Let's ask an expert!
I surf, a lot. I am one of those perpetual advanced intermediates who can surf, but doesn’t turn any heads. I wish I could say I was in the surf industry, but I cant. I have spent the entirety of my professional career as a mergers and acquisitions attorney.
I have been part of natural growth companies, start-ups, consulting firms etc. I know the model well. None of that knowledge has helped me “be part of the conversation” in the surf world but when Chas broke the news on Beach Grit, shortly followed up by his conversations with David Lee Scales on The Grit Podcast, I thought I would reach out to Chas to help him play a little insider baseball with what is most likely going to happen to a once shiny and revered publication because, well, it is my time to shine.
There are many types of exits a company can have. For instance, the entire goal of startups is to exit. Startups, or at least the good ones, take on several rounds of Venture Capital (rather than growing organically) with the specific intent of spending as much money as possible to grow and expand as rapidly as possible, avoid paying income tax, and selling to a much larger company to get a [hopefully] big pay day. Other exits/acquisitions, like the one Surfer is going to experience post acquisition, are far less pretty.
In situations like what we are seeing at Surfer, this acquisition is a outward signal that Surfer Magazine is in significant financial hot water. Companies that grow organically, like Surfer, are highly unlikely to sell. They, after all, have a vision, a customer base, a product, and a culture they want to retain. In situations like these, the general consensus is that the profits are negatively impacted by bloated operating models or mismanaged finances that are ill equipped to react to pivots in the customer base or delivery model. In this particular circumstance, my best guess is that the old “Print Media Is Dead” tag is sprayed all over the downfall of Surfer Magazine and they got bought not because they wanted to sell to the National fucking Enquirer, but that it was the only way to keep the magazine above ground and without a tombstone.
From where I am sitting, the Surfer acquisition will like this.
1. You’re all fired (except the authors)!!!!
a. When a company is bought because they are on the rocks, the
first thing that always happens, without fail, is that people in
departments that do not generate revenue (ie HR, AP, AR, etc.) are
axed and rolled into the new parent company’s processes. Why have
multiple cost centers when you can have one?
2. Authors, if you were on a W2, you’re now a contractor!
a. Benefits, employment, payroll taxes, and PTO are expensive. You
can get a lot more authors on a per word basis than you can paying
them all salaries. Think of The Inertia- I have no first-hand
knowledge but If I was to guess, I would say they have 12 full time
W2 employees, and they’re all non-writing executives. The thousands
of dog shit articles on The Intertia about feelings and humping
dolphins is all provided by “contributors” scraped from the dregs
of professional Surfing. As a result, surfer loses its voice, and
we get another Inertia.
3. Your office is closed!
a. For the same reason as above, bye-bye office.
4. We’re throwing your operating model away!
a. It is very likely that if the print content does not present a
huge revenue upside for the National Enquirer, they are going to
redesign the entire operating model. I imagine that this will mean
either the magazine will get pared down to a rag like The Enquirer
so it can run as a loss leader that points people to blown out and
more expansive online.
5. We’re only here for the IP! And most of it is ALREADY
SOLD!
a. My guess is that the ONLY reason National Enquirer wanted surfer
is an EXPANSIVE amount of surf related intellectual property.
Surfer had nearly 60 years of pictures, prints, articles, videos,
and surf related assets that NOBODY else had. The Enquirer is
probably going to sell most of these for a proft and keep only a
very small portion of what made up Surfer. Wilbur Kookermeyer?
Sold! Covers? Licensed to be turned into cheap posters! The Surfer
Bar? Sold to a restaurant group! 60 years of pictures? Getty
Images!
So the writing on the wall is, Surfing is dead. The issue in your mailbox is the last issue (or close to last issue) you will receive. You are going to see a huge dumping of Surfer assets for you to buy cheap and from China. Your friends that work there probably won’t anymore once the deal is done. Does this suck? Yeah, but THAT’S CAPITALISM BABY. And let’s be real, you and I haven’t bought an issue since we got nifty glowing pocket hypnoboxes in our pockets.
So really, this is all our fault, but mostly yours Steve Jobs.
