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VOL. 122 | NO. 51 | Tuesday, March 20, 2007

Daily Digest

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New Mags Sprout Like Mushrooms After Rain

     Trying to start a magazine is considered a high-risk venture, especially for small one-man operations that might experience difficulty absorbing initial losses.
          Only about one in 10 new magazines is successful, according to www.magazinepublisher.com. The Web site, which offers a bleak picture of magazine publishing, nevertheless is designed to be a resource for entrepreneurs.
          The key for every startup seems to be pinpointing a target audience and then going after advertisers who want to speak to that audience.
          However, despite the dire predictions, several startup magazines have been popping up recently in the Mid-South.
          
Carving a niche
          
Around Town Magazine is a new regional publication that appeared on local newsstands in early February. Targeting transplanted Memphians, as well as visitors and tourists, the magazine highlights a different "Great Escape" for weekend getaways.
          Joe Copen is the publisher of Around Town.
          He said one of the differences between his magazine and others in the market is the way he uses pictures.
          "I try to put as many pictures as I possibly can in the magazine," Copen said, adding that the strategy is also one way of attracting advertisers.
          Currently, Around Town has about 30 different advertisers. "But we're always trying to get more since it's a free publication. That's how we pay for printing costs and other costs," Copen said.
          Ad revenue makes up about 75 percent of the magazine's overall operating budget.
          Another new magazine publisher on the scene is Mike Bullard, founder and publisher of Memphis Sport magazine.
          Memphis Sport also has a niche audience it wants to reach - any and all sports fans.
          In the beginning, Bullard and his wife, Kim, financed the magazine themselves for an undisclosed amount.
          "When we started, we had a couple of business partners and we started fleshing out the business plan," he said. "After about a year of that ... there was only one person left and that was me."
          Because of the well-defined audience Bullard is seeking to reach, he's had a great deal of success at pulling in advertisers. With one glance through the latest issue it's plain to see advertisements for everything from car dealerships to health and fitness clubs.
          Besides nailing down the audience, Bullard said another key to the magazine's success to this point has been the cooperation of local team franchises.
          "We've been lucky to work with some of the sports teams in town, to go to their games and give out magazines," Bullard said, adding that had it not been for that cooperation, he might not have reached his audience as directly and quickly.
          Advertising currently makes up about 99 percent of the magazine's operating budget, Bullard said.
          "Everything comes from the advertising," he said. "It's a free publication, so we're giving it away. There's nothing else right now that's producing income."      

Pennies for thoughts
     
Bullard and his wife sometimes design the ads for their clients and sometimes there's revenue from graphic design, he added.
     Right now, with every issue of Memphis Sport magazine, they're just about breaking even. The couple produces about 25,000 to 30,000 copies of each new issue.
     "We're doing better than probably 90 percent of the magazines out there," Bullard said.
     If things continue to go in a positive direction, somewhere down the line, Bullard said he could see charging a small fee for the magazine. But, that's three or more years down the line, and it wouldn't be any more than 50 cents.
     Right now, he's working to establish a local coalition of independent publishers of free magazines so they can work together to dispel some of the stigma attached to the periodicals.
     One of the biggest problems concerning free publications is the clutter that seems to happen in front of restaurants and other venues.
     "So, we want to get all these magazines together and clean these things up," he said. "Because the restaurants hate (the clutter) and I don't blame them."
     Bullard said he's careful to ask businesses before placing his magazine stands, and some others just place their stands in some businesses and then leave. His plan for a coalition would include collaborating with other periodicals to buy racks that hold three to four magazines.

Frayser Apartments Sold To Connecticut Investor

     Two Frayser apartment complexes have sold to a Connecticut investor for $2.6 million.
     Whitney Manor Apartments at 1520 Whitney Ave. and Frayser Manor Apartments at 931 Frayser Blvd. were bought by Frayser Manor Real Property Holdings LLC and Whitney Manor Real Property Holdings LLC for $1.3 million each. The selling parties were Whitney Dawn Crest Inc. and Frayser Manor Inc.
     Memphis builder Brad Rainey of Brad Rainey Homes signed as president of the groups selling the properties, while Daniel Ross of Southington, Conn., signed as managing member of the buying organizations. Neither was available for comment.
     Built in 1968, the 96-unit Whitney Manor Apartments sits on 6.8 acres at the northeast corner of Steele Street and Whitney Avenue. Frayser Manor Apartments, built in 1974, sits on about six acres on the south side of Frayser Boulevard west of Thomas Street. The Shelby County Assessor in 2006 appraised each at a little less than $1.2 million.
     The purchase was financed with a $2.4 million loan through Madison Realty Capital LP. In addition, a $600,000 loan was filed through Frayser Manor Inc. for Whitney Manor only.
     Frayser Manor is about 90 percent occupied, said the property's assistant manager Sheba Morton. Nobody was available from Whitney Manor, but Morton said she thought occupancy there was higher than 90 percent.

Utility Company Scandal Gets National Attention

     The anger over the suggestion that prominent Memphians were allowed to let utility bills periodically slide and various company decisions reach all the way to Memphis Light, Gas & Water Division (MLGW) president and CEO Joseph Lee have caught national attention.
     In a New York Times story Monday headlined "Uproar Over Memphis Power Broker's Unpaid Bills," the paper quoted two local ratepayers, including one - a public school math teacher - who visited the utility's headquarters building recently to dispute a high bill. "Can I get an Edmund Ford deal?" he reportedly asked in frustration, trying to work out a payment arrangement for his account.
     The Memphis City Council is scheduled to get an update today from a team of lawyers retained by the council to investigate the controversy at MLGW.

New York Firm to Buy ServiceMaster for $5.5 Billion

     The ServiceMaster Co. announced Monday it has entered into a definitive merger agreement and will be acquired by New York-based global private equity firm Clayton, Dubilier & Rice Inc.
     The sale price is about $5.5 billion and includes assumption of ServiceMaster's debts.
     ServiceMaster shareholders will receive $15.625 in cash for each outstanding share, which is about 16 percent higher than the company's closing share price of $13.47 on the New York Stock Exchange Friday.
     The ServiceMaster board of directors has approved the merger agreement and recommended the shareholders adopt it. The transaction officially will be completed once customary closing conditions are met, including a stockholder vote on the merger at a special meeting which will be held in the second quarter.
     "The board of directors conducted a thorough review of strategic alternatives available to the company and concluded that this transaction is in the best interest of our stockholders," said J. Patrick Spainhour, chairman and CEO of ServiceMaster, in a statement.
     ServiceMaster last year announced it would move its headquarters to Memphis from Downers Grove, Ill., a Chicago suburb. At this point, the plan still seems to be in place for that move.
     At a Land Use Control Board meeting last month, planning officials discussed a site plan for ServiceMaster's new corporate headquarters. The site being considered was at the southeast corner of Tenn. 385 and Forest Hill-Irene Road.
     A spokesman for the company said the move still will take place, but a location has not been chosen.
     "We are still looking at different site options within the Memphis area," said Bridget Glavaz, vice president of communications at ServiceMaster. "We (are) relocating 165 positions from Downer's Grove to Memphis, and the majority of it will be completed by the end of the summer."
     ServiceMaster already has about 2,400 employees in Memphis and 39,000 worldwide. In addition to the 165 positions that will move with the new headquarters, the company estimates 335 new jobs will be created in Memphis over the next five years.
     ServiceMaster will be the fourth Fortune 500 company headquartered in Memphis. FedEx Corp., AutoZone Inc. and International Paper Co. are the others.

FedEx Subsidiaries Announce Rate Hike

     FedEx Freight and FedEx National LTL, the less-than-truckload subsidiaries of Memphis-based FedEx Corp., have announced plans to implement a 5.59 percent general rate increase effective April 2.
     Rates for other operating companies within FedEx will not be affected by the increase.
     Since acquiring Watkins Motor Lines in September, FedEx National LTL has re-engineered its operations to focus on the long-haul market with a highly engineered network, similar to FedEx Freight's operations in the regional market, officials said in a statement.
     The rate increase will apply to interstate and intrastate traffic, and selected shipments between the United States and Mexico and Canada.
     After April 2, the new base rate and rules tariffs for FedEx National LTL will be available at www.fedex.com/us/national/main. The new base rates and rules tariffs for FedEx Freight will be available at www.fedex.com/us/freight/main.

Pinnacle Orders 15 Bombardier Planes

     Memphis-based Pinnacle Airlines Corp. has signed a contract to acquire 15 Bombardier Q400 74-seat turboprop airliners, Bombardier Aerospace announced last week.
     The transaction also includes conditional orders for another 10 Q400 aircraft and options on an additional 20.
     The value of the 15 ordered aircraft, based on the list price of the Q400, is about $381 million. The value could rise to $1.2 billion if all conditional orders and options are exercised.
     Pinnacle Airlines will assign the 15 aircraft to its wholly owned subsidiary Colgan Air Inc., which will operate the aircraft under the Continental Connection banner primarily from the Continental Airlines hub at Newark (N.J.) Liberty International Airport.
     Pinnacle Airlines operates 129 regional jets in the United States and Canada as Northwest Airlink. The company's flight attendants are based in Memphis, Detroit and Minneapolis-St. Paul.

Nationally Renowned Attorney To Speak in Memphis

     The Memphis Lawyers' Chapter of the Federalist Society will host a nationally known labor attorney.
     Raymond J. LaJeunesse Jr., legal director of the National Right to Work Foundation, will present a lecture March 29 at The Racquet Club of Memphis, 5111 Sanderlin Ave. The lecture is called "On the Cutting Edge: Using the First Amendment and Labor Laws to Protect Freedom of Choice in the Workplace" and will take place from noon to 1 p.m., following lunch. Attorneys attending the program will be eligible for one hour of continuing legal education credit (CLE) in Tennessee. The cost, which includes lunch, is $20 for Federalist Society Members and $25 for nonmembers.
RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 51 328 20,960
MORTGAGES 58 387 24,132
FORECLOSURE NOTICES 6 54 3,101
BUILDING PERMITS 170 842 43,435
BANKRUPTCIES 50 288 13,468
BUSINESS LICENSES 34 90 6,712
UTILITY CONNECTIONS 16 110 7,899
MARRIAGE LICENSES 32 91 4,734