The sale of California Business magazine by Los Angeles businessman Martin Stone to a Texas publishing group collapsed this week after an apparent disagreement over financing and the magazine's value, it was announced Thursday.
Stone, who writes a column in the magazine airing his views on politics and the economy, said he now intends to continue operating the monthly business journal and to assume the title of president.
The troubled negotiations, however, apparently resulted in the departure of California Business' publisher, Stone said. On Thursday, Karl Fleming, former Los Angeles bureau chief of Newsweek magazine, was named to the post, replacing Hershel D. Sinay, who also was president. Stone also named Jay N. Cole as vice president for marketing.
Just why the sale to the Texas group collapsed is unclear because the two sides tell slightly different versions of what transpired.
Last June, Stone agreed to sell the 70,000-circulation magazine to Dallas-based Commerce Publishing for $7.1 million. Commerce owns 13 business publications in four states, most notably the 48,500-circulation Texas Business magazine.
In an interview Thursday, Stone said he pulled out of the deal because the financing "came through in a distorted fashion," with him taking a secondary position on all notes. If for some reason Commerce defaulted on its payments, Stone would have had to wait until Commerce's banker was paid before he could collect any money.
However, E. Jack Martin, president of Commerce Publishing, said the two sides had agreed to the new financing position. What killed the deal, he said, is that, after getting a closer look at California Business' financial situation, Commerce lowered its offer to "considerably less" than the original $7.1 million.
"When we more fully examined everything at the magazine, its potential, its opportunities, where it really is today, we placed a lesser value on it than the owners did," Martin said. "We found a lot of current and long-term liability that we had not been aware of."
Stone said he initially wanted to sell California Business because "I am becoming very strongly interested in the possibility of owning a major league baseball team in Phoenix." To do that, "I would need all my investible capital."
Stone already owns the Phoenix Giants, the minor league franchise in that city affiliated with the San Francisco major league team.
Now, Stone said, he will keep the magazine because "the lengthy negotiations were so disruptive to the organization. They harmed the magazine. They caused the loss of some very good people," among them publisher Sinay. Stone also said others may be leaving, but he offered no details.
Sinay was traveling and unavailable for comment. California Business Editor Michael T. Harris referred questions about Sinay's departure to Fleming. Fleming, who started work Tuesday, said he was not on hand to know the circumstances of Sinay's departure.
Fleming himself is a veteran Southern California journalist. He worked for Newsweek for 12 years and was Los Angeles bureau chief from 1965 to 1973. For the past 8 1/2 years he worked for CBS News, first as managing editor of KNXT TV Channel 2, the CBS-owned affiliate here, and later as a producer for the network.
Cole, the new marketing vice president, filled a vacant post. He is a former associate to the publisher of Teen Magazine and for the past 12 years publisher and owner of Mammoth Publishing Co., publisher of a weekly newspaper and quarterly magazine.