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

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.

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

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

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.

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?

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.

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.

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…

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

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.

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.

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.)

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!

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

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.

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

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.

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.

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