Optimism at Curtis

The 300 stockholders who assembled quietly in a building on Philadelphia's historic Independence Square had no hesitancy in giving the Curtis Publishing Co. exactly what it wanted. By an overwhelming margin, they approved a management proposal for refinancing payment of some $30.5 million in mostly overdue debts.

Behind the proposal stood six banks --two of them already Curtis creditors --willing to underwrite this obligation and to give the company another five to seven years to pay it off. The banks were also ready to advance an additional $4,500,000 in fresh working capital. From a quarter never known for faith in bad financial risks, this seemed a healthy vote of confidence--and the stockholders clearly felt the same way.

In Sore Need. Curtis' principal financial savior is a short, Russian-born, multilingual financier named Serge Semenenko, 60. Vice chairman of Boston's old and eminently respectable First National Bank, Semenenko has long enjoyed a reputation in banking circles for rescuing failing corporations with timely infusions of credit. Among his patients: the Hearst publishing empire, which he helped cure, in the early 1940s, of a disastrous indebtedness of nearly $150 million. In the fall of 1962, when Curtis' new president, Matthew J. Culligan, approached Semenenko, the venerable magazine-publishing house stood in sore need of Semenenko's kind of resuscitation.

Until 1961, Curtis, which publishes the Saturday Evening Post, Ladies' Home Journal, Holiday, American Home, and a children's magazine named Jack and Jill, had rarely had a bad year. Then the tide turned with sickening swiftness, and it began to look as if Curtis might never again have a good season. The company lost $4,200,000 in 1961, a staggering $18.9 million in 1962. Advertising accounts evaporated along with profits, and the word spread that Curtis was mortally ill.

Despite Curtis' calamitous balance sheet, Banker Semenenko apparently disagreed with such prophecies. The company was making a sturdy effort to recover on its own; new management and editorial teams had swept in to change the face and direction of all five magazines. Culligan, a former advertising man, not only hustled new accounts but ordered stern cuts in Curtis' overhead. He chopped 2,300 names off the payroll, at an annual saving of $10.3 million. Curtis' papermaking subsidiary, New York and Pennsylvania Co., which had been charging the company $214 a ton, found ways to cut the price to $178 a ton. In all, Culligan said, annual expenses were cut by $16,000,000.

Impressed by such economies, Semenenko was convinced that Curtis was on the road back to health. Although it will lose an estimated $3,400,000 for the full year, in October the company recorded a profit of $1,500,000. Because of this, Curtis will probably record a last-quarter profit as well--about $1,100,000. "I have seldom seen a company which could so quickly put its house in order," said Semenenko, and he carried the favorable message to five other banks.

Equal Advantage. The credit that Semenenko raised has given Curtis much-needed time to recover. Among its unresolved problems is a spate of five libel suits. Last summer a Georgia jury awarded $3,060,000 in damages to Georgia University Athletic Director Wally Butts, whom a Post article had accused of conspiring to fix a football game. The judgment has been appealed and may well be reduced--but four other suits, asking a total of $24.5 million, still await trial. It may be necessary, said Culligan, to establish a special reserve fund to accommodate such legal actions.

But no shadows could dampen the new mood of optimism about Curtis' future. At a press conference after the stockholders' meeting, Banker Semenenko hinted at Curtis plans to expand into book publishing, television broadcasting, and perhaps in other directions. "It will be advantageous," he said, "for Curtis to acquire such companies." Nor did he rule out the possibility that other companies might find it equally advantageous to buy into Curtis. "Many companies will want to merge with Curtis," said Semenenko. "Many have already made overtures."

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