State-Run Titles Feel the Pinch

Article excerpt

Privatization is a popular buzzword in this era of less-government-is-better rhetoric. But for state-run magazines exploring the idea, there's a lot to consider.

More than 40 states publish magazines, primarily environmental, travel or history titles. Many are prohibited from selling ads or ancillary products. Most must follow government purchasing and bidding rules.

For those mulling over privatization, there are two major models to follow: Maryland, which was sold outright, and Michigan Natural Resources, which was contracted out. Another title, Texas Parks & Wildlife, represents a compromise approach: Although still controlled by state government, it is legally required to be self-supporting.

Money is usually the prime motive behind privatization. Consider the 1992 decision to sell Maryland: "We were in the depths of the recession, and I was instructed to make tough decisions," recalls Dean Kenderdine, assistant secretary of tourism and promotion in the state Business and Economic Development Department.

Michigan Natural Resources was losing circulation in 1992. Pages were down (the title didn't accept ads), staff was cut and frequency fen from six to five issues. With no financial relief in sight, the Department of Natural Resources solicited bids for production and distribution, eventually awarding a seven-year contract to Bingham Farms-based Kolka & Robb Inc.

In both cases, the new operators were left with economic headaches. Baltimore-based Maryland changed hands again last May. Since then, co-owners Michael Hodes and Charles Nabit have boosted frequency bimonthly to monthly, focused editorial more on people than places, provided the magazine as a membership benefit for supporters of public television, and promoted subscriptions on radio stations they own.

"We'll run in the red for a short duration, but in the long run we can increase our ad rates," says Hodes. The title averages 43 ad pages an issue, and circulation is now more than 90,000, compared with 23,000 when Hodes and Nabit took over.

Things are still tight for Michigan Natural Resources, where circulation has dropped from 85,000 at the time of sale to under 75,000, notes managing editor Richard Morscheck. Although the title now takes ads (averaging nine pages per issue), it is no longer able to piggyback subscription offers with state mailings (tax refund checks, driver's license renewals, etc. …