Shortly after midnight on Sept. 29, 1923, Willard M. Kiplinger labored over his typewriter on a page of telegraphic comments.
Among the issues he covered were rumors of an international loan to revive the German mark. He noted that "bankers take these rumors seriously in some cases, but they are foolish."
The letter, titled the Kiplinger Washington Letter, eventually spawned a $90-million publishing and printing company, producing Changing Times magazine and six business forecasting letters.
The Washington Letter, the granddaddy of newsletters, is an industry giant. Its latest figures show a circulation of 425,000--far exceeding that of any other commercial business newsletter, according to the Newsletter Assn.
During a time when intense competition has sunk many publications and forced others to overhaul their appearance, Kiplinger's newsletters have prospered without having to alter the basic format established on the first day.
Kiplinger Washington Editors Inc. employs 616 people; it had revenue of $60.7 million in 1986. In addition, a wholly owned subsidiary, Editors Press, had sales of $29.1 million. About 220 employees work at the Hyattsville, Md., printing company, which prints Kiplinger publications as well as other magazines, advertising brochures and special publications.
Kiplinger declined to disclose exact profits of the privately held company. But the company said that after employee profit sharing, taxes and contributions to charitable organizations, profits were about 10%.
Mission Has Never Changed
The family owned company has evolved through three generations of Kiplingers, but its mission, as articulated by founder Willard Kiplinger in a 1923 New York Times article, has never changed: to "report what businessmen need to know to look ahead, plan ahead and make the decisions that help them stay ahead."
This means Kiplinger publications do not report news but rather give advice for business decisions, according to Willard Kiplinger's son Austin, who is president of the Kiplinger Washington Editors Inc.
Accordingly, he said, he shuns the "newsletter" label, arguing that the company sells advice, not news. He refers to subscribers as clients, and says editorial meetings are "more like a gathering of partners" than like news media story conferences.
The decor of the downtown headquarters here--with its marble halls, wood-paneled rooms and leather chairs--exudes the aura of a law firm rather than a newsroom.
Austin Kiplinger's son Knight joined the Kiplinger organization in 1983 after working as the Washington bureau chief of Ottaway Newspapers, a chain owned by Dow Jones & Co.
He is editor-in-chief of Changing Times, a personal finance magazine that recently celebrated its 40th anniversary. Knight's brother Todd, who has been at the company 16 years, manages the company's assets.
Consistent Management Themes
Despite the differences in generations and professional backgrounds, the Kiplingers seem to speak with one voice about the company.
With uncanny consistency, they echo the same management themes: belief in conservative corporate financial planning, wariness of media conglomerates, skepticism of the glitzy and a devotion to keeping the company out of the hands of public stockholders.
But the strongest theme permeating each discussion is that of corporate benevolence, a theme that has meant the free use of a Florida resort and hefty profit sharing for all employees.
"My grandfather was a fervent believer in the free-enterprise system. He was just as fervent a believer in sharing the fruits of the free-enterprise system with all employees," Knight Kiplinger said.
In many companies, only the top executives receive bonuses.
But at Kiplinger, last year's profit sharing increased employees' incomes by more than a quarter of their base salaries. They received a combination of 12% in cash and another 15% in deferred profit sharing, which is invested for them.
The firm's Florida retreat, Bay Tree, is north of West Palm Beach. Willard Kiplinger bought it as a retirement home but never retired. For more than 30 years, any employee of the company has been allowed to go there for free with friends or family for up to two weeks. The retreat includes a large lodge and some small cottages.
"Again, I contrast that with the typical executive hideaway that some companies have that is used by the top executives," Knight Kiplinger said. "There is a collegial spirit, a spirit of generosity toward our employees . . . which is quite unusual. . . . People don't tend to leave."
The weekly Washington Letter costs $48 a year. Renewal rates have averaged 30% to 35% for first-year subscribers and 60% to 65% for the second year. But after that, renewals shoot up to between 85% and 90%. Nearly all its readers are outside the Washington area. "We don't write to Washington," Austin Kiplinger said.
Other letters include the biweekly Kiplinger Tax Letter, which costs $42 a year and has a circulation of 175,000, and the biweekly agriculture letter, which costs $42 and circulates to 25,000.
Also, three state-specific letters focus on the economies of Florida (30,000), California (17,000) and Texas (10,000). The California and Florida letters, published monthly, have annual subscription rates of $34. The Texas letter is bimonthly and costs $66 a year.
The letters still have the staccato style, with underlined phrases, that Kiplinger pioneered in his first issue. They are four pages long and chock-full of information. Items are often as short as two sentences, such as this recent tidbit from the Texas letter: "Rice farming will be poor. Worldwide surplus, prices depressed."
"Lord, how we condense," Austin Kiplinger said. But he said that clients are encouraged to phone or write for more details, adding that many do.
Often Not Profitable
Changing Times was launched after World War II and was geared to returning GIs who were buying homes, starting jobs and trying to manage their money. It has a circulation of nearly 1.4 million--more than twice the combined circulation of the newsletters.
But Changing Times has never been a big moneymaker. In fact, it has been profitable in only about half of the years it has been published, Kiplinger said.
For 33 years, the magazine did not accept advertising. The Kiplinger letters had always been subscriber-supported, and the magazine was designed along those lines. But rising printing and postage costs and growing competition from personal-finance magazines prompted changes in its strategy.
In 1980, the magazine began accepting ads. That move was coupled with a decision to invest heavily in sprucing up the magazine. The staff increased the use of color and graphics, improved the quality of paper and changed some editorial content.
Despite the changes, circulation has remained stable during the past few years. Renewal rates after the second year are 65% to 70%, a reflection of the stiff competition Changing Times has faced from Time Inc.'s Money magazine and other personal-finance publications, Austin Kiplinger said.
Named a 'Hot Magazine'
Austin Kiplinger said he still believes the investment will pay off. A few months ago, Changing Times was named one of the 10 hottest magazines of 1986 by Adweek magazine, which noted Changing Times' impressive growth in advertising revenue during a period when much of the magazine industry was sluggish.
Ad revenue for Changing Times was $15.4 million in 1986, up 26.5% from 1985. The magazine had 132 ad pages, up 26.9% from the previous year.
By comparison, ad pages fell an average of 2.1%, and ad revenue rose just 2.7% for the magazine industry, according to Adweek.
Total advertising revenue and ad pages for Changing Times still lagged behind Money, which had $71.6 million in ad revenue and 1,493 in ad pages in 1986.
Austin Kiplinger said the Kiplinger organization is willing to wait patiently for ad revenue to catch up with costs, adding that he believes there is a strong market for the magazine.
Benefits of Being Private
"That's where we have the advantage of being a privately held corporation. If we had stockholders saying, 'Why are you spending so much? Why aren't you making more?' we would have been hard put to do that," he said.
Knight Kiplinger echoed those feelings, saying that "public shareholders, coming to our meetings, clamoring for their pound of flesh" would probably prevent many of the activities the firm considers important, including heavy investments in the magazine, employee profit sharing and growth through retained earnings.
He added that the company has rebuffed many inquiries about mergers or sales, because "we don't want to be part of a publishing conglomerate. Too many American companies today fixate on short-term gain. They don't have the courage to stay with a new product to see it through to success."
Both generations of Kiplingers say they have no radical plans for the future. Austin Kiplinger said that when he wants to gauge the health of his company, he keeps his eye not on sales, but on renewal rates, because that is an indicator of how helpful the clients find the letters.
"We're in business to help our readers succeed," he said. "If they succeed and prosper, we will succeed and prosper."
Thus, economic hard times tend to hurt sales. But so, too, does too much calm, said Austin Kiplinger, noting that sales dropped during the Eisenhower Administration, when business executives were particularly secure.
The best sales climate, Kiplinger said, is "prosperity with worry."