When Phillip Picardi at year’s end takes up the editor in chief role at Out magazine, he’ll have his work cut out for him.
On top of a summer exodus of more than half of the editorial staff from an already small masthead over continued operational issues, there are new investors to keep happy, the task of getting recently re-branded holding company Pride Media ready for a Reg A+ filing (known as a “mini-IPO” — something akin to a regulated crowdfunding campaign), and, for good measure, a new owner that happens to be a documented supporter of conservative Republican politicians during a time when the culture wars have never been more fierce.
Behind Pride Media are the stepbrothers Adam Levin and Maxx Abramowitz, the founders and operators of Oreva Capital, which last September acquired Out and The Advocate, along with related brands and intellectual property. They are also, respectively, the chief executive officer and lead investor of High Times magazine parent High Times Holdings. That company was formed last year when they bought the magazine, but it is experiencing significant hurdles with its own mini-IPO filing and facing many millions in losses as it tries to raise money from the public.
Last year, HTH posted a $13.6 million loss. So far this year, it’s lost $12.3 million and is sitting on about $68 million in debt. Moreover, its public filing, which is set to close at the end of this month, had only resulted in around $5 million in investments as of three weeks ago, far short of its $50 million goal.
A source familiar with the company told WWD that the public filing of High Times was supposed to be a model for Pride Media, which Levin is said to have acquired opportunistically, seeing a largely untapped market in LGTBQ media. However, a new owner that not only is perceived as relatively disinterested in the community it serves, but has given money to politicians who worked against that community, didn’t sit well with a lot of now former staffers, who had a sense of mission in their work, sources said.
Levin has donated to a number of Republicans including Devin Nunes, Dean Heller and Josh Mandel (all of whom have publicly taken anti-LGTBQ stances, like supporting religion-based discrimination), and Dana Rohrabacher (who recently said gay people can be denied the right to buy a home and has consistently opposed legal advancements for the LGTBQ community) was praised on this year’s High Times’ list of cannabis supporters.
Of Levin’s political donations, a Pride spokesman said, “Adam is a staunch supporter of pro-Israel, pro-cannabis and LGBT issues and consistently works across the political spectrum to ensure he’s advocating effectively on behalf of each of these communities.”
But a tipping point for a lot of Out staff came once being regularly paid for their work was no longer a certainty.
A number of sources told WWD that issues with being paid are something of an editorial legacy at Out, but it started to really affect the staff earlier this year after Oreva came in and put in place new ceo Nathan Coyle. One of his first moves was to end a system at Out that had been in place since at least 2012, wherein editorial employees were paid not by then-parent company Here Publishing, like noneditorial staff, but through a separate company, Grand Editorial, owned and operated by former editor in chief Aaron Hicklin (he left over the summer, too).
Hicklin, however, says little over a year ago he sold Grand to McCarthy Media, owned and operated by Evanly Schindler, best known for his other media operation BlackBook. Terms of the sale included McCarthy taking over Grand, and its set-up with Out, by paying 40 percent upfront then working to take over the remaining portion in installments, tied to a consultant arrangement with Hicklin. According to Hicklin, he stopped receiving payments for the rest of Grand, in part because McCarthy was not getting expected funding from Pride to create and run Out. Grand was formally dissolved earlier this year.
Hicklin said that he became “alarmed” when in June the lack of payment started trickling down, which he says continued over a number of payment cycles and through his July resignation. “It became harder and harder [to be at Out]… and I could see that my staff had lost confidence.”
Observers speculated that this oddly bifurcated system of payment, which started with Grand and continued under McCarthy and Pride, for a time, began because it allowed Hicklin production autonomy and the platform to take on outside projects while giving Here owner Paul Colichman an easy way to cut and regulate costs, because it offered editorial staff no benefits or even full-time employment status. Essentially, Here outsourced the creation (in print and online) of its largest property directly to the editor in chief, along with all of the operational responsibilities, for a flat fee.
Coyle admitted to WWD that one of his first goals, after getting Picardi on board to be “the new, next face of Out,” was to end the relationship that began with Grand and continued with McCarthy and bring all operations back in-house. “It was a total ‘black box’ business relationship,” Coyle said, and one that made him concerned as soon as he realized he’d “inherited” it.
“When I’m running a business, I want insight into what’s happening in the various corners because those have implications for what we’re doing and how it’s perceived,” Coyle said.
He’s since terminated the relationship and it is set to fully dissolve by mid-November. Coyle reiterated a number of times that he inherited the operations and has been working to normalize things, but also that he had little to no insight at Out for many months given the Grand Editorial/McCarthy arrangement.
Still, Coyle said he was “surprised” to hear that any employees had grown frustrated with a lack of transparency after Oreva’s acquisition and said he’d told some employees directly of his plans to bring everything under Pride.
But now Pride seems to be having some cash-flow problems of its own. When the appointment of Picardi (whom Coyle had worked with previously at Refinery 29 and began courting as soon as he became ceo in spring) was revealed in late August as Hicklin’s successor at Out, contributor Michael Musto wrote on Facebook that Picardi was trading one “troubled” publisher, Condé Nast where he led Teen Vogue, for another “problematic” publication. “I will help you try and get paid, if you need me,” Musto wrote. A spokesman for Pride blamed any issues with payment on the Grand Editorial/McCarthy situation, and said speculation that Pride is experiencing significant cash flow problems is not an accurate reflection of the company right now.
But Musto is just one of many freelancers who have had to fight to get paid, sources said. Even those working solely for Out (people who would normally be considered staff editors, writers and photographers, but for the arrangement started under Grand), before the many summer departures, were being paid via PayPal, and often late at that. More recently, Pride is said to have missed its third-quarter financial goals, after meeting first-quarter goals and exceeding in the second. And Joe Landry, group publisher of Out, Advocate and related assets since 1994 and an executive vice president at Pride, was recently let go. While Pride is on the hunt for a chief financial officer, which it’s been without since June, it just brought on Orlando Reece as chief revenue officer, a first for the company.
Possibly in an attempt to bridge the gap between a major turnover in staff and a public filing, it seems that Pride, while only a year into its existence, has taken on another outside investor in Fisher Capital, operated by the billionaire Kenneth Fisher. The firm recently added the company to its list of investments without disclosing the amount of its stake and Pride declined to comment. Pride is also working to expand and diversify its revenue and reader base. This month launched an in-house branding agency, a money-maker for a number of media companies, along with Chill, a print and online outlet for “urban Millennials” that live “label-free.”
Coyle noted that “a digital push and really unleashing these brands in a stronger way in their digital manifestation is a huge priority” at Pride right now, and Picardi’s digital savvy is a big part of why he got the job at Out. As for Out’s print future, Coyle said it “may go on successfully for another five years,” but that its digital product is the focus. Revenue from digital operations at Pride as a whole is said to be up 9 percent year-over-year.
When Pride will be in a position to pursue a public filing, which sources insist is Oreva’s plan, is unclear. If going public doesn’t happen, a source speculated that the company could perhaps be sold again, marking the sixth time the properties will have changed hands in the last 20 years. The idea that Out or the Advocate would simply close was dismissed out of hand.
For now, however, it’s about getting Pride on solid financial ground, which at this point isn’t an easy thing and could become even harder if High Times’ public filing stumbles, which could leave Oreva, Pride’s majority stakeholder, in a tougher financial position.
As for Picardi, he’s said to be coming into Out mainly to shift the title to a digital-first publication from the print-focused one it has been. It’s also said that the prospect of getting in on the ground floor of a soon-to-be public enterprise is part of what drew Picardi away from Condé, where he was a favorite.
Editors note: This article was briefly amended after its initial publication.
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