Will Bill Reilly Become A Magazine Mogul?

In his prime, William F. Reilly played one hot game of tennis. "I used to be, I would say, by country-club standards, excellent," he says. But as he grew older, his game declined, and being intensely competitive, he says, "I couldn't deal with that." So he abandoned tennis and took up golf. But then something happened. In 1987, while president of Macmillan Inc., Reilly suffered heart trouble--nothing life-threatening, but enough to reshape his outlook. The result, he says, was a less competitive and "more mature" Reilly. In fact, at age 52 he has just taken up tennis again, with the view that it's still fun even if he can't slam the ball the way he once did.

But the new perspective hasn't softened Reilly's approach to business. After leaving Macmillan with $45 million--thanks to the dramatic runup in its stock during Robert Maxwell's 1988 takeover--Reilly is out there competing with the best of them. As chief of New York-based K-III Holdings, Reilly has spent the past two years building a publishing company. With 75% backing from investors Kohlberg Kravis Roberts & Co., K-III has six units (table), with expected 1991 revenues of $500 million.

GOOD FIT. Reilly is now poised for his biggest move yet. Industry executives believe that with a bid of around $500 million, he is the leading contender for Rupert Murdoch's nine U. S. magazines, which include New York and Premiere. If all goes well, a deal could be announced as early as mid-May. If he does not get the Murdoch publications, Reilly also has his sights on Harcourt Brace Jovanovich Inc. In January, K-III lost out to General Cinema Corp. in a bid for the publisher, but the deal has been stymied by bondholders seeking a richer price. Reilly says he is eager to bid again if General Cinema walks away.

Of the two possible acquisitions, HBJ seems the better fit. HBJ is among the top publishers of elementary and high school textbooks--as is Macmillan, which Reilly ran for eight years. Despite weakness in the elementary division and a "suffocating debt structure," HBJ itself is not in bad shape, he says.

The Murdoch titles are more of a stretch. Reilly has no experience in the consumer magazine business. On top of that, the magazine business is suffering its worst slump in years. Industry executives say that of the nine Murdoch magazines for sale, only three--New York, Seventeen, and Soap Opera Digest--are profitable, and one estimates Mirabella's losses at $10 million a year. A Murdoch spokesman calls those assessments "totally inaccurate" but declined to elaborate. Reilly won't discuss possible acquisition of the magazines.

Made rich by the Macmillan takeover, Reilly has more than enough money to keep him happy, he says. But it wasn't always so. An affluent childhood in New York's Westchester County changed abruptly when his father, a stockbroker, died. Bill was 13. Reilly says he worked his way through the University of Notre Dame. After college, he joined the army as a paratrooper but never saw combat. From there it was on to Harvard business school, and then to W. R. Grace & Co. as assistant to J. Peter Grace, among other jobs.

In 1980, Reilly moved to Macmillan. At the time, the publisher's market value was $150 million. By cutting a third of operations and then rebuilding with 60 small acquisitions, he made Macmillan into a $1 billion-a-year powerhouse. Raiders Robert M. Bass and Robert Maxwell liked what they saw, and in 1988 each made hostile overtures. Reilly teamed up with KKR in a rival bid--and nearly succeeded--but a litigious struggle ended with Macmillan in Maxwell's hands.

ODD ROLE. Reilly and KKR decided to stick together, and for the first few months of the partnership, Reilly was in the odd position of remaining president at Macmillan while he and KKR bought off pieces of the company. By February, 1990, Reilly walked. Charles G. McCurdy, chief financial officer at Macmillan, and Beverly C. Chell, its general counsel, came with him. Thus the name K-III: K for KKR, and the III for the three partners.

Reilly is known as a demanding leader with a talent for seeing to the core of things. Says Harry McQuillen, now president of Macmillan Publishing Co.: "He would take what was a very complex problem and reduce it to a few simple principles." For inspiration, Reilly turns to history. He has particular fondness for reading about great statesmen. His son, Tony, says his dad's favorite is Marcus Aurelius, the second-century Roman emperor known as a philosopher and bold leader. Nobody's calling Reilly a philosopher, but taking on Murdoch's magazines or HBJ would certainly enhance his reputation for boldness.


NEWBRIDGE COMMUNICATIONS Special-interest book clubs

HOME CONTINUITIES Children's books

WEEKLY READER Books and periodicals for schoolchildren

FUNK & WAGNALLS Encyclopedias and other reference books

INTERTEC PUBLISHING Trade magazines, technical books

K-III PRESS Railroad and shipping data


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