Norman Pearlstine knows a thing or two about business journalism. As managing editor of The Wall Street Journal, he directed the newspaper's coverage of the triumphs and travesties of 1980s capitalism. That may explain why Pearlstine seems anxious during an interview about his own entrepreneurial venture, Friday Holdings LP, a year-old media investment company. "Either this will make me look like I haven't done enough," he says, "or it will look like I'm promoting myself."
Of the latter, he is clearly innocent. Pearl-stine has kept a stubbornly low profile since he formed Friday Holdings in April, 1993, despite having three highly visible partners: Barry Diller's QVC Network Inc., Fort Worth investor Richard E. Rainwater, and Para-mount Communications Inc. How much Pearl-stine has accomplished, though, is a matter of some debate. Despite looking at two dozen media properties and more than 300 proposals, he has made only one deal: acquiring a market-research firm for about $10 million.
"BAD LUCK." Media watchers aren't blaming Pearlstine for the slow pace. They say he has been frustrated by the very partners that won him so much publicity when he first announced the venture. "He has had pretty bad luck," says one investment banker familiar with Pearlstine. "Two of his partners ended up at war with each other." The two, of course, are Diller and Para-mount--predator and intended prey in the five-month takeover battle eventually won by Viacom Inc.
Pearlstine insists his partners have been fully supportive. Indeed, he says Diller and former Paramount Chairman Martin S. Davis signed off on his deal to buy market researcher BIS Strategic Decisions the same week that a Delaware court broke up Paramount's merger plan with Viacom, midway through the takeover battle. Still, he acknowledges, it's tough getting time with people who are so busy.
That may not change, even now that the battle is over. For one thing, Paramount's new owner, Viacom, still has a passel of worries, not the least of which is its troubled merger deal with Blockbuster Entertainment Corp. Indeed, Viacom Chairman Sumner M. Redstone hasn't been able to meet Pearlstine yet. What's more, Viacom's heavy debt load will constrain its ability to dole out funds: "This is one of the more modest investments we will make," says Thomas E. Dooley, executive vice-president of Viacom.
Unlike some venture capitalists, Pearlstine doesn't have a pot of cash to dip into. His seed capital consists of a few million dollars to pay for office space and salaries. As general partner of Friday Holdings, he must bring projects to the limited partners, who then decide whether to back them.
SELLING THE STORY. Pearlstine says he would rather walk than run anyway: "People make a lot of mistakes by feeling compelled to move quickly." After leaving the Journal in 1992, he took several months to scour the media landscape for his niche. Pearlstine was drawn to the nascent business of digital media. With Friday Holdings--which he named for his wife, author Nancy Friday--Pearlstine plans to create an array of print and electronic products that explain the revolution in communications to a business
Buying BIS from Nynex Corp. was the first step. The company sells information about technology to clients in eight countries. But Pearlstine has bigger plans for it: He wants to expand BIS's $25 million in revenues by delivering its reports electronically. And he may use it as an information resource for Friday's other business: trade publications. Last October, he hired respected journalist Denise Caruso to start a newsletter focusing on digital technology.
Friday Holdings has ventured after less esoteric publishing properties, but it has come up short on price. Pearlstine studied BPI Communications, a trade publisher that owns Billboard, Adweek, and The Hollywood Reporter. But Dutch publisher VNU ended up buying it for $220 million. And Pearlstine considered investing in Wired, a hot new magazine about the digital age. The publishers were seeking $3.5 million for a 15% stake, though, and Friday Holdings ceded the field to media mogul S.I. Newhouse Jr.
Now, Pearlstine says he is focusing on starting--rather than acquiring--magazines. One possibility is a publication that would compete with Wired, but would have more of a business feel. Pearlstine has hired Peter W. Eldredge, former publisher of Newsweek, to sound out Madison Avenue. If he did launch such a magazine, Pearlstine would probably do so in a joint venture with another publishing company.
Pearlstine has a prodigious track record in starting publications. He helped launch the Wall Street Journal's Asian and European editions, and he oversaw the birth of SmartMoney, a personal-finance magazine backed by Dow Jones & Co. and Hearst Corp. But with well-heeled players such as Newhouse entering his niche, Friday Holdings faces formidable competition.
RISKY STANCE. S. Christopher Meigher III, a former Time Inc. executive, has raised an estimated $60 million to bankroll his new media company, for example. But Meigher Communications is buying only established magazines, which it hopes to expand into electronic versions. "We're basing our company on the relationship between magazines and existing readers," he says. Starting from scratch, without any readership, says Meigher, is a riskier proposition.
Still, Pearlstine shouldn't be underestimated. He gets regular counsel from Diller and Rainwater. The QVC chairman advised him to hire Caruso, who had been editor of the newsletter Digital Media, which focuses on multimedia. And both partners say they are unconcerned by Pearlstine's methodical pace: "It's a new world for him," says Diller. "He has put together some very good things early on." Pearlstine has other powerful friends, too, including his old Journal colleague, Dow Jones Chairman Peter R. Kann, and producer James L. Brooks. Kann says Pearlstine approached Dow Jones about a joint venture if Friday Holdings succeeded in acquiring BPI. Dow Jones passed on that proposal, but Kann says he is open to others.
Pearlstine promises a string of announcements this year. Caruso's newsletter starts appearing next month. And he says Friday Holdings is involved in three or four other deals. Pearlstine has even begun turning up at conferences as a proponent of the Information Superhighway. "For all the hype," he says about the media industry, "something dramatic is happening." Now, if Pearlstine could only generate some drama of his own.
THE PEARLSTINE FILE
AGE 51 BORN Philadephia
-- A.B., Haverford College
-- L.L.B., University of Pennsylvania
-- Postgraduate work in securities law at Southern Methodist University
-- Correspondent and editor, Wall Street Journal, 1968-78
-- Executive Editor, Forbes, 1978-80
-- Managing Editor, Wall Street Journal, 1983-91
-- CEO, Friday Holdings, 1993-
PERSONAL Married to author Nancy Friday