A glossy outlook for Tiger Oak

Most media analysts expect 2009 to be a brutal year for anyone who relies on the good graces and deep pockets of advertisers.

But that outlook didn't stop R. Craig Bednar from going on a scavenger hunt.

In November, Bednar's Tiger Oak Publications bought the assets of Washington CEO, which had a monthly circulation of about 32,000. He combined those operations with another publication he owned, the monthly Seattle Business.

A month earlier, Bednar paid $275,000 in cash to acquire MinnesotaBusiness and a group of suburban lifestyle magazines owned by jailed businessman Tom Petters.

With the recession deepening and Advertising Age reporting the worst ad market since 2001, Bednar is betting that he can grow Tiger Oak's revenue to $21 million in 2009, from about $17 million this year.

"Sometimes you need to be able to seize the opportunity when you see it," Bednar said from his spacious second-floor office in a brick building that was used to make casters in an earlier era. In 2005, Bednar bought the building that is sandwiched between the Metrodome and Guthrie Theater in downtown Minneapolis.

Tiger Oak's competitors are more skeptical.

Steve Fox, publisher of Minnesota Monthly, said he's forecasting a single-digit advertising decline for his magazine next year because of troubles in the housing, auto and retail sectors. Though its readers have an average household income of $188,000, Fox said some advertisers are reducing the size and frequency of their space buys.

"Macy's has suspended all magazine advertising for the first half of 2009," he said.

Bednar, 45, was a financial analyst with the Star Tribune before he launched Minnesota Bride magazine in 1992. The Petters acquisition means he now publishes 25 titles. He has offices in the Twin Cities and Seattle, but his magazines for business meetings and events are circulated in eight states or regions.

Locally, Bednar's most visible publication is Twin Cities Metro, a glossy monthly targeted to professionals in their 30s and 40s. The magazine has a circulation of about 36,000, a combination of paid subscribers, newsstand sales and free delivery to people who fit the magazine's target audience.

Michael Delgado, associate publisher of Metro and the newly acquired community magazines, said that Metro has fallen behind the company's projection for ad revenue this year. But he said the magazine has diversified its ad base since Metro was introduced in the fall of 2006. With the addition of the lifestyle magazines, Delgado's eight-person sales team has the ability to tailor ad buys for Tiger Oak clients.

Local magazines are a "lone bright spot in the publishing universe these days," Delgado said. "There is a philosophy here that the magazines are marketing tools for advertisers and that we exist to make them successful," he said.

Barbara Knox, Tiger Oak's editorial director, is responsible for the content of 20 magazines, including the lifestyle publications, bridal magazines in three states and meetings and events quarterlies that are distributed around the United States.

Knox said that much of Tiger Oak's content is generated by contract workers or freelancers. The editors of the newly acquired community magazines -- Eden Prairie, Edina, Lake Minnetonka, Maple Grove, Plymouth and Woodbury -- are not full-time employees.

"We have devoted a lot of energy in the past three years to streamlining this off-site system, which does keep our overhead down," Knox said.

Bednar, who holds an MBA in marketing and finance from Notre Dame, said that he wasn't planning to make any acquisitions this year. But the Petters-owned titles allowed him to go after more of the upscale businesses that advertise in Minnesota Monthly and Minneapolis St. Paul magazine -- two well-established competitors.

Bednar said that his company has been profitable nine of the past 10 years, and he expects to make money this year and next year despite a weak economy. He said he's even making money on the former Petters magazines, partly because he has leaner staffing and lower labor costs than when they were published by Petters' Great Water Media.

Deborah Hopp, publisher of Mpls.St.Paul magazine, said that regional and local publications tend to do better than national magazines in tough economic times.

But Hopp doubts whether there are enough advertising dollars in the Twin Cities market to support all of the current publications. The Petters magazines were abruptly sold to Tiger Oak following Petters' arrest on fraud charges, so Hopp said the new management has had to deal with extra disruptions to the magazines.

There were 15 lifestyle magazines when Petters, a key investor, bought the assets from Bloomington-based Metropolitan Media Group in July. Petters killed off some of the magazines immediately, but the survivors were soon back on the market as Petters' business assets were being liquidated by a court-appointed receiver.

Tiger Oak got the magazine assets for such a low price because "it's a challenge that nobody else wanted to take on but them," Fox said.

The Barry Berg Group, which markets expensive homes, had a full-page ad on the back cover of Edina Magazine in August. But after three years of advertising in the publication, Berg ended the relationship before the sale to Tiger Oak.

"I had enough people in the community who openly acknowledged that they didn't think it was much of a quality publication," Berg said.

Bednar and Delgado are trying to turn that perception around. Delgado said he's been going out on sales calls with his representatives to meet directly with advertisers and give them some assurances. "We let them know who Tiger Oak is by sharing our vision for how it works for them," he said.

Bednar, whose dog Lucia can often be found in his office, is Tiger Oak's only shareholder. He can afford to be patient, and to give employees like Delgado and Knox the time they need to make things work.

Bednar said he aims for 45 percent advertising and 55 percent editorial content in the community magazines. While he sees the same softness in the economy as his publishing peers, he said he used conservative assumptions for his advertising revenue for 2009. "We didn't project robust growth," he said, but he's confident he'll be profitable.

Despite the tough times, Bednar said Tiger Oak is a place where "people have the ability to be creative and do what they do."

Liz Fedor • 612-673-7709