Tony Elliott, founder and chairman of the Time Out empire, is not a man used to begging. But in 2008, his company, which had already been battered by the digital revolution, was in dire straits thanks to the recession. So Elliott went to his lender, Lloyds Banking Group, hat in hand. The meeting was tense, unpleasant.
“They said, ‘Tony, you keep on never getting the finances sorted out. Why don’t you look at what you really need?’” Elliott says.
Ultimately, Lloyds agreed to lend him about 6 million pounds, or about $12 million at the time—on the condition that he would sell the business. “It was a ghastly, ghastly, ghastly period; it was incredibly depressing,” Elliott adds.
Unable to find a buyer, he was forced to repay the debt himself, borrowing against his house in London suburb St. John’s Wood. He’s still bitter about the incident: “I put everything at risk.…What they were saying was, ‘We’ll let Time Out have up to 6.2 million, we’ll whack them for a fee, and we’ll have Tony sell the business!’”
It was quite a contrast from Elliott’s heyday. Now 64, he’d started Time Out on a shoestring—birthday money from his aunt—in 1968. But back then London had a vibrant underground music scene, and those were carefree days. The ads started flowing in, and when Elliott, who wasn’t so much in it for the money, ran into cash flow problems, he borrowed from his distributor. He hung with fellow independent publisher Felix Dennis and briefly dated Anna Wintour. Time Out started as a one-sheet pamphlet that he handed out himself and dedicated itself to the issues of the day: racial equality, police harassment. Over the years it shed its radical roots and swelled to a 110,000-circulation weekly at its peak, but it remained the trendy voice of London. There were troubles, sometimes, the kind that came with so many counterculture magazines—he ran it as a cooperative until 1981, and when he decided to give that up, his employees went on strike. Some split off to form their own publications based on the Time Out model. But they couldn’t compete; Elliott had the formula down.
Fast-forward to today. Elliott is sitting in Time Out New York’s conference room, looking every bit the aging hippie in his customary Liberty shirt and black jeans. This is no longer his conference room, no longer his offices. Elliott has been forced to sell much of his empire to Oakley Capital, a London private equity firm. He’d already given up 50 percent of Time Out London to Oakley in the fall of 2010, and had ceded ownership of Time Out Chicago, his only other U.S. edition, to another investor. In May of this year, Oakley bought 66 percent of Time Out New York.
Still, Elliott manages to sound optimistic. “I’m a practical person,” he says. “I accepted, because of the downturn and our debt position, that something had to happen. I have absolute confidence that the percent I have today is going to be worth hugely more than if I held on to 100 percent.”
But this has to be hurting him. Elliott, after all, had dreamt of starting Time Out New York since 1974, when he visited the city for the first time. At the Chelsea Hotel, where he was staying, Elliott had gathered all the local papers and spread them out around him—he liked to know what was going on in a city, even if he wasn’t actually planning to go anywhere. But reading those papers, all he got was frustrated.
“I was looking at [everything] and saying, ‘What the fuck is on tonight?’” he says. “The information was unbelievably badly done!”
Still, it took him 20 years before he could finally bring Time Out across the Atlantic. When he did pull together the investors he needed to launch the magazine, people in the city’s media world thought he was crazy. The economy was still recovering from a recession, he was a relative unknown from the U.K., and the market was already saturated. But then, when Time Out New York launched in 1995, it shut the naysayers up. It seemed he’d launched the magazine at the perfect time. The city was on the upswing—crime was coming down, once-gritty neighborhoods were gentrifying, Silicon Alley was emerging. It was a time of infinite possibilities for TONY.
A parade of spunky, young journalists, undiscovered talents, flocked to the new magazine and its office, a grungy former garment shop on Broadway near a handful of dot-com startups. The magazine brought some of that cool Britannia thing to the States, refined the short, smart, crafted cultural review, and quickly became the cultural touchstone for young New Yorkers at the time.
“It was raw and fun and unpretentious, and was a place that made you feel that everything was happening,” one former staffer says. Every week, it seemed, there was another going-away party, another staffer being sent off to a fabulous new job—future stars like Brandon Holley, now editor-in-chief of Lucky, and Adam Rapoport, who recently became editor of Bon Appétit.
Elliott was a largely benevolent if demanding boss, and he involved himself in every aspect of the magazine. “He’d go down every row and talk to everybody about anything they had written,” Holley recalls. By Elliott’s own admission, he’s incredibly exacting about details.
“Once, someone accidentally opened up the file containing the logo and shifted the text something like 1/128th of an inch,” says Cyndi Stivers, who was the editor of the magazine when it launched and later became its president. “None of us noticed it, but he did, immediately.”
The success of TONY fueled Elliott’s grand plans—he wanted to start a string of editions in major cities like Los Angeles, San Francisco, D.C., and Boston, which would present a compelling national ad buy. Overseas, he was expanding in the U.K. and to Paris, although both ventures ended up being short-lived. And by licensing the Time Out name, he eventually spread his empire to comprise 33 city magazines from Cape Town to Dubai, along with dozens of travel magazines, city guides, and books.
But the world was changing. Even as Elliott was planning the rapid, global expansion of Time Out, the online revolution was starting to assert itself. He and his company had survived an onslaught of new print listings rivals, but the Web caught Elliott flat-footed. Time Out New York didn’t even have a website when it launched, and when one was started, it had only one dedicated staffer. In the meantime, websites like Citysearch and established publications like The Village Voice figured out how to take TONY’s listings business and make it work online, and the pioneer was left in their dust.
It’s true that few print publishers have successfully figured out how to cope with the digital age, but Time Out was particularly vulnerable to the Web, where its core offering was so easily replicated. Elliott’s critics think he just didn’t see how transformative the Web would be. “He felt, ‘I made it and I can make it again,’” says one investment banker who had dealings with Elliott. “But this was such a fundamental shift. He missed the boat.”
Elliott is defensive of his digital track record, saying he was low on cash to invest online in the early days, and he’s quick to point out that few people saw how pervasive digital media would become: “I don’t remember anybody saying, ‘Fucking hell, we’ve got to have a website.’ Online’s only really taken off after the millennium. And even now, it’s still growing.”
But he never came up with a coherent strategy, flirting with various pay schemes before going free. His sites around the world don’t share a common platform, which has likely hampered their growth. Now, he says, he wishes he’d started Time Out Chicago as a digital product.
There were other problems, too, and they started mounting in the late ’90s.
“Time Out used to be an automatic inclusion on the advertising schedules…maybe it got too arrogant,” Adam Crow, from the media buying agency Mindshare, said of the London edition in a 1999 interview with The Evening Standard. “It used to be very popular in the early nineties, full of good ideas, but I haven’t spoken to anyone from Time Out in the last two years.”
Time Out had profitable years, but Elliott had a high tolerance for losses. They were bound to catch up with him eventually. It didn’t help that while the magazine industry was consolidating around him, Elliott clung to his independence. He’s admittedly more interested in ensuring the quality of the product than in the nuts and bolts of the business, but even so, he largely ran it himself until 2009 when he appointed David King, a former BBC finance chief, to run the day-to-day operations.
“What I’d always hoped was, I’d never ever end up selling the business,” Elliott says. “Control was always going to be a difficult issue with me.” (Indeed, Elliott was never far away from the company; in early 2005, he had surgery for prostate cancer on the eve of Time Out Chicago’s launch, but he still flew to Chicago for the kickoff.)
Elliott now regrets not having struck a deal with any of the big publishing houses. Twice, he rebuffed Condé Nast. In the ’70s, Condé offered to invest in Time Out London for 30 percent equity. But Elliott didn’t like the idea of switching to Condé’s distributor, so he turned it away. More recently, lunches with Jonathan Newhouse, who was running Condé Nast’s international business, led to talks of a partnership, but Elliott balked when Condé insisted on having control. “I told him that he had ‘crossed the line’ and I was quite cross!” Elliott recalls. In hindsight, the partnership would have been a “good fit,” he says. “Had Condé Nast become our partners, I think we would have been in a completely different place.”
He was willing to look for investors, though, and he courted some at various times over the years. But his insistence on retaining ownership, his financial expectations, and his suspicions of bankers and their focus on the bottom line would prove to be deal breakers.
In the process, he left sore feelings in the banking community. “He’d been approached by every single bank about investing in Time Out, buying Time Out,” the investment banker says. “He’d get very close, then he’d back away. He didn’t want to give up control or share control. He pissed off a lot of people. He wasted a lot of people’s time; he got a lot of free advice.”
Looking for a way to get capital without giving up too much control, at one point Elliott also looked for investors willing to put money in only to the online side of the business. But with his debts mounting, Elliott finally tried to sell in 2009. But by then, the would-be buyers didn’t see the same value in Time Out that he did, and he didn’t get offered anything near the 12 million pounds he was looking for.
“As soon as the financial buyers started to see the numbers, Tony backed off, knowing he wouldn’t get the kind of valuation he wanted,” says Reed Phillips of New York media bank DeSilva + Phillips, one of the multiple advisors Elliott has retained over the years.
Finally, in 2010, Elliott handed Oakley Capital half of the London edition and most of the company’s non-U.S. holdings for the equivalent of about $23 million and, more recently, 66 percent of TONY for $23.9 million. In exchange, Oakley erased Time Out’s roughly $9 million in debt and provided about $8 million in initial investment capital. In the process, TONY shed 13 jobs, in addition to the nine positions it had already left unfilled. The deal happened almost by accident after a chance meeting a year ago. “I remember we got on well because he doesn’t see me as a typical private equity person,” Oakley founder Peter Dubens says of Elliott. “He’s very proud, and should be, about the brand he built.”
The deal requires Time Out to meet certain growth targets—if they’re not met, Oakley may increase its ownership stake. Elliott is philosophical about the deal, though. Ultimately, he says, it became clear that despite his fight for independence, “owning 100 percent wasn’t doing a lot for me—I’ve never been paid a dividend— and it absolutely wasn’t doing anything for the business.”
Besides, if Time Out has a future, Oakley is it. The takeover comes along with a major infusion of capital and expansion plans that might rival even the grand vision Elliott had in the 1990s. The company is now planning to launch digital guides in Los Angeles, San Francisco, Miami, and Washington, D.C., starting early next year. It wants to have editions in 50 cities by some time in 2013. And Oakley’s Dubens wants to take the still somewhat moribund Time Out websites and transform them, building a common Web platform that would take the brand beyond just listings. “You should be able to sit in Sydney and know you’re coming to London and be able to book theater seats, have things recommended to you that you know you’ll like, have mobile applications that keep you up to date,” Dubens says.
Realizing this ambition will be harder and more expensive today. While Time Out waffled with the Internet, the world moved on, and the competition for readers, advertisers, and talent has stepped up. Time Out’s greatest days may be over. But Elliott’s optimism is unfailing. “We’ve been through some shit times,” he says. “But things are pretty good.”