Big changes at the Wine Advocate- Parker reportedly cashes out and gives up editorial control

[Brad Kane]

This is just hitting Reuters and the Wall Street Journal, but it's being reported that Parker has sold a controlling interest to three unnamed subscribers from Singapore independent of the wine industry, has given editorial control to Lisa Perrotti-Brown MW, will start taking advertising and is eliminating the print edition. They're also opening up another office in Singapore, which Ms. Perrotti-Brown will manage all content , will add coverage of the growing Asian wine industry and will have a separate edition aimed at corporate clients.

Reuters article here

Wow! The end of the Robert Parker era as we knew it.

[Nancy Dolce]

Wow, it is not April 1st and this is in Reuters, not the Onion. Interesting reading!

[PeterH]

The end of WA as we know it.
Fine with me, and a good move for RP. Maybe he will become one of those bloggers.

P Hickner

[Eric LeVine]

It's funny, there was a letter from Bob posted on the eRP forum that made it sound like no big deal. However the WSJ and Reuters articles are both more scathing and release a number of details not mentioned in the letter. Fascinating.

[Brad Kane]

It's funny, there was a letter from Bob posted on the eRP forum that made it sound like no big deal. However the WSJ and Reuters articles are both more scathing and release a number of details not mentioned in the letter. Fascinating.

Yep. I was surprised by the disconnect between the two.

[M.Kaplan]

An almost perfect ending. The only better ending would have been a sale to Jay Miller and a consortium of Spanish buyers, promoted by Pancho Campo. Or that the Singapore buyers are the Kurniawan family.

Does this mean that Antonio will revise his scores downward of the horrible California wines that he highly rated while the heir apparent? Better sell those ta$$tings while you can! Oops, too late.

Don't let the door hit you on the ass on your way out, Bob.

Who says that schadenfreude is a bad thing?

[dcornutt]

According to Bob Parker, he is still the President and CEO and owns some interest in the company. Sounds like an expansion move. Smart move to get rid of the print edition too. That is a big resource user. The Singapore guys are probably business folks who wanted to help him expand. A good move for him to slowly divest. Haven't read the articles yet. BTW, looks like he will still do Bordeaux and Rhone.
I don't think he is giving up US editorial control at present. Only Asia. Sounds like Lisa is going to be the editor of TWA Asia.

There will be more to this story when he finally sells the US part and his ownership part to a group of investors. That will happen at some point.

[dcornutt]

Lettie's article makes a couple of key points that changes the whole dynamic for me.

1. Lisa is getting editorial control over the entire publication.
2. The main office of the publication TWA is moving from Monkton, MD to Singapore. (This is the symbolic big one)

That to me indicates a total sellout to the Singapore guys with Bob holding a very small interest. Wow. If true, this is a little different than the nice letter on the TWA site.
Hope this works out. Selling advertising etc is going to really change this publication.

[Bill Klapp]

And let us not fail to savor how foolish Parker has made his good friend Lettie Teague look by feeding her Pat's famous crabcakes and setting her up to write her puff piece of last month, the jist of which is completely at odds with the new reality that had been or was being negotiated. (As if Lettie needed any help looking foolish.)

"He gently shooed aside his bulldog, Betty Jane (he’s almost as impassioned about dogs as he is wine), and offered some semiconvincing assurances. “There is no apparent heir, although Antonio has the work ethic and the integrity to do it.” But, he added, he had no intention of retiring. “I still work 12-, 14-hour days when I’m on the road,” he said, though he no longer tastes hundreds of wines a day in his home office as he once did.

Parker will probably end up donating a good portion of his 10,000-bottle cellar to charity one day, as his daughter, Maia, prefers tequila to wine.

Parker said he has entertained offers to buy his newsletter over the years, including three from “hedge-fund guys,” but so far he has refused them all, in part because he would not relinquish editorial control of the newsletter. And with that, Parker announced that lunch was almost ready — although there was time for a brief cellar tour."
Did Mr. Wine Ethics out-and-out lie to her, no, but the best face that one can put on it is perhaps that he has streadfastly failed to answer all inquiries about outside investors. In a private company, that is, to be sure, his legal prerogative, but the ownership/transition/succession discussion has gone viral on the Squires board several times, and the consumer's advocate offered very little useful information. Interesting also that there have been outside investors since at least 2001. I wonder if Galloni is feeling a little squeamish about his decision these days, or if he knew from the get-go that he was not destined to be heir apparent. Surely he must have believed that, whatever his future was to be, Parker himself would call the shots. He does have a huge leg up on the "wine conference" business or whatever one should call it...

[John Morris]

If you Google "robert parker selling the wine advocate," you'll get a link to the WSJ that does not require a subscription.

[Magno González]

I like the last sentence of the article: "The idea that a 95-point wine is always better than an 85-point wine is an idea which deserves to die. And this deal, with luck, might just hasten its demise."

I don't care for points or critics for a long while, but still think is a sad ending, if it really is the end.

[ekovitch]

I don't know what the terms of sale were, but Parker is 65, and he has worked hard enough to deserve retirement. I am happy for Bob that he cashed in. From the other side of the coin, I can't imagine what the value is of what the investors purchased. Eventually, with no Parker, what is the future worth of the website and content? I think that it is the road to the end.

[Bill Klapp]

Errol, a good point, even for a long-time Parker baiter and detractor like myself. Parker absolutely does deserve to cash out. And so do smart subscribers! (My last issue is on the way this month.)

[Bill Klapp]

It gives you two and one-half paragraphs for free, John, but thanks, it was all I needed. I would have stopped reading after Lettie dragged out the "fiercely independent publication" canard yet again. Please, Lettie, off to see The Wizard and get a brain!

[stevetimko]

With all due respect to Antonio, Parker is The Wine Advocate. I am not sure it will attract much advertising without him in control.

[Brady Daniels]

Accepting advertising is a major step that loses differentiation from other publications. I'm not saying it's not the right thing to do, but it is a big deal.

Killing the paper version makes sense to me. It will allow for more timely publication of notes and articles, without having to hold them back to be fair to the Luddites.

When Galloni took over California and Burgundy, didn't Parker name him heir-apparent on the board? I wonder if that is still true.

Maybe Lisa Perrotti-Brown's first editorial action should be to deduct two points from every past review, to give some room for improvement. And allow each region no more than one 100 point review per year. This is the chance to reverse grade inflation.

[Brady Daniels]

With all due respect to Antonio, Parker is The Wine Advocate. I am not sure it will attract much advertising without him in control.

How much control can he exert when editorial decisions are made in Singapore, while he sits in Monkton?

[John Morris]

Bill - See my edited post above for a route to the full WSJ story.

As for the sale, I figured this was the endgame when he went beyond a second writer (Rovani, then Thomases, then Schildknecht). He had a very successful business he couldn't monetize so long as it was a one-man operation.

The WA's 55,000 subcribers make this a $4 million-a-year business. That's terrific if you own it, but how much of that income will survive Parker's retirement? And what does this look like as an investment now, with Parker still writing? Here are some back-of-the-envelope calculations

Suppose Parker nets $2 million a year now after printing and mailing costs, other writers' salaries, wine purchases, travel, etc. The new owners will have to pay him something substantial as chief writer ($1 million year?). That would leave (hypothetically) $1 million in net income. And they'd have to pay him for the business -- say $4 million (1x revenue). They'll want a return on that investment. A 20% projected return (quite plausible for this kind of expansion capital investment) would be $900,000, or almost all the rest of the profit.

In short, there's not a lot of upside to the buyers to compensate for the risks unless you can really expand the revenue base.

If you pencil it all out, it's a challenge to get to a deal that (a) makes it attractive to Parker to cash out vs. staying on and collecting the profits in WA's current form and (b) makes it attractive to the buyers.

If you assume Parker clears $2 million a year now, the sale itself is unlikely to net him more than a couple of year's income.

[ekovitch]

Nice analysis John, especially for this early in the morning! I bet they paid a lot more than $4 million. My guess is that the group wanted the prestige to hob nob with the Emperor, and all the trappings of owning a prestigeous wine journal. Something that money can't buy (OK I guess money can buy it!), and that they are rich enough to pay for this.

[mike pobega]

How else could they (the Asians) gurantee Carruades De Lafite success going forward? Smart move. (now ¥3707.17 per bottle!)

[Paul Jaouen]

Maybe Squires will get promoted to reviewing Chinese wines.

[Alan C h a n]

John, he must be getting far more than that - he said "offer he couldn't refuse" - a few years revenue isn't that.

Presumably the new owners are counting on expanded base with Asian subscribers, events, advertising to shift the paradigm of the model completely to justify a big number to RP.

[GregT]

Funny Mike!

It all makes sense to me - even if it's only a few year's income, he probably has enough to live out a comfortable retirement and for a couple years will still have the biggest name in the biz, although that's going to be a finite period. The biggest surprise is Lisa. She's really an unknown even now and I wonder why he felt it would be better to put her in charge than someone else, particularly Galloni, who he pretty much anointed just a few years ago.

David can always go great work, but I don't see him signing on as an employee. Squires either, although he's a good writer and critic. Neal has really stepped up and would be a great addition if they can keep him. Antonio can probably go back to doing the Piedmont Report and do as well as he would were he an employee.

And nothing about Parker's health. Seems to me that would explain a lot - 65 isn't all that old after all. I wish him a long and healthy life. He's got a lot of wine to get through.

This was surprisingly cold however, and makes me think he's really relinquished pretty much all control:

Ms. Perrotti-Brown said the company is discussing terms with its correspondents, who include lead critic Antonio Galloni, as well as David Schildknecht, Mark Squires and Neal Martin, whom she and Mr. Parker hope will sign on as employees. If they decline? "There is a plethora of good wine writers out there. It's a buyer's market," she said.

[Frank Drew]

How long has Ms. Perotti-Brown been with TWA, and how did she worm her way onto the top of the heap?

[Nathan Smyth]

Maybe Squires will get promoted to reviewing Chinese wines.

In fairness to the Orient, they've got a bazillion acres of terroir sitting at prime latitude for Vitis vinifera.

If there's not a huge problem with the tradewinds or the jetstream or the orientation of the mountains [or something like that], then I don't see why they shouldn't be able to make some very nice wines.

Unless, God forbid, they should get the Pierce's Disease.

[GregT]

Well it does seem like Lisa has already stepped in as proofreader. In his note to subscribers, there aren't a million misused ellipses!

And as far as John's figures go - if there are 50,000 subscribers, how many of those are businesses vs individuals? My guess is that there are fewer individuals and more businesses. They're not going to be receptive to advertisements for Piaget watches and such.

[Bill Klapp]

Anybody who has access to the other board needs to check out the thread on this. After a couple of the clueless and perennial buttkissers offered congrats, it has turned REALLY nasty!

John, nobody knows for sure but Parker and other insiders, but there are persistent rumors that WA circulation peaked at 55,000, and is more like 30,000-35,000 today. A lot of subscribers bailed out when the Squires board was closed. I just let my subscription run out. And this latest move is going to cost them a whole lot more. Greg is probably right that it will end up as a trade publication for the ITB, and not even that for long without a bunch of wine buyers hanging on every score. Unless the enterprise is reborn in a Chinese-language edition that SOMEBODY will buy, the money will need to be made in "wine conferences". People are going to get tired of that quickly enough, too. I am hearing that some of Galloni's tasting events were not selling out already.

Oh, and if Lisa P-BJ really thinks that there are a "plethora of good wine writers out there," then the investors need to kiss their money goodbye right now. That comment reflects sheer ignorance of what is going on in the real wine world...

[A.Gillette]

Seems to me like this would be a great time to welcome our friends from the Parker board to Wine Berserkers!
A

[ChaseHinderstein]

It's funny, there was a letter from Bob posted on the eRP forum that made it sound like no big deal. However the WSJ and Reuters articles are both more scathing and release a number of details not mentioned in the letter. Fascinating.

I was thinking the same thing. The letter focused on a mild transition of power, largely consisting of editting typos and the addition of new features for subscribers. The WSJ article talked more of editorial control going to new parties, a focus on the Asian markets, and an unattractive comment from the new editor regarding the current writing staff.

[Frank Drew]

Chase,

I, too, was struck by what seemed that unnecessarily snarky final comment by Perotti-Brown (essentially, "If the current writers want to join us, fine, if not, no big deal, they're are plenty more where they came from.")

Perotti-Brown is based in Singapore, right? TWA is being sold to three investors from Singapore. Is it out of the question to wonder if P-B had some hand in putting that deal together, perhaps with the proviso that she ends up in the catbird seat? A coup d'etat at TWA?

[Bill Klapp]

Seems to me like this would be a great time to welcome our friends from the Parker board to Wine Berserkers!
A

Ahem...take a look at some of the threads over there. I, for one, will urge Todd to impose a strict immigration quota!

[Mark Golodetz (Online)]

Excerpt from Parker's secret diary (Monkton Library archive released 2052)
September 14th 2012
Just received a mega million offer from an Asian conglomerate to buy me out. Bears considering, in fact, should probably think it through.

Current status of WA

Most powerful critic still, but influence beginning to wane.
Getting tired, and very run down.
Lots of money!
Given Asian purchasing, probably maximum value now.
Bored with editing and the other crap that is part of Advocate, but if it's mine, can't afford to give it up, Don't want another Jay Miller debacle.
No relatives interested or capable of taking over.
Wonder what Galloni is up to, and can he afford to match this offer?
They want me to stay on, and I can continue to write about Rhone and Bordeaux.
Megabucks to sell, and plenty of dollars to stay on as top scorer.


Negatives
None.

Conclusion
Grab it before they change their minds.

[Brian G r a f s t r o m]

I like the last sentence of the article: "The idea that a 95-point wine is always better than an 85-point wine is an idea which deserves to die. And this deal, with luck, might just hasten its demise."

I don't care for points or critics for a long while, but still think is a sad ending, if it really is the end.

Which article are you quoting, Magno?

EDIT: Nevermind. I found it; the Felix Salmon blog: http://blogs.reuters.com/felix-salmon/2012/12/10/the-robert-parker-bombshell/

[Ken V]

Anybody who has access to the other board needs to check out the thread on this. After a couple of the clueless and perennial buttkissers offered congrats, it has turned REALLY nasty! ...

Bill, have some of those comments been removed? It is hard for me to think the posts there now are "REALLY nasty" by your standards. And I don't mean that as a dig.


BTW is there any truth to the rumor that you will be one of the new writers for the WA?

[David_T]

IMO one of the most interesting lines from the WSJ article was in the middle of the quote Greg posted:
"There will be changes in the Wine Advocate's staff as well; most of its wine correspondents will become full-time employees, instead of independent contractors. "We want to have more control over the reviews," said Ms. Perrotti-Brown"

Thoughts on this? The ability to pimp a score from one of the sponsored tastings they're now going to put on while lowering others to make it look like point-inflation isn't as bad as it's been with JM/RP?

Personally, I hope they aren't trying to standardize a TN style, as I get much more from Schildknecht's prose than the others. A brief comparison w/ examples I found on a retailer's website just now with a quick search:

Schildknecht: "Nicole Chanrion - who, amazingly, said she began picking last year already on September 10, yet at 12.7% potential alcohol - had only bottled her 2010 Cote de Brouilly two days before she poured it for me. Scents of fresh black raspberry set the tone for a vivacious and juicy, yet surprisingly plush palate on which piquant notes of huckleberry, toasted pecan, and crushed stone serve for counterpoint and savory salinity for saliva-inducement. This is a fine exhibition of Chanrion-s talents and those of the 2010 vintage. I would expect it to perform well for at least 4-5 more years. (The - at least, by this estate-s standards - deep, dark 2009, on which I reported in issue 190, is like many of that vintage currently showing its tannic teeth and bitter edge, yet also its complexity.)"

LPB: "The 2008 Pinot Noir gives a pale ruby color and aromas of warm raspberries and strawberries plus a musky/mushroomy/damp leaves undercurrent. Crisp, light to medium bodied, it has soft silky tannins and a medium-long finish. Drink it now through 2013."

RP: "More limited in availability, but still a bargain is the 2008 Cabernet Sauvignon (only 1,450 cases produced). It possesses a dense purple color, striking intensity and plenty of charcoal-infused black currant and blackberry fruit as well as a chocolate earthiness. This ripe, full-bodied, dense 2008 should drink nicely for a decade or more."

JM: "The 2009 is a nearly identical blend with the same elevage. Ripe, succulent, and impressively balanced, this outstanding value will also drink well for another 5-6 years."