, financial institutions and even individuals. The big magazine players—Condé Nast, Hearst, and Time Inc. and Associated Newspapers—all put in bids. As did Rupert Murdoch, who not long before had acquired Seventeen, which was still the leading magazine in the teenage girl category. Sandra and I had been introduced to him at a function celebrating the visit to New York of the Sydney Symphony Orchestra.
‘Interesting that Australians now control the major magazines consumed by teenage girls in America,’ Sandra said to Murdoch.
That night he wasn’t interested in talking to us—about Seventeen or anything else. Maybe he had heard the slogan Sandra had put out on the street: ‘Seventeen is the magazine your grandmother buys for you, YM—Young Miss—is the magazine your mother buys you, Sassy is the magazine you buy for yourself ’. But it was different now. Sassy was on the market and Murdoch, like every media company in town, wanted it. We could have sold Sassy in a heartbeat, taken the millions and set ourselves up for life. Except for one very big problem: no one at all wanted Ms. The market saw Ms. as the ugly sister of magazines, we insisted she was an integral part of the deal. We wanted to save Ms., to show the marketplace that a feminist mass-circulation magazine could work.
‘We expect when Sassy readers grow up they will want to read Ms.,’ Sandra used to say.
Our numbers actually showed that Ms. could become profitable, long before Sassy. It was expensive to replace teenage readers (who quickly outgrew the product) whereas Ms. readers, if they liked the magazine, had the potential to remain loyal for years, decades even. We were optimistic because the response to my first issue had been so positive. The editorial was being widely praised and this was translating into good numbers. We posted a 100 per cent increase in newsstand sales; our first direct-mail drop had yielded 32,000 responses against our budget of 22,000, and we’d had 1900 early subscription orders when we had expected only 800. Even more importantly, we had done a deal with the National Organisation for Women (NOW), the activist body founded by Betty Friedan, which would enable us to take our rate base (the number of subscriptions we guaranteed to advertisers) from its current 450,000 to 500,000 in July, and to 600,000 the following January. Our projections showed Ms. making a big profit within five years. The trouble was, given Ms.’s reputation around town, no one wanted to believe this.
In late March, Young Warwick Fairfax had given us a day’s warning that he was coming to New York, asking Sandra to book him a ‘moderate priced hotel’ and to send a car to pick him up from the airport. He arrived at our offices accompanied by Peter King, the South-African born executive who had replaced Greg Gardiner as CEO of Fairfax and an advisor whose function was never made clear. The weedy, bespectacled young man who had orchestrated the takeover that had shredded a great company, wrecked the careers of so many of my friends and had sent his tiny New York outpost reeling into an uncertain future seemed to me to be very ill-at-ease and immature. He was either ignorant or insensitive about the devastation he had wreaked. In Sandra’s office, as he and King flicked through copies of Ms. and Sassy, Warwick told us that we were being sold not because our efforts were not appreciated but because ‘it made no sense’ to keep us now the magazine division was being sold and there would be no one to manage us. He tried to tell us what a great opportunity he had given us: ‘Executives usually only ever get a salary,’ he said, ‘but we now had a chance to do something more.’ ‘Found our own dynasty?’ Sandra shot back at him. We had an awkward lunch at Café Un Deux Trois, the place where Sandra had first hatched the plan to get Fairfax to buy Ms. Young Warwick sipped his SevenUp, as Sandra tried hard to get him talking while we waited what seemed like forever for the food. Afterwards we guided them back to the Times Square subway station so they could return to Wall Street where, presumably, they were trying to raise more money to keep their deal in place. So, of course, were we.
We hoped we might be able to turn around the market’s view of Ms. with the very encouraging feedback I was getting for my overall editorial direction. I had made a couple of bad mistakes, such as my anti-fashion photo feature I’d called ‘Personal Appearances’ of women wearing their own clothes. It was a disaster. I knew Ms. readers did not want fashion, but I thought they might appreciate help in how to put their own wardrobes together via seeing what other women like them wore. Our first issue featured Professor Catharine Stimpson, a well-respected professor of English Literature, who had led Ms.’s advisory Board of Scholars. It did not work. It wasn’t stylish enough for fashionistas and was loathed by those who thought clothes had no place at all in Ms. After a few issues, I killed it. But other innovations of mine were better received by both readers and the industry. I’d had editorial appraisals done by industry gurus to include in our sale documents. I’d asked for assessments from Redbook’s Sey Chassler, the only male editor-in-chief of a large women’s magazine, who’d expanded the editorial formula from recipes to articles about women’s rights, and Lenore Hershey, whose eighteen-year tenure running Ladies’ Home Journal, America’s top-selling women’s book, made her the unofficial queen of the industry. Both said, independently, that I had accomplished a great deal in a very short time and that I was taking Ms. in a direction that was totally new and fresh in the American market. Chassler went so far as to say that I might even be establishing a new genre of women’s magazine. This verdict was reinforced a short time later when John Veronis, a merchant banker who specialised in media deals and who had been deputed by Si Newhouse, the owner of Condé Nast, to check-out the Sassy/Ms. deal, interviewed Sandra and me. Veronis told me that if I succeeded in what I was trying to do with Ms. I would have created a new kind of magazine for women. Heady stuff but although it led to a job offer from Condé Nast’s Creative Director Rochelle Udall for me to edit one of their titles, the company decided to pass on our deal.
Sandra and I set up a corporation which we named Matilda Publications Inc. as a nod to our Australian origins. It would be the vehicle for the new ownership. It was fast becoming clear that no media partner wanted to be involved with Ms. so we decided we should go to Wall Street and try to raise the money ourselves. We hoped bankers might take a different view of Ms.’s prospects. We were running out of options—and time. If we were unable to do a deal by 30 April Fairfax would put the magazines up for auction, Sassy would be sold, Ms. would fold, and Sandra and I would most likely be out on the street.
Those next few weeks were a hectic and emotionally heart-stopping rollercoaster ride. We learned to measure success by the day, even by the hour, as our deadline loomed and one offer after another either evaporated or did not meet our criteria. We often let off stea
m during that exciting but extremely stressful time by going to a bar on Broadway in the 70s, which was close to where both Sandra and I lived. Sometimes there would be a group of us, Sandra’s exuberant husband Michael Skinner or some of the Australian gang from the office, but often it was just Sandra and me needing to navigate the trickiest situation either of us had ever found ourselves in. The bar was the usual sort of neighbourhood place, with its share of locals huddled over drinks watching one of several television sets that were of course stuck on sports channels, while groups of various descriptions congregated in wooden booths along the outer wall. Max, a stately African-American man of about 70 who always wore an immaculate three-piece dark suit, presided over the bar, so we always referred to the place as Max’s. Max took a shine to the Australians, especially to this one, and whenever we appeared he would immediately clear a booth for us. Those evicted had to find other seats, or else leave. We would settle down with our drinks and, more often than we should have, stay until closing time at 2 a.m. We lived off our nerves, so the lack of sleep did not seem to matter. Nor the hangover, although I usually stuck to wine so the damage was not as great as it might have been. Around midnight, the mood in the bar would change, the music would be turned up, and Max would come from behind the bar and invite me to dance. Up and down the room he trotted and swung me, around and around, until I was giddy and giggly and all thoughts of bankers, media tycoons and the jargon of the deal driven from my brain. Max was courteous and considerate, totally the old-fashioned gentleman who swatted away predatory barflies, and waited months before he put the hard word on me. I was single and a fling would probably have been good for me, but I did not want to complicate things at Max’s. It was a haven like no other in the city, and that mattered more to me as we hurtled towards whatever our future was going to be.
The breakthrough came when the State Bank of NSW told us they thought the $14 million purchase price represented true value of the assets and was therefore ‘bankable’. Their New York manager, the affable Kevin O’Neill (not to be confused with John O’Neill, his boss back in Sydney, the bank’s CEO) would lend us $10 million. We just needed to find a source of capital to fund the operating costs. The deal fell into place in late April, when Citicorp’s Venture Capital Fund said it was ready to put in $20 million, half of it as mezzanine debt—a term I had not encountered before, and which I learned referred to a high-quality form of debt that is able to be converted to equity—and half as a line of credit. And they were prepared to give Sandra and me equity. The CVC team was led by Steve Sherrill a 33-year-old preppy-looking young man, whose 24-year-old sidekick was Melissa Woolford, a rare woman in the financial world in those days. The two were very keen to do a deal involving Sassy and, providing there were tough performance hurdles, agreed to include Ms. This was not just good news. It might be a lifeline, because I had just received the alarming news that the newsstand sales for the March issue of Ms.—my second—had collapsed; they were one of the lowest sales in Ms.’s history. I had defied convention by using the image of a young nuclear family for a cover story on the progress of the American Dream. It was part of my plan to rely less on the standard magazine cover formula of a portrait of an attractive person, often a celebrity, making eye contact with the reader. Instead, I would be more journalistic, using images that illustrated the cover story which, I’d planned, would be less likely to be a profile or an interview than an exploration, from a feminist point of view of course, of a pressing issue or topic. I followed the family cover with a photo of a sad-looking girl in school uniform for a report on the teen pregnancy epidemic, and illustrated a story on women in Arizona politics with a feisty woman in her eighties who’d been prominent in the story we were reporting. All of these issues crashed on the newsstand. Even when they received reader approval, as the Arizona cover did from several key audiences, the failure to sell on the newsstand with the consequent collapse in new subscriptions was disastrous for us. I was forced to concede that the convention was adhered to because it worked. I learned of the famous ‘Stolley’s law’9 of covers compiled by Richard Stolley, the founding editor of People and based on the magazine’s newsstand performance over a decade or more. It wasn’t just that covers needed people, it was the kind of people that the rules stipulated. Young is better than old, was the first of the eight laws. Pretty is better, rich is better, movies are better than TV, everything is better than politics and, the final rule, nothing beats a dead celebrity. People’s cover following John Lennon’s murder in 1980 was its biggest-ever seller until 1997, when Princess Diana died. I had had some success with my May cover story about the threats to motherhood of reproductive technologies, which I’d illustrated with a woman and her baby. She was not famous but she was an archetype, a Madonna, beautiful and young, staring straight at you. This was the cover that had caught Condé Nast’s attention. Our bankers had loved it, too. Just as well that it distracted from my other failures. But I could not continue to defy reality. For the July issue, I’d brought in Lenore Hershey as a cover consultant and, on her advice, run an arresting stock photo of Cher. It sold its socks off.
For Sherrill and Woolford, the Fairfax buyout was a tiny exercise. Their previous deal had been for more than a billion dollars, but despite the small sums they approached the deal with a similar forensic ferocity and found plenty to quibble with. Every day a new issue arose that usually developed into a crisis that threatened to jeopardise the whole deal. All too often I found myself having to set aside my editorial work to respond to yet another set of bankers’ questions. It was time-consuming, and utterly at odds with the mindset needed to tackle the myriad problems at Ms. Finally, in mid-June, our lawyers said we were ready to do the deal. It was four months since we had learned of Young Warwick’s intention to sell us. We had gained an extension of the five-week deadline once we had an in-principle agreement that we’d raised funds to buy out Fairfax. Each of the parties had completed its due diligence, scrutinising our books with the kind of passionate intensity I soon learned was the particular province of the accountants who worked on these sorts of deals. I had been astounded at the arguments that could be confected and disputes generated where there were no apparent discrepancies. Sandra and I had begun to suspect that some of these professionals were taking advantage of what they presumed was our naivety and, with the meter ticking, inventing issues that would prolong the process. When we protested, we were assured that it was far preferable to resolve any problems in advance of the settlement, when there would be no one else’s door to lay them at but ours.
The settlement was delayed several times. The same thing had happened when I had bought my apartment at the Level Club a few months earlier. The mortgage closing was on a much smaller scale, but it still involved all the essential elements of a big corporate deal: lawyers for all parties, brokers, and a mysterious cast of extras whose functions were unclear but who all required fees or ‘tips’. Our closing had been deferred three or more times for reasons that made no sense to me. Now, we were finally ready to formally acquire the magazines from Fairfax. The date was set for 30 June.
Sandra and I arrived early at our lawyers’ offices, high up in the Pan Am building that straddled Grand Central Station. I had decided to wear the Anne Klein, which I was now calling my lucky suit. Sandra wore a black dress. Both of us sported huge red and white buttons stating our first names. I had found them in a novelty shop. They seemed to me, and Sandra agreed, to add the irreverent touch we both felt was needed to dent the inflated pomposity of the proceedings. I had another button, ‘I’d rather be ironing’, but in the end decided that one might place too much of a strain on the underdeveloped sense of humour of our American advisers. As it was, our name badges were eyed with bafflement as we all lined up in the conference room for photographs to commemorate the deal. We had dozens of pictures taken: Sandra and me with all the bankers and lawyers and accountants—a long snaky line of ill-matched people brought together by yet another of the exigencies of the 1980s;
Sandra and me with the women bankers and lawyers and, finally, just Sandra and me. Behind us was the silver spire of the Chrysler Building. In the photo, it seems to be touching our shoulders, the sun sparkling off its recessed parabolic arches. This iconic New York building was fortuitously providing the backdrop for the beginning of our very great adventure.
Each of the parties had separate conference rooms on the same floor. It scarcely seemed possible that so many parties, each requiring a team of lawyers and accountants, could be involved in what was by New York standards a pretty small deal. Nor could I believe that here we were, Sandra and I, doing an MBO, epitomising ‘the story’ I had found so difficult to write about just a year before. The Fairfax legal team was in one room, Citibank in another and the State Bank of NSW in a third and, of course, Wilma Jordan and her people. In each room a huddle pored over the tower of documents that constituted the final deal that Citibank had hammered out with the State Bank of NSW and Fairfax. Steve Sherrill had got Fairfax to accept only $12 million plus an earn-out arrangement, instead of the straight $14 million deal covered by our option agreement. Fairfax was not happy but they had much bigger problems, and amounts of money, to worry about as they haggled with both Kerry Packer and Robert Holmes à Court over the spoils of the former Fairfax empire.