ARTHUR never called before 8:00 A.M. unless something was bothering him or he had some news. It was not quite 7:30, and I was lying in bed, waiting for the alarm to go off in my Cambridge sublet on Memorial Drive, when the phone rang. It was Arthur (Arthur Carter, my friend, boss, and sometimes bane), and this morning something was bothering him or he had some news, depending on how you look at it. How would I like to take over from him as owner of The Nation?I was in Cambridge because after sixteen years as the editor of The Nation,America's oldest weekly magazine (it was founded in 1865 by a group of visionaries and malcontents in and around the abolitionist movement), I had persuaded Arthur that I could use a sabbatical. My plan had been to spend six months, starting in January of 1994, as a fellow at the Institute of Politics at Harvard University's Kennedy School of Government, where I would ruminate on the role of the journal of opinion in the post-Cold War world, and then spend the next six months writing. Arthur's call, five months into my year off, changed all that.
This, I quickly figured out, was what is technically known as a wake-up call. Economics is not my strong point, but I did know two things: the magazine was losing $500,000 a year; and I didn't have $500,000 to lose -- that year or any year.
"There's no hurry," Arthur said. "Think it over and let me know by the end of the week."
Having done business with Arthur for the past half dozen years, I assumed that this was not an invitation to negotiate. It was more like a take-it-or-leave-it-and-if-you-don't-take-it-by-Friday-(you schmuck)-I-might-well-take-it-off-the-table.
So I took it. Or, rather, I consulted my brother-in-law the lawyer and gulped and took it. Here, as I learned after the lawyers got into the act, was the deal. Arthur wanted a million dollars for The Nation(which seemed to me a little steep, given its balance sheet), but he asked nothing down and proposed a payment schedule of $100,000 per annum at six percent interest. This, my brother-in-law the lawyer explained to me, was "cheap money." Furthermore, Arthur's idea was that I could continue my sabbatical
until the end of the year -- and although I would sign the papers instanter and take on legal responsibility immediately, he would continue as publisher and continue to cover the losses until I took over.
There was still the little matter of how I would explain to my wife, Anne, who lacked her brother the lawyer's understanding of higher mathematics, that buying a magazine that was losing $500,000 a year for $1 million that I didn't have was a deal worth grabbing by Friday. Especially since I knew that as a genre, journals of opinion almost never make money. Even that avatar of capitalism William F. Buckley Jr., when asked whether his own journal of opinion, National Review,might ever make a profit, had responded, "A profit? You don't expect the church to make a profit, do you?"
But I had an idea. Across the Charles River from the Kennedy School stood the world-famous Harvard Business School, and on its faculty was my friend Samuel L. Hayes III, the Jacob Schiff Professor of Investment Banking. Well, he wasn't exactly my friend, but we had served on Swarthmore College's Board of Managers together, where Sam was one of the key managers of the college's investment portfolio, which that year was the No. 1 performer in the country. I told Sam that I might have the chance to acquire The Nation,and I explained my idea over baked scrod at the business school's faculty club. Suppose I opened The Nation's books to a class of Harvard's brilliant young M.B.A. candidates. Was there a way that they could turn our little company into one of those famous case studies? The job would be simple but challenging: How to take a magazine that has lost money for 130-odd years and, without changing the magazine, turn around its economics.
Sam gently reminded me that although he didn't see The Nationregularly (or irregularly, for that matter), he suspected that his Republican politics were not exactly Nationpolitics. But he said he would think about it, and that I should send him my "financials." I signed with Arthur, and not long after, I sent Sam the numbers, along with a business plan I had worked up. He said he would let me know.
Although I had confidence in the modest projections I had developed with the help of an old friend, Jim Kobak, a leading consultant to the publishing industry (they showed us passing the break-even point four years down the road, and they called for an investment of at least $3 million), I feared that Sam, who sat on the board of Tiffany's, might prefer more-ambitious projections.
So when, some months later, Sam and I had our follow-up lunch, it was with surprise that I received his news that Harvard was going to help us become a capitalist success story.
Sam had "run" our numbers and was impressed that the actor Paul Newman had agreed to invest in our cause (I emphasize the "cause" here; the proprietor of Newman's Own salsa, spaghetti sauces, salad dressings, and lemonade knew more about business than I did, and he had few illusions about The Nationas a business proposition). Sam thought that The Nationmight make a fascinating case study -- not for the M.B.A. program but, rather, for a special course given for owners, presidents, and CEOs of companies with annual sales ranging from several million to several hundred million dollars. This is the Owner/President/Management Program (OPM), whose initials coincidentally also stand for "other people's money" (an apt acronym, it seemed to me, since the course -- which is offered in three units of three weeks each over a three-year period, to accommodate the busy schedules of its students -- cost an astronomical $12,000 a year).