What’s happening at Standard Publishing?

by

Bill Tucker

Changes are underway at Standard Publishing. Last year, the company was sold, now having its third owner in a long, rich history. For 135 years, Standard Publishing has been a resource provider to the Restoration Movement. Venture capitalists are beginning to invest in Christian publishing, noting recent profitability in the industry and a growing demand for Christian resources by a public hungry for spiritual fare. Standard’s new owner and the dynamics of today’s Christian publishing industry represent a sea change for the company.

Such change merits a closer look at Standard’s future by its market, Restoration Movement churches. Standard Publishing is double-tasked with developing Biblically-true resources the Church needs, and to produce profits for its owner. The company has operated under these dual tasks for over fifty years. Yet, the business model of its new owner, coupled with a fundamental shift in the Christian marketplace, may effect a new direction for the company.

Ownership Change

Founded in 1872 by Isaac Errett and R.W. Carroll, Standard Publishing was the business support to Errett’s Christian Standard magazine. Soon after incorporating, Errett and his son purchased Carroll’s share of the company, and become sole owners. In 1955, John Bolton, a Massachusetts entrepreneur, sold his vinyl sheeting company, Bolta Plastics, and used those proceeds to purchase two companies: Standard Publishing from the Erretts, and a Rochester, New York engraving company. He merged these two companies into Standard International, later renamed Standex International Corporation. From these modest beginnings, he, and his son, built Standex into an international conglomerate; twenty-two companies, operating in North America, Australia and Europe.

In October, 2005, Standex retained Berkery, Noyes & Company, an investment banking company, to identify potential buyers of its consumer products group, which besides Standard Publishing included Berean Christian stores and Standex Direct, a direct retailer of food products. Standex wanted to divest Standard to implement its strategy of shedding consumer group businesses, claiming the publishing company did “not…fit strategically with other operating segments as [this business has] few synergies to leverage across the other segments”.

Standex sold Standard Publishing in July, 2006 to the Wicks Group of Companies, LLC, a New York City private equity fund that invests in communications, information and media. Standex noted a pre-tax gain of $10.1 million in the transaction. A month later, JMH Capital, a Boston private equity fund, partnered with certain Berean management, to acquire Berean Christian Stores from Standex. The Wicks Group picked up Standard Publishing in an all-cash transaction under a new subsidiary, CFM Religion Publishing Group, LLC (“CFM”). Daniel Kortick, Managing Partner of the Wicks Group, said, "We believe there are positive growth trends in the niches in which Standard publishes, and we could not be more pleased with the foundation on which we plan to build." Among other assets of the Wicks Group are Vive, an urban hip-hop magazine, and a number of cable television and radio stations in the U.S. Standard is under Wicks’ WCMP Fund III, a fund with over $535 million.

Matthew Thibeau joined the Wicks Group as CEO of CFM and President of Standard Publishing and moved to Cincinnati. In the July, 2006 press release, Wicks noted “Mr. Thibeau has more than 20 years of experience in educational publishing, including senior management positions at World Book, Inc., MacMillan/McGraw-Hill, and Harcourt, Inc., where he was President of Harcourt Religion Publishers”. He was President of Brown-ROA, a publishing house for Catholic instructional materials when Harcourt acquired the company in 1994, and in 1999, Brown-ROA was renamed Harcourt Religion Publishers. He was formerly board member of the Catholic Book Publishers Association and is currently on the board of Ministering Together, an association which facilitates health care and human services in dioceses and Catholic organizations throughout the country. His choice of church may also be influencing recent acquisitions by Standard’s parent, CFM.

CFM Acquisitions

· January, 2007 – Standard Publishing acquired Rainbow Studies International, publisher of the Rainbow Study Bible. This Bible is color-coded to twelve themes: God, Faith, Family, History, Evil, Sin, Outreach, Commandments, Prophecy, Salvation, Love and Discipleship. This Bible is mentioned at christianbook.com as the “ultimate Catholic study Bible”.

· July, 2007 - CFM Religion Publishing announced acquisition of two companies: RCL-Resources for Christian Living from RCL Enterprises, Inc. and the Benziger product line from McGraw-Hill Education. The new company, RCL/Benziger Publishing, now an affiliate of Standard Publishing, will focus on multi-media products for Catholic parishes and schools. Thibeau stated in the press release. “RCL's innovative, high-quality products and services coupled with Benziger's long-standing tradition will enable RCL/Benziger to offer superior multi-media product offerings that will empower catechists to nurture the faith development of Catholics of all ages,"

· September, 2007 – RCL/Benziger purchased Silver Burdett Ginn Religion, a company specializing in publishing Catholic catechetical materials. Matthew Thibeau stated, "This is a 'first' in the history of Catholic religion publishing. The combination of Silver Burdett Ginn Religion and RCL Benziger results in a publishing company that can provide products and services for the entire Catholic faith community in a more effective way than ever before."

These acquisitions point to a definite market strategy: consolidation. It seems Mr. Thibeau is using his expertise in Catholic publishing to roll up several companies in this field towards consolidation, which leads to reduced costs, greater market presence and shared resources. Does a similar fate, merger with evangelical publishing houses, await Standard?

The Business of Publishing

At first blush, one may wonder what a New York City private equity firm would consider investing in a mid-sized Christian publishing house. Business has focused on faith-based publishing primarily from the stellar rise of the industry in the past twelve years. It began in 1995 with the first installment of Jerry Jenkins/Tim LaHaye’s Left Behind series; the twelve-volume series has sold over 62 million copies. Then in 2000, Bruce Wilkinson’s Prayer of Jabez was released, selling over 12 million copies. The industry finally bleeped on bid business’ radar when Rick Warren’s Purpose-Driven Life was released in 2002, selling over 30 million copies to date. Faith-based publishing continues to push up revenue. Max Lucado’s collection of fifty titles has accumulated sales of over 50 million copies. In 2005, Americans purchased 25 million Bibles, amounting to about $500 million in sales. And who can walk into a Wal-Mart or Cosco store and avoid book displays from authors such as Bill Hybels, Philip Yancey, Beth Moore, Joel Osteen, Janette Oke or Frank Peretti? The entire Christian product industry is estimated at $4.2 billion annually. During 2006, the publishing industry posted the largest number of acquisitions since the dot.com phenomena in year 2000. Similar to the Wicks acquisition of Standard, private equity firm InterMedia Partners acquired the religious publishing house Thomas Nelson and major publishers Random House, Simon & Schuster and HarperCollins each acquired Christian publishing companies. Most in the Christian publishing industry believe the market is far from saturated. We would rejoice in the popularity of Christian-themed books was it not for the Christian message of these books as a whole: self-centered, simplistic, in some cases even heretical. Too much non-fiction product in Christian bookstores today is dross, marketed to us under the “Here’s what God can do for you” category. And while the Christian fiction genre is experiencing phenomenal growth, critics charge it is pietistic and fails to write realistically of sin. To reach mass markets, most authors and publishers mollify the Biblical message. This is the ‘marketing slip’ so prevalent in Christian culture today. Christians become customers and the successful organization is the one that will understand the customer and provide the product the customer wants; be that seeker-sensitive services or media designed to leave the customer feeling good about a luke-warm faith. Marketing slip is a deliberate business decision; but one, thankfully, not all publishing houses make.

To assess what changes may await Standard Publishing requires a focus on the business of its new owner, the Wicks Group. Private equity (PE) companies amass large amounts of capital from pension funds and cash-rich corporations to acquire and consolidate companies. Implicit in the process of mergers and acquisitions is the makeover. Typically, the PE firm will hold onto the acquired company for a five year period. During those years, it follows a “buy and build” business model. In the first year the business is re-established, the next three years are the building years with acquisitions of like businesses to consolidate costs, and in the final year, the PE firm prepares to liquidate. As an example, in 2007, the Wicks Group sold Daily Racing Form, LLC, a multi-media information company for horse racing enthusiasts. According to reports, it acquired the firm in 2004 for about $60 million, and sold the company for just under $200 million. Private equity companies are high-risk investments, with greater yields (>20%) as a reward to the degree of risk. Pursuing high returns means PE companies have short-term horizons, which causes acquired company management to also think in the near-term. Following that paradigm, three months after Wicks acquired Standard Publishing, Matthew Thibeau gathered Standard management and together developed five goals, the top goal being “1. Sustained profitable growth”. A venture like this must be commercially viable. PE firms have one eye on the steady income stream of Christian publishing and the other eye on the next multi-million copy book. The business side of Christian publishing is not necessarily corrupting. The question is: how much does the desire for profit drive the product? Who carries the day in new product committee meetings, the editor, or the accountants?

Staying true

Commenting on the subsidiaries of CFM Religion Publishing, Mr. Thibeau states, “Each company will operate independently and maintain its unique theological perspective and tradition even as it contributes its own publishing know-how for the benefit of the group.” (CFM website). The press release announcing the purchase of Rainbow Studies International stated, “Standard Publishing, a Wick Group of Companies portfolio company, has been providing true-to-the-Bible resources that inspire, educate, and motivate Christians to a growing relationship with Jesus Christ.”

With a new owner, new offices, new affiliates, a new 89,000 square foot distribution center, Standard has changed. Infused with capital and a new business plan, change was inevitable. The Company outsourced its printing operations three years ago and seems to be totally focused on developing broad-based Christian resources. It is estimated there were 1.1 million Christians in Restoration Movement churches in the year 2000, an insufficient niche market for Standard Publishing to focus solely upon and still achieve the returns its New York owner requires. It appears to have re-established itself in the first year of new ownership and is ready to branch out of its niche marketing to Restoration Movement churches and begin focusing on products designed for broader appeal.

It is expected not all divisions at Standard Publishing are set for change. Standard’s Publishing Committee, comprised of fifteen leaders in the Christian Church, should insure its Christian Standard and Lookout magazines continue in service to the Restoration Movement community. It should continue success in marketing its Vacation Bible School materials; although a report from the Barna Group states that between 1997 and 2005, there has been a 15% decline in churches offering Vacation Bible School, primarily due to a lack of teachers.

In a lengthy quote, its new Director of Product Development, Matthew Lockhart, may provide us a glimpse of its new market strategy:

“..(P)ublishers, like Standard, were generally regarded as “old” and less innovative. It’s true Standard has been serving the church for a long time. With that comes both maturity and trust, as well as the tendency to doing things the same way….We’re respectful and mindful of our history, but one of the reasons I came here was to be a part of something new, trying to build on the strong and rich tradition, but also to help move us forward…The values that are important to churches in the Restoration Movement tend to be reflected in the values that are important to Standard. Standard has worked very hard to maintain a purity with respect to the Restoration Movement…A number of the churches have been loyal, but frankly, there’s not a beholden loyalty to Standard. Standard’s challenge is to create the best product for the church. We’re creating things with values we hold in common. The acid test is: Does it work in local church ministry? If you’re in the body of Christ and you want to reach kids, young people, adults, you have to ask, is it consistently true to the Bible? Is it engaging and relevant? And does it deliver and work in the context of local church ministry?...In the church the influencers, the megachurches to some degree, are the new “denominations.” …We have some of the leading churches in the nation who are influencing other churches within a number of denominational camps. A part of what we’re seeing is a proliferation of resources not coming from publishers, but from other churches—with megachurches certainly playing a role as a key influencer….In the current publishing environment, there’s not room for all Christian publishers to exist as they do. We’re in a highly competitive environment. We will become a full-service provider to the church delivering excellent resources where there are primary programming resources needed in the church.” (July 3, 2007 interview, Christian Standard website).

InterVarsity Press’ publisher Bob Fryling has been quoted as saying, “Book publishing is like shooting a gun in the air and hoping a duck flies by”. In such a hit or miss industry, it takes a keen business eye to spot an emerging market and developing resources. Standard has clearly done its homework. Megachurch preachers are in the forefront of Christian book publishing. Publishers are feasting on the book sales of Rick Warren, Joel Osteen and Bill Hybels; Hybels alone has authored over twenty books. Best-selling authors have a “platform”, the industry’s term for a built-in audience. Mr. Lockhart’s reference to megachurches may suggest where Standard is looking to harvest. Consider how Zondervan Publishing marketed the fatally flawed book of Rick Warren, The Purpose Driven Life. With Zondervan’s research and Rick Warren’s past Purpose Driven Church seminars, 1,200 churches representing 400,000 members were persuaded to conduct a “40 Days of Purpose” campaign. Zondervan reduced the book’s price from $20 to $7. During the national campaign, in the pulpit and in small groups, members were encouraged (read, manipulated) to read the book and share their insights with others. Zondervan chose this deliberate marketing strategy, termed viral marketing, because they understood how evangelical America buys their books: by one person passing information to another. Word of mouth is responsible for blockbuster sales because Christians meet often and share recommendations. It was the Christian community, by word of mouth, that pushed Mel Gibson’s movie, The Passion of the Christ, to over $500 million in ticket sales. Megachurches make effective launch platforms for resources because of the numbers and influence necessary for viral marketing; but, if past is prologue, these are not good content providers. Insuring products are quality, true-to-the-Bible resources must be the missional task of the publisher. At the time of Wicks’ purchase of Standard, Matthew Thibeau issued this press release, "We will continue to produce the highest quality products for our customers in church markets while also developing new titles and products for additional areas we believe are poised for growth.” For the good of the Church, we pray Standard remains dedicated to providing resources Biblically sound. Standard has always focused on materials which are edifying and encouraging; yet in today’s culture, it also needs to exercise a voice of discernment.

Standard’s current adult book offerings include Queen Mom, When God Steps In, Scars the Wound: Scars the Heal, Scared Silly (taking on your fears, worries and what ifs), Remember Who You Are, That Crazy Little Thing Called Love, Second Guessing God, From Clutter to Clarity, Opie Doesn’t Live Here Anymore, Living With Eeyore. These are brief, quick-read books in the inspirational genre. It reveals the historic “warm hearts” personality of Standard Publishing. Contrasting their product line is publisher College Press, based in Joplin, Missouri. Most offerings from this publisher are didactic non-fiction, indicative of the firm’s “sharp minds” personality. Both product lines have their place on the Christian’s bookshelf. Yet in today’s fad-driven culture, solid Bible-based teaching is disappearing from print media, and inspiration regresses into entertainment. Recently it was announced pop star Britney Spears' mother, Lynne Spears, is writing a book on parenting for Christian publisher Thomas Nelson. Perhaps the book will be worthwhile, but it is indicative of how pop culture has infiltrated the Church. We could accuse the publishing companies of foisting books on Christians that we do not need. They would counter they are publishing what consumers want.

In June, 2007, Standard announced a new series of adult small group studies labeled “Tuning into God.” Each study uses an album of classic songs from one of four pop icons – the Rolling Stones, the Beatles, the Eagles and George Strait – to “prompt discussion of Biblical truths”. “The Tuning into God series is an innovative approach to topical Bible study“ said Steve Couture, vice president of marketing and sales for Standard Publishing. “In every generation pop music explores the themes of love, loss and the meaning of life, and many times speaks honestly of pain and hopelessness. Using these songs as a springboard for Bible study allows Christians to engage our culture and challenge commonly held secular worldviews,” he added. These 48-page six-lesson booklets are hip and engaging, but sorely miss the mark in challenging non-Biblical worldviews. These fail because of a lack of proper content. The “Tuning into God” series uses more ink on facts about the bands and their songs than on deconstructing erroneous worldviews and presenting Biblical truth to the basic human issues these songs address. These would be very worthwhile Bible studies if expanded with sufficient content to rebuff the false worldviews prevalent in our culture.

Let us pray this is just one misstep by Standard. Christian publishing has always been part missional and part business. Changes made to this publishing house may be commercially viable to its new owner, but the company should not abandon its 135-year mission in the pursuit of profits. Such loss would be huge to the Restoration Movement.