On the first anniversary of F+W Media’s bankruptcy filing—and nearly 8 months after I left Writer’s Digest on the verge of being handed over to its opportunistic new owners—I have some lightly seasoned thoughts about what I learned from the experience.
Running a successful media organization has always presented various challenges, long before “digital disruption” became the default excuse for failure rather than the opportunity to evolve it often represents—in the right hands, at least. Business models evolve, consumption habits change, and brand affinity is never guaranteed for the long-term—for beloved “legacy” brands, nor the new shiny du jour.
Myriad wannabe disruptors have come and gone over the past two decades, their VC-funded arrivals, pivots—and periodic successful exits—brazenly trumpeted as “the future of media” (too often by the very legacy media players they’re allegedly disrupting), but their failures usually go unremarked with few, if any, lessons learned. Meanwhile, established—and often profitable—players’ attempts to evolve are pre-emptively dismissed as inevitable failures or deemed irrelevant, unless they succeed, and then become “templates” for non-existent silver bullets. Or worse, private equity swoops in, extracts every last drop of value they can squeeze out of it before playing hot potato, or filing bankruptcy to restart the clock.
Anyone who’s worked in media in the 21st century—particularly “traditional” magazine media and its various digital counterparts and competitors—has at some point lived through the ups and downs of expense cuts and surprise layoffs, questionable pivots and their inordinate investments. I’ve been through variations of it a few times in my career, but my second time around with F+W was absolutely the worst, particularly because I realized, belatedly, that the writing was on the wall pretty early on.
Here’s four things I learned which might be strong signs your company is heading in the wrong direction.
I’ve worked for some strong-willed media CEOs over the years, some worse than others, but the kind who surround themselves with sycophants who never challenge them, don’t have their own ideas, and/or have a questionable prior track record are a big red flag. Two months into my return to F+W, it became clear that there was a very small group of senior executives who had the CEO’s ear and most of their colleagues were either afraid of them or powerless to counter them, ensuring the CEO rarely ever got any direct pushback on his strategy or tactics. Insisting on doubling-down on his predecessors’ belief that F+W was an e-commerce company rather than a media company with multiple revenue streams, including DTC, they reportedly blew as much as nine million dollars on an ill-conceived, home-brewed e-commerce and marketing platform before finally being fired by the board at the beginning of 2018. A consultant with a sketchy history was brought in as interim CEO, and after two quarters of missing budgets and having no clear strategy for moving forward, was inexplicably named permanent CEO. Like his predecessor, he surrounded himself with executives who told him what he wanted to hear, ignored everyone else, and nine months later the company filed for bankruptcy.
It’s a tale as old as time—freelancers getting paid late, well beyond the revised net-45 terms that were implemented months earlier. Worse, revenue share partners, affiliate partners, and key vendors were all getting paid late, sometimes not at all. But also, some would surprisingly get paid on time or not as late as others, with no apparent logic to who was being prioritized and how. Because F+W had grown over the years through multiple acquisitions and eventual divestments—most of which were sloppily integrated into an accounting structure that emphasized the e-commerce side of the “Content and Commerce Company” while making the book side even more inscrutable than normal—it was often difficult to understand the big picture, how several profitable content-driven brands were being held back by some unprofitable commerce-driven ones. Coupled with hiring freezes, including on backfills, it became belatedly clear that the company was having severe cash flow problems, and rumors of bankruptcy finally started to circulate a month or so before it became official.
Lack of Communication
My first time around at F+W, our CEO was a good talker—for better and worse. If nothing else, he could clearly communicate his strategy, and the main issue was whether or not you believed it was realistic. When I returned, the new CEO was cut from the same pattern, albeit from cheaper material; kind of like Buttigieg mimicking Obama. His replacement was a significant step backwards, unable to communicate any coherent strategic direction, frequently contradicting himself when he deigned to communicate at all. In retrospect, he was clearly guiding the company into bankruptcy as slowly as possible, draining some assets of resources while optimizing others he’d spin off into a new, debt-free company. A leader who can’t be challenged, can’t manage a budget, and refuses to communicate when things are going bad isn’t a real leader.
Nothing’s in Writing (until it is)
A purposeful lack of communication usually suggests a belief that no one will care enough to dig, and people won’t talk amongst themselves. In a media company built on deep engagement with specific communities, where many of your readers and customers might also be your contributors, authors, and partners, things will eventually get out. It may just be rumors in the beginning, but there will be some truth hidden in them that will eventually become clear. Because Writer’s Digest had a unique position in the company of also being an engaged member of the larger publishing community, rumors of delayed payments, divestments, and bankruptcy surfaced pretty quickly—and were mostly ignored and dismissed, but never with any official internal or external comment. We also still didn’t have approved budgets heading into March 2019, despite major commitments in the second half of the year, and deteriorating relationships with unpaid contributors and partners who were either being ignored or given vague explanations for when payments would be made. And then they all got the bankruptcy notifications, at that point having more information than anyone on staff had gotten to that point.
The path to bankruptcy can be long and difficult because it’s a last resort, but it’s rarely a surprise to the executives who’ve guided things in that direction—either through bad management, purposeful execution, or F+W’s stellar combination of the two. The warning signs may not always end in bankruptcy but the ride’s going to be excruciating either way, so unless you have a financial stake in seeing it through to the end, or an overwhelming emotional connection to the brand and/or audience you’re working with—like my dumb ass did—you’re better off updating your resume and looking for your next gig on your own timeline.