Curtis' Green Acres

In 1961, for the first time in its history, the Curtis Publishing Co. finished the year in the red. Its losses amounted to more than $4,000,000. After that, the troubles of the proud publishing empire that likes to trace its lineage back to Benjamin Franklin grew worse. In both financial and publishing circles, faith in Curtis' future became as scarce as advertising in Curtis' magazines. Now the talk has turned--not because of some suddenly successful publishing coup but because of a profitable real estate deal.

Last month Curtis negotiated the sale of 110,000 acres of mineral-rich Canadian land, as well as 141,000 acres of Pennsylvania forest, to Texas Gulf Sulphur. The transaction should bring in some $24 million, which could wipe out most of Curtis' $28 million bank debt --down from $36 million after the sale of Curtis' Lock Haven, Pa., paper mill earlier this year. "We are over the hill," says the vice chairman of Boston's First National Bank, Serge Semenenko, the financier who put together a $35 million loan for Curtis in 1963 and has been riding herd on the company ever since. "The first phase has ended," Semenenko says. "That was to save the company. The second phase is about to begin: an infusion of talent, brains, funds; possible acquisitions; relations with others."

Down to Bedrock. Behind such determined optimism remains the harsh fact that Curtis is still losing money. By selling assets, however, and cutting the Post from 45 issues a year to 26, the company has held its 1965 losses to an estimated $6,000,000, compared with last year's $14 million. As a result, the company's money men feel that their operation has been vastly strengthened.

After World War II, Curtis expanded into a fully integrated organization involved in every aspect of publishing--from the felling of trees for its paper mills to the printing and distribution of its magazines. Such integration saved money as long as business was brisk and Curtis' own magazines enjoyed heavy sales. When business slackened, the paper and printing plants were forced to operate well under capacity. "We are now down to bedrock," says Semenenko, who doubts that any more Curtis assets, including the venerable office building in Philadelphia, will be sold.

Curtis has also made a substantial recovery from the internal revolt that shook it last year. When Editor in Chief Clay Blair Jr., whose policy of "sophisticated muckraking" involved the Post in costly libel suits, tried to oust President Matthew Culligan, Curtis dumped them both. But not before the entire organization had suffered. The Culligan-Blair regime was a textbook example of mismanagement. Now that Blair is gone and Culligan has been replaced by John Clifford, a one-time NBC vice president, the editorial operation appears to be calming down. "For years we've heard nothing but the snap of the jackals and seen nothing but buzzards overhead," said Post Editor William Emerson. "Now it's time to get a crop in."

There are even signs of a revival of advertiser confidence. The Post, which suffered a 38% dip in ad revenue in the first nine months of this year, expects to gain substantially in the first half of 1966. With the exception of Holiday, all the other Curtis publications--Ladies' Home Journal, Jack and Jill, American Home--should also show gains. To be sure, the upturn may only reflect the fact that magazines in general seem headed for a banner year in 1966. Still, Curtis believes it has convinced its critics that the Post, once rumored to be folding, will survive.

Tantalizing Tax Bait. After reduction of the massive debt, management is now in a position to talk of acquisitions: profitable radio or TV stations, perhaps --the sort of properties that might appeal to Newton Minow, the retired FCC chairman who was hired as special counsel. On the other hand, Curtis itself now looks like an attractive target for another company seeking to improve its financial position through a merger.

Curtis' losses over the past five years give it a tax-loss carryover amounting to $40 million, which can be applied against some future earnings. A prosperous company merging with Curtis would enjoy some of that tax deduction --provided, of course, that it convinced the Internal Revenue Service the merger was not merely a tax-evasion gimmick. This would probably require keeping Curtis' major magazines publishing, at least for a while. And if the merging company happened to be in the communications field, there would be the added necessity of convincing the Justice Department that the deal did not involve violation of the antitrust laws. This eliminates some big companies that have been mentioned in merger rumors; the real merging partner will probably turn out to be a surprise.

Semenenko admits that in his 35-years of doctoring sick companies, he has never faced one quite so sick as Curtis. Hearst, which called on his services 25 years ago, was burdened with a debt of $150 million, but it had no problems like the internal rebellion that racked Curtis. Nevertheless, Semenenko is now satisfied that he is not facing his first failure. Says he: "We showed them we were people who would not get scared and run."

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