Not just juice
Publisher and rising media force Lesa-Belle Furhagen talks to Murray Waldren
LIVING WELL, Lesa-Belle Furhagen tells me with quiet emphasis, is the best revenge. Conspicuous by its absence is the corollary, that revenge is sweet. And whatever the uncharitable may deduce, the managing director of multi-media company terraplanet.com Ltd is making no such inference. She's far too busy making media waves to gloat. And as she oversees an operation whose year of huge expansion and recent public listing sees "it well on line to meet its prospectus budget projections", she has neither inclination nor interest in revisiting the past. But it's that past, of course, which adds poignancy to any media watchers' analysis of the rise and rise of Lesa-Belle.
In September 1992, some six years after Phillip Keir, his then wife Furhagen and journalist Toby Cresswell, had taken over the local franchise of American youth culture bible Rolling Stone, the situation imploded. Keir and Cresswell had been friends from high school; Furhagen had met both at university. At the time of the take-over, they were the Three Musketeers of Musicville, the young guns whose enthusiasm and complementary skills were going to rewrite youth magazine culture.
But philosophical differences surfaced almost immediately. By 1992, relations between the principals were at breaking point, with contention largely over editorial direction (Australian vs American content) and budgetary matters: it was a lean, mean publishing machine with some staff describing the usual 60-hour, no-paid-overtime working week as "volunteer slave labour". Cresswell and Keir were communicating only via deputy editor John O'Donnell, Furhagen had sold her 15 per cent stockholding in the company to Keir so she could set up her own company to produce one-shot magazines (while still working for Rolling Stone). When publisher Keir sacked Cresswell, hiring a security guard to escort his editor off the premises, marketing manager Furhagen and senior staff resigned four days later.
Furhagen and Cresswell then joined forces in Terraplane Press and five months later, amid threats of legal action, hit the newsstands with the first issue of juice, a magazine aimed squarely at Rolling Stone's market. What followed was a bad-blood war of attrition and sniping: Rolling Stone's readership diminished, juice survived but hardly flourished economically. The difficulties for both were exacerbated by the nature of their intended readership: the youth market (generally 17-30) is much sought-after by advertisers but relatively small in a magazine-buying sense, and unreliable. As well, diverse youth-oriented niche magazines were coming and going, further disrupting circulation.
On a minimal budget, Terraplane was always going to struggle. Its young, low-paid staff helped keep costs down, producing consumer titles for commercial groups paid some bills. But the market perception was that juice was a month-to-month proposition, despite winning editorial kudos. As publisher, Furhagen claimed the magazine was making a profit from its fourth issue but there was always external scepticism at just how wide its reach was. While her regular press releases trumpeted a rising circulation, there was never any auditing.
In the late-90s, Furhagen ceded majority control of Terraplane Press when entrepreneurial printer John Spira bought into the company. Furhagen's own stake-holding dropped from 51 per cent to around 25 per cent. Personally, it was devastating, professionally a watershed. By 1998, the company, already publishing the architecture title Monument, had won contracts to produce the ABC music magazines 24 Hours and Recovery; was diversifying into website design and looking to the internet as a revenue source. By the end of 1999, Terraplane had become the print division of the wider multi-media parent company, terraplanet.com Ltd; an internet site, juice.net, was launched as the forerunner in a network of brand-leveraging websites; and the company had taken out a three-year lease on HQ magazine from Australian Consolidated Press.
This year, the pace really picked up. In May, terraplanet was launched as a public company, shortly thereafter picking up trendy lifestyle magazine Australian Style in a share and cash deal with News Limited chairman Lachlan Murdoch (publisher of The Australian). And last week, another strategic domino slotted into place with the outright acquisition of teeny popper magazine Big Hit and the HQ masthead in a 3 million plus options ordinary shares deal with ACP.
Such high-end expansion has led many to significantly reassess both terraplanet and its managing director. Few dismiss either's expertise or ambition, nor the extensive market reach their group of titles now commands. But not everyone is firmly convinced yet that a potential publishing leviathan is in the making. The terraplanet float this year looked like sinking when it coincided with a bubble-bursting market rationalisation of e-commerce companies. On listing, the company held a theoretical market capitalisation of around $80 million; by the end of the first week on the ASX, that worth had plummeted to just under $43 million. At the time Furhagen made "Wot me worry?" statements, talking up the long-term and emphasising the company's hybrid nature with its "hard edge of the publishing and imaging divisions coupled with the potential of our Internet strategy."
The plunging float price, Furhagen says now, was "simply a product of bad timing, Murphy's Law and market confusion over where we should be listed." Terraplanet realised ahead of the float that its share values would be mauled but the company was committed: its prospectus offering 20 million one-dollar shares had been oversubscribed within a week of release, "we'd done all the due diligence and it was too late not to go". Then her trademark positive mode cuts in. "Anyway, over recent weeks the share price has had a substantial increase as the market regains confidence." Well perhaps not substantial - this week the price stood at 54c, certainly up on the 50c mark with which it was flirting early on but still far short of its par value.
IN THE minimally-furnished terraplanet headquarters, on the 5th floor of a defiantly no-frills brick office block in Sydney's Surry Hills, Furhagen is elegantly dressed in an understated Double Bay way. She's poised and empathetic but definitely in executive mode: the strong undercurrent is that time is precious. Coffees delivered from "a little shop across the road", she launches into talking the corporate talk. With enthusiasm. Her conversation is a cryptic of revenue streams, advertising inventory and broadband strategies, and she rattles off readership figures and magazine demographics without hesitation. She comes, she says, to corporate life "with an ego that's in check", well aware that "some people when they get to a certain position get very ego-driven - it's important to me to avoid making decisions based on that kind of ego". That's why she cultivates a managerial style that's "very much a team thing ... a successful managing director harnesses the skills of the people who work for the organisation; they also know their own limitations."
Nevertheless, disaffected former employees talk of the just juice years as being an era of grim economics where payments were delayed embarrassingly and share deal promises did not eventuate. That was then. Today, Furhagen says with some force, "every single person on staff is part of an employee share option plan. And on the back of the float, we were able to increase pay levels - modestly - to acknowledge all the hard work, because we've got people who have worked for the company since the beginning."
But she does allow that the early years were less than ideal. "We were holding our own," she winces, recalling their string-and-Sellotape start-up, "but they were tough, tough times, just treading water. Look, no start-up publishing company that doesn't have the backing of the Packers or the Murdochs doesn't struggle in those first years. And boy, did we struggle." Now, she says, they are born again but they haven't come into their brave new world with bravado: "We're like people who have come out of the Depression, and that makes us very careful about what we do have."
As last week's acquisitions show, though, carefulness does not equate to timidity when it comes to going after what they want to have. The new Big Hits masthead also means terraplanet will have to revise upwards its revenue and profit forecasts for 2001. The main unknown is just how the net will perform, but as Furhagen acknowledges, "our solid revenues and profits are from our off-line products anyway, and we've been prudent in our forecast. [Before Big Hits was bought] we were looking at $8 million on the magazines, $4 million on the imaging and $4 million on the Internet."
Expansion, though, has always been part of the Furhagen philosophy: "Even from the early days of juice, I hoped we would have other magazines. I never sit down and say, 'okay, today I'll be a magazine magnate' but I've always wanted a company that would have a range of niche-oriented titles. I've never wanted to compete against the big players with the huge circulating titles - that's not our skill-set. But we do product with high production values particularly well, we're good at segmenting the market and even though our range now extends across all age groups, we have a proven track record with the youth market."
Now 38, Furhagen lives with her husband, terraplanet CEO Anthony Sive, and their two children in Sydney's salubrious Vaucluse. For someone who massages the media so expertly, her own public profile is unusually private. That's partly instinctive ("I'm don't like talking about myself," she grins, "because I don't think it's particularly interesting"), mostly professional - there's always more mileage in pushing product than the person behind it. In the past she's been dubbed the Mistress of the Positive Spin - certainly her post-university background in theatrical administration, marketing and promotion has helped her develop a politician's Teflonic skill at diverting the probingly personal towards the spruikingly public.
Besides, she clarifies, shunning the social-page approach of so many other publishers is also a personal inevitability. "I work 60 hours a week, and when you have children and a career, what gives is both leisure time and social life. I'm a working mother who looks to have time with the kids when I can. And I'd rather eat cheese on toast in front of the fire than spend $1000 on a fancy dinner somewhere any day".
A Sydney girl born-and-bred, Furhagen grew up in a "slightly bohemian" eastern suburbs family "where equality was the order of the day". Her father was a Scandinavian immigrant and a wool buyer originally, her mother sold fashion accessories; later they built up a fashion accessory hat business together. She was fortunate to narrowly escape being christened Sweetpea, and was allegedly expelled from prestigious girls' schools for drinking sherry, dancing in a fountain and ignoring the uniform code. "I did go to quite a few schools," she laughs, "Kambala and then Frencham and they threw me out of there ... then I went to Pymble Ladies College. I was a bit rebellious, a bit irreverent, always have been. But I don't like the private school system much, that monastic English education system is limiting if you don't fit into a mould - and I didn't."
That irreverence/rebellious mix possibly explains why she was open to converting from Anglicanism to Judaism some ten years ago. At the time she said it seemed the "only sensible religion". She still holds that today, describing herself as a "liberal Jew who is active in that community and who values Judaism as a regular part of my life".
Certainly she appears a woman very much in control of her life, indomitably can-do and upbeat. Nevertheless, mention of her former husband, Next Media publisher Keir, and the furore surrounding the birth of juice elicits a sustained sigh. "I've moved on from that," she says quietly. "He and I get together once or twice a year to have lunch and it's quite amiable. But we're competitive you know, by nature, not on a personal level. When all this started, there was a lot of acrimony and that probably held both of our businesses back, but now that doesn't prevail. My life has become everything I wanted it to be - I come to a job I love every day, I have two beautiful children and a very happy life ... and that makes me very boring copy." She glances down at the tape-recorder on the table, then stares off at the grey-clouded windows. "I am happy to be through that time of my life," she says with quiet emphasis. "The marriage was short but our relationship was quite long, and I met him at quite a formative time." Then she sits back with next-question finality.
Keir and Furhagen were married a couple of days before they annexed Rolling Stone, divorced 18 months later. When I ring him for his take on the vicissitudes of life and niche magazines aprés the Rolling Stone "re-organisation", he's out to a late lunch. His secretary says he will call me back. He doesn't, not then and not after subsequent calls. That's why they call it the communications industry.
Post-float, Furhagen holds around 17 per cent of terraplanet stock, with Spira the chairman and major shareholder. Selling-down, she acknowledges, "was an emotional leap but it was one I had to make ... it's interesting, and again it's about ego - I had to acknowledge then that I didn't have the firepower to grow this business on my own. But it wasn't a defeat; the relationship with John has been incredibly positive in so many ways. Even on current share prices, you're looking at a company that has a market cap of more than 40 million, and I don't think I could ever have taken us to those levels single-handedly. Had I been unable to think objectively about what was best for the business, I wouldn't be sitting here in the same context."
That context, after 13 years in publishing, is that this self-confessed magazine junkie - "it is an addiction, like being a heroin addict" - is setting her own agenda, and impressing other players with her nous. In her language, then, what skills-set does she bring to publishing? She doesn't hesitate. "I'm very good at bringing people together, in the way a good film producer brings very good people together and creates a forum where they can flourish. I'm tenacious and I'm very hard-working - and it sounds daggy but I don't give up easily.
"I've always said I could sell coals to Newcastle, which I believe is an important skill in publishing - and I'm passionate about it, I just love magazines, I like working with writers, fostering new talent. It's not about the money at all: it's still exciting to go to the factory and see the presses rolling and know it's your magazine up there."
Copyright © 2000 Murray Waldren
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