Can Aaron Kushner Save the Globe?
Aaron Kushner, the former CEO of a small South Shore greeting-card company, has a top-secret cure for the dying newspaper industry. And he plans to put it to the test by buying the Boston Globe.
IN A CITY WHERE POWER is as entrenched as a Beacon Hill brownstone, where the coffee klatch of heavy hitters have been attending one another’s parties for decades, Aaron Kushner might as well be from another planet.
Prior to the Boston Herald splashing his photo across its website last October, no one who’s anyone around here seemed to have ever heard of the guy. Yet there he was, announcing that he, a former executive at a small greeting-card company, was going to buy this city’s paper of record: the Boston Globe.
That someone was declaring an interest in the Globe came as no surprise. Ever since 2009, when the New York Times Company announced it was putting the paper on the market, It’s become a kind of parlor game around town to guess which business titan or hedge-fund hotshot would be the next to step forward as a contender. Power brokers such as Jack Welch, Jack Connors, and Steve Pagliuca have all flirted with the idea of buying the paper.
It’s easy to understand why. The Globe is tough, independent, and nationally respected. A lot like the city it covers, actually. In fact, it’s hard to think of an institution more interwoven with Boston itself. The Red Sox, maybe. Harvard or MIT; one of the big hospitals. The list dwindles from there. In many ways, the paper is Boston. So it makes sense that from the moment the Taylor family sold the Globe to the Times Company in 1993 for $1.1 billion, the rich and sometimes famous have been trying to take it off chairman Arthur Sulzberger’s hands. If you happen to be a captain of industry or finance, what better way to demonstrate your influence than to own the Boston Globe?
But what if you’re a 37-year-old guy who’s lived in the area for only seven years? Who’s likely not on the invite lists to those power-elite parties? Then the announcement that you’re going to buy the paper will probably be greeted very much the way Aaron Kushner’s was last fall: with a collective shrug. Kushner’s story quickly disappeared, and then, so did he. We all went back to raking the leaves, dismissing him as a two-bit attention-seeker trying to pass himself off as a player.
But as I was about to discover, Kushner is serious about getting his hands on the paper, and he’s assembled a strong and well-connected team to help him do it. He insists he’s come up with a formula — the details of which he won’t reveal — to return the Globe and its sister paper, the Worcester Telegram & Gazette, to their days of glory. This plan, one of his investment partners believes, may even revolutionize the entire newspaper industry. In other words, if Kushner has anything to say about it, nobody in this city is going to underestimate him again.
ON A BRISK JANUARY MORNING, Aaron Kushner hurries into the Bristol Lounge at the Four Seasons, looking like a fresh-scrubbed boy wonder. Clean-shaven and handsome, he’s a lean wire of a man who gives off the faintest air of having more important things to do than talk to a reporter about his heretofore hush-hush bid to buy the Globe. Over the next 90 minutes, however, he answers questions with-out hesitation (and often without specifics).
“You know,” he tells me after we’ve taken our seats, “the reality is that there isn’t today a good, clear model about how you profitably grow a newspaper. And that is our objective: to profitably grow a newspaper and particularly the Globe, and it’s gonna take a lot of patience and a lot of capital.”
If Kushner does get the paper, though, he’ll be wandering into a decimated landscape. In the first half of 2009 alone, at least 105 newspapers went under, taking with them 10,000 jobs. There have been other entrepreneurs certain they could overcome such troubles. In 2007 Sam Zell, the billionaire real estate mogul, bought the Tribune Company — which includes the Los Angeles Times, Chicago Tribune, and Baltimore Sun — claiming he would bolster everything from ad revenue to readership. He lasted just a couple of years and drove the company into bankruptcy. There was also Brian Tierney, a former PR executive who acquired the Philadelphia Inquirer in 2006, only to see ad revenues evaporate. Before long, yet another big-name newspaper had filed for bankruptcy. And on Kushner’s own investment team is Chris Harte, whose private equity group bought Minneapolis’s Star Tribune in 2007. Then the recession hit, and, yes, that one filed for bankruptcy, too. The traditional newspaper model seems to be in a death spiral, with journalists, to say nothing of the public, left wondering about the future of the printed word.
Kushner, though, is confident. A self-described Boston “newbie,” he lives in a $1.7 million house in Wellesley with his wife and three kids. After growing up in Georgia, he attended Stanford University, where he earned a bachelor’s degree in economics and a master’s degree in organizational analysis, and starred on the gymnastics team. His first break came during the Internet bubble, when in 1999 he sold a company he’d started — MyMove.com, which allowed people to change their addresses online — to Imagitas, a business then based in Newton. It was that deal that eventually brought Kushner to the Boston area. A few years later, he and a business partner started looking around for other acquisitions, which led them to a greeting-card company in Wareham called Marian Heath. (Kushner’s grandfather and great-grandfather had both been in the greeting-card game.) Kushner and his partner bought Marian Heath in 2002 with funding from the Walnut Group, a Cincinnati investment company, and Kushner became CEO.
“At the time it was a very contrarian thing,” Kushner tells me of moving into what some considered an endangered industry. “E-greetings were incredibly popular, and there were a lot of people who actually were saying that physical paper greeting cards were going to disappear, similar to how people are saying today that physical newspapers are going to disappear. And I believed, as I still believe, that there are things that simply cannot be replaced digitally.”
It’s difficult to see how running a small greeting card company would prepare someone for owning one of the largest newspapers in the country, but Kushner sees plenty of overlap. “At Marian Heath, I was not a writer. I was not an artist. I did not do layout…. Similarly, I don’t expect I’ll ever write a newspaper story,” he says. “But if I can bring in more people who can write even more stories that do touch people in ways that are meaningful, what a wonderful thing.”
That does sound wonderful, but what’s the plan? Kushner bats the question away without quite answering it: “We will take the things that the Globe does really well and expand upon them and layer on additional things that they haven’t yet been able to do and do those.”
But how do you generate the revenue for any kind of expansion in a battered industry? The answer is one more detail about Kushner’s plan that we don’t know. What we do know are the identities of a few of the investors he has assembled to bankroll his bid.
One is Brendan Burns, an adjunct associate professor at Columbia Business School and former CEO of AdOne, the online classifieds empire. I call Burns and ask how Kushner, without any newspaper experience, can possibly right the Globe’s ship. “The most successful entrepreneurs often see a reality that may not exist yet,” Burns says, “but in their estimation, with the right ingenuity and sometimes a leap of faith, that vision can become a very exciting reality.” Does Burns’s background in online classifieds have a place in Kushner’s plan? “Unquestionably,” Burns replies. He says he also envisions incorporating online tools to facilitate real-time negotiations for a job or an item that’s for sale. The whole thing sounds like Craigslist meets Facebook, so, back at the Four Seasons, I ask Kushner if that’s what he has in mind. Kushner stares for a moment, then cocks his head slightly. Have I stumbled onto one of his strategies for newspaper success? “No,” he says finally. “I mean, it’s a very dynamic space, and there is a great deal that you can do today using networking technology, using tools that three or four years ago were very expensive to deploy if they even existed.”
To cut through the entrepreneur-speak, I call Chris Harte — the former publisher of the Star Tribune and one of Kushner’s investors. Unfortunately, Harte tells me that he had a similarly confused reaction when he first met Kushner. “I didn’t even understand many of [the details] in the first 30 minutes,” he tells me. “I thought, Hmm, I’m not sure I understand this yet, I’m very skeptical, but this guy is very specific about what he wants to do and he’s got massive spreadsheets showing all his assumptions and I can read and test and talk to him more and find out whether or not he’s got some answers. And I did, and I think he does.” Harte, who has a long history in newspapers, seems taken with Kushner’s youthful exuberance. “There’s nobody that I’m aware of who’s got as innovative a plan and as good an understanding of some possible solutions that I think will be seen later as among the foundations for most newspapers going forward.”
I want to believe, too, but there’s not a spreadsheet or specific detail to be found at the Bristol Lounge. Which makes it hard to imagine that the man sitting before me, with the somewhat thin résumé for the job he’s seeking, holds the blueprint for saving the entire newspaper industry.
“IS THAT RIGHT?” Bill Grabin asks the question slowly over the phone. I’ve just told him that Aaron Kushner wants to buy the Globe. Grabin, the cofounder of a small company in Maine called Renaissance Greeting Cards, tells me he’ll have to think about talking to me for this story. When I call him back later, all he’ll say is, “I’m afraid I’ll have to decline comment.”
At the time Kushner took over Marian Heath, the greeting-card industry was dominated by two players: Hallmark and American Greetings. Kushner’s goal, according to Gary Russell — an independent sales rep who sells the cards of several different companies to retailers — “was that he was going to be the third-largest greeting-card company in America.” Doing so would mean blowing past the number three company, Recycled Paper Greetings. Russell, who worked with Kushner selling Marian Heath greeting cards until their business relationship ended in a lawsuit a couple of years ago, all but laughs as he describes that ambition. Russell estimated that Recycled was doing more than $90 million in annual sales. Marian Heath, he said, was probably doing less than $10 million at the time, “and he’s gonna take it to $90 million with no business experience in our industry?”
Kushner denies ever setting Recycled in his sights, but there’s no doubt he wanted to grow Marian Heath. One strategy was acquiring existing greeting card companies and folding them into Marian Heath. Which is how Kushner came to buy Renaissance.
It was a cold December morning in 2005, the day after Marian Heath had announced its purchase of Renaissance, and the staff of the recently bought company had been told to arrive early for a meeting. Though rumors had been flying that Renaissance might be sold, no one expected what came next.
“When they opened up the door,” says a former employee, who asked to remain anonymous, “we got into a line like cattle, and there were people at the door with clipboards asking us what our name was, and they looked at us and said, ‘Okay, you go upstairs, you go to the cafeteria, you go upstairs, you go to the cafeteria.’ Once we started seeing who was in the room, we were like, ‘Oh my God! Oh my God! Those people downstairs are going to be let go today.’ And sure enough, that’s what happened. We never got to say goodbye to them.” In all, 34 of 77 employees were dismissed that day.
“I was just really astonished that he failed to appreciate the value that he had just destroyed,” says Ronnie Sellers, one of the founders of Renaissance, who left in 1991 and now runs a greeting-card company in South Portland, Maine. [Editor’s note: Sellers was once married to an aunt of this magazine’s acting editor.] Sellers says customers soon began moving from Marian Heath to his company. “Our greeting-card sales doubled,” he says. “And we know a lot of the reason our sales increased so much was because there were many accounts that were just fed up with Marian Heath and came to us.” Sellers says his company’s internal tracking suggests that hundreds of customers switched over from Marian Heath.
Eventually, Sellers says, things happened that suggested Marian Heath was having financial difficulties. “I was hearing from sales representatives who rep our line and also rep Marian Heath, and they told me that Marian Heath wasn’t paying them, or was paying them very late. Artists and licensors who had sold content to Marian Heath also told me that they weren’t getting paid their royalties on time. Some of these were owed substantial amounts of money. I assumed, therefore, that it was likely that Marian Heath was running short of cash, and that the grand plan that Aaron orchestrated may have run aground.”
Kushner denies that Marian Heath had financial difficulties under his leadership. In fact, he insists the company more than tripled revenues during his tenure. The company, he tells me, made a point of paying its vendors and sales reps fully and on time. “And I think the results at the end of the day speak for themselves,” he says. “We are one of the last players in the business still standing in terms of a true full card line that can compete with American Greetings and Hallmark.”
I ask Kushner about firing so much of the staff at Renaissance. “It’s never an easy thing when anyone has to be let go,” he says. “And the greeting-card business, like the newspaper business, has had to go through some incredibly painful transitions in the industry…. The reason Marian Heath is the leader that it is today is in large part simply because it survived, whereas a lot of our competitors ceased to exist.” Moreover, Kushner claims it was Renaissance management that suggested who should stay and who should be let go.
In the end, he says, there were painful decisions that had to be made. “How anybody could think that we didn’t love the business and understand the business and that I didn’t have a great vision for the business and leadership for the business, I don’t see how anybody could make that argument,” he says.
Still, Kushner and the Walnut Group parted ways in 2009, seven years after they bought Marian Heath. Kushner says he remains a major stakeholder in Marian Heath, and that his leaving the business was a mutual decision between him and the Walnut Group: “I had a vision for the business, and they had a very different vision, and they controlled the working capital, so we decided to move on.”
Calls to the Walnut Group were not returned. When I called Marian Heath and asked for Kushner, the receptionist answering the phone would say only, “He no longer works here.”
WHATEVER DIFFICULTIES KUSHNER may have faced in the greeting-card business, he sees nothing but promise in the newspaper industry. That said, papers everywhere are shedding jobs. Globe editor Marty Baron tells me his paper is down to 345 staffers these days, about 40 percent fewer than the 550 it had in 2000.
As the Bristol Lounge grows quieter in the interim between late-morning coffee and lunch, however, Kushner is undaunted. Leaning forward, he says he’s going to increase staffing in the Globe newsroom. “Our plan is a very contrarian plan,” he says. “If you want to grow a business, you have to invest in that business; especially when it is at a weak point, you cannot cut your way to growth.” Where will the money for all this expansion come from? Kushner won’t say.
I change the subject and ask how he envisions editorial decisions being made at the paper. Would he, as owner, sign an agreement not to get involved in editorial? “I’m not sure why,” he says, speaking forcefully. “I actually think it’s unhealthy. If you don’t care enough about your product to have an opinion of it, why are you even in the business?” When I suggest that most credible newspapers maintain a sacrosanct wall between the business and editorial sides of the paper, his voice carries across the quiet room. “I think the existing editors have fabulous judgment,” he says. “It’s not a question of their judgment or their abilities…. But does that mean that I’m not going to care equally deeply and be very much engaged? Of course [I will]. As will our investors.”
Those ideas seem to me a departure from how reputable newspapers have generally operated. But Marty Baron doesn’t seem concerned. “I don’t know a single publisher or owner who’s totally disengaged from the editorial side of the business,” he says. “…So, it’s part of the business.”
BECAUSE HE WON’T SHARE DETAILS of his plan, it’s hard to know what Kushner has up his sleeve.
But as Dan Kennedy, a media observer and journalism professor at Northeastern, told me, the Times Company is not going to hand over the paper to just anyone. “People in the position to know have told me that back in ’09, the only person in ownership who really opposed selling the Globe was Arthur Sulzberger himself,” Kennedy says. “He really did not want it to be his family’s legacy that they had ruined the Globe. My guess is it still matters to them what sort of intentions the new owner would have for the paper.”
It seems that if Jack Connors, Jack Welch, and a multitude of others from the local power cluster weren’t able to convince the Times Company to sell to them, then an unknown former greeting-card executive has an even slimmer chance. (Abbe Serphos, spokesperson for the Times Company, says, “We do not comment on rumors of acquisitions or divestitures.”)
And yet, midway through our interview, Kushner’s phone, which he’d placed on the table between us, lights up with the words “Ben Bradlee Jr.” Bradlee spent 25 years at the Globe, including in the post of deputy managing editor. Without missing a beat, Kushner flips his phone onto its face. Maybe this guy is not so outsider after all.
When I call Bradlee later, he explains that Kushner approached him for guidance on his business plan. Bradlee was impressed enough to introduce him around town to potential investors.
“I totally support his goal to bring local ownership to the Globe again,” says Bradlee. “And he views it the way I do — as a prized civic asset, which hopefully can be brought back to its glory days.”
[EDITOR’S UPDATE: As this story was going to press, the Globe reported that Benjamin and Stephen Taylor, former Globe executives, had also joined Kushner’s investment team.]
THE GLOBE — AND ALL NEWSPAPERS — face an uncertain future. No one knows what they will look like just 10 years from now. What is certain, though, is that the people ushering them into their next era bear an enormous responsibility. Perhaps recognizing this, Kushner says, “You know, in my own modest way, if I can move that needle further along, change the direction, how could I not?”
The comment suggests that Kushner feels a kind of calling to this titanic endeavor — and that he may be further on in the process than we realized.
At the end of our interview, Kushner doesn’t have time to linger. He rises, offers a quick, firm handshake, and then, like a man with a full day of important meetings ahead of him, strides toward the lobby and disappears.
Source URL: http://www.bostonmagazine.com/2011/02/can-aaron-kushner-save-the-boston-globe/