Ebony: Up for Sale?

For 50 years, the Ebony Fashion Fair has been a glamorous social event in dozens of U.S. communities. The traveling fashion show has raised $55 million in college scholarships for African-American students. But this year the company behind the show, Johnson Publishing which publishes Ebony, pulled the plug on the event, citing lack of corporate sponsorship due to the recession. "This is devastating to us," Ann Lee, publicity chairwoman for the Charmettes, a civic group that staged the event in Broward County, Fla., told The Miami Herald.

It's been a year of excruciating decisions for publishing companies—layoffs, pullbacks, closures. Now it appears Johnson Publishing’s chairman and CEO, Linda Johnson Rice, has reached what must have been an agonizing decision: Johnson Publishing is seeking a buyer or investor for its flagship publication, Ebony, in an effort aimed at securing the survival of the nation's oldest magazine devoted to African-American life. It's unclear whether the company's other properties, including Jet, would be part of a possible sale.

According to media and investment executives familiar with the developments, Chicago-based Rice, the daughter of Ebony's legendary founder, the late John H. Johnson, has approached, among others, Time Inc., Viacom, and private investors that include buyout firms. Time Inc., the world's largest periodical publisher, already owns Essence, a monthly lifestyle, beauty, and fashion magazine for African-American women. Viacom, meanwhile, owns BET (Black Entertainment Television).

Nothing has yet resulted from any of Johnson Publishing's overtures, however. And it's unclear whether negotiations are underway between the publishing company and any of the identified parties or other potential rescuers.

Time Inc. declined to comment, as did Viacom. "Your facts are incorrect with respect to Time Inc. and Viacom," a spokeswoman for Johnson Publishing said. Johnson Publishing likely made its overtures through the media giants' properties, NEWSWEEK's sources indicate. They also declined to elaborate much beyond acknowledging, on condition of not being named, that they were aware of Johnson's efforts. According to one top magazine executive, Johnson Publishing is requiring potential bidders to sign a confidentiality agreement to access the company's financial information, a standard practice in the dealmaking world.

One publishing executive familiar with the situation said that Rice, given the magazine's historical significance and its deep roots in her family, hopes to remain an integral part of it. This suggests she prefers to woo a partner rather than sell the magazine outright. In any case, a purchase by a mainstream media company or publisher—a move that would end African-American control—might cause a stir in some quarters of the African-American community, as was the case with Viacom's acquisition of BET. And Ebony's woes would appear to dash hopes that African-American-owned or -oriented media would see a big lift in the marketplace with the election of Barack Obama, the nation's first African-American president. Ebony landed the first post-election print interview with the president-elect and his wife. Rice is a close member of the Obamas' Chicago social circle.

The economic downturn has killed off scores of magazines, including such prominent titles as Condé Nast Portfolio and Domino, while forcing others onto the auction block, including BusinessWeek. But the historic Ebony has fared worse than average amid the industry's woes. In fact, Ebony's advertising pages and ad revenues have declined in each of the last three years, even during periods when the industry was flat to positive. Among the 243 magazines tracked by the Publishers Information Bureau, ad pages plunged an average of 28 percent, with revenues falling by 21 percent, in the first half of 2009 compared with the same period a year earlier. But Ebony's decline was sharper, as advertising dived almost 35 percent, dragging revenues down almost 32 percent, to $18.8 million from 2008's $27.7 million. And the deterioration of Jet magazine, Ebony's sister publication, was even more severe—about 40 percent in ad pages and revenues.

And according to industry tracker Media Industry Newsletter, things have only turned grimmer for Ebony since the first half. Total ad pages sank by 40 percent this year through the October issue, now on newsstands and featuring Whitney Houston on the cover, compared with 2008's January–October editions. The company is "in big, big trouble," a publishing executive close to the developments told NEWSWEEK. "It's a sad thing, because they are so important to [African-American] communities."

In 1942, with a $500 loan collateralized with his mother's furniture, John Johnson launched what would become the world's largest African-American-owned publishing company. Three years later he began publishing Ebony, which changed the face of publishing and media merely by its existence and mission. "Ebony," Johnson once said, "was founded to project a dimension of the black personality in a world saturated with stereotypes. We wanted to give blacks a new sense of somebodiness, a new sense of self-respect." Covers graced with positive images of African-American celebrities and politicians are a staple of the magazine, as are articles extolling African-American achievement. Johnson, who died in 2005, was awarded the Presidential Medal of Freedom in 1996.

© 2009