Upside Creditor Takes Over Publication

Narrowly avoiding an Industry Standard-like debacle after essentially running out of money, Upside magazine will continue publishing, albeit under a different owner.

MCG Capital Corp., the major financier of Upside’s publisher, San Francisco-based Upside Media, acquired the magazine and its assets through foreclosure. But unlike the bankrupt Industry Standard — the fate of which is in question following its bankruptcy auction — Arlington, Va.-based MCG plans to keep the magazine running largely on schedule.

There will be some changes, however. MCG has set up a firm tentatively called UMAC — short for Upside Media Acquisition Company — to oversee publication of the magazine, beginning with Upside‘s delayed September issue, which is slated for release in a few days.

At the helm of the new company will be Ed Ring, who had served as chief financial officer at the firm from 1991 to 1997, and who said he wound up as chief executive based on recommendations from the board of directors and ex-CEO and editor David Bunnell. Bunnell, meanwhile, will take on the consultative role of editorial director.

UMAC declined to disclose how much finding MCG handed to the company to get it back on its feet and pay off other creditors, but Ring told that Upside Media’s debt “was quite substantial … the old Upside basically ran out of money, and had no way of getting more money.”

MCG “basically foreclosed and resurrected the company … in order to recoup their investment,” he said. “Upside was very decisive in cutting its costs, but it kind of happened too late.”

Among those cut costs were reductions of the company’s staff from 125 to about 25, and the shuttering of its Web site earlier this week.

That site, UpsideToday, would indeed be relaunched, Ring said, but in a “probably less ambitious” format.

“It’s not going to be possible for it to have the kind of staff that it had in the past. And if it can’t make money … it’s primary role will be as a resource for people to get more information about Upside, about advertising, and about subscribing,” he said. “But as a daily, ‘stock ticker’ kind of Web site, that’s not a space that Upside is prepared to continue to compete in.”

With those changes in place, the publisher’s new management and owners are banking that it will soon be back on the track to profitability, “certainly by next year,” Ring said.

“But it depends, there’s so much going on out there, it’s a difficult time to be a publisher in this space,” he added. “The board … and David Bunnell recommended me as someone who would provide good financial management, and with the new realities of the market, we’re going to have to be a little less ambitious. The name of the game is profit, not growth … and we think we can do that.”

Despite the changes, Upside will still appear on newsstands next month — a situation that isn’t likely for onetime competitor The Industry Standard. That publication ceased when its publisher, Standard Media International, filed for bankruptcy protection last month.

Last week, the Standard brand name, assets, subscriber lists and conference data went up for auction, with International Data Group and AOL Time Warner paying a combined $1.4 million. It is unknown whether IDG — which bought the magazine’s name — plans to relaunch the publication at any future point.

Besides Upside and the Standard, several other business trade print publishers have felt the sting of the downturn in ad revenues — precipitated by the drop-out of dot-com clients. Earlier this month, Red Herring said it would cut its staff by about 17 percent and return to monthly publication, after eleven months of publishing twice a month. In July, AOL agreed to purchase Future Network’s Business 2.0, which it ultimately relaunched after combining it with its own eCompany Now.

“When you think about the amount of Internet investment that translated almost directly into advertising, it was a phenomenal percentage,” Ring said. “Magazines would have been foolish to turn that away. But the drop-off was so swift that it was difficult for publishers to decrease their cost structure at the same rate of speed. It’s a shame that it had to happen [to Upside] … but it’s not a unique situation.”

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