Forbes’ Corporate Style Points to Cautious Manager

Several months ago, even savvy Republicans were snickering about publishing heir Steve Forbes trying to break into the seasoned pack of Republicans running for president in 1996. There were even suggestions that Forbes had been “snookered” into spending millions of dollars on political advertising that would amount to a pittance in the polls.

Now, with only a few weeks until the first caucus and primary votes, Forbes’ competitors are laughing no longer. Forbes is suddenly second in an eight-man field, nudging closer by the day to the front-runner, Sen. Bob Dole of Kansas. And his rapid ascent has sent the public, the candidates and the media scrambling to find out whether the man behind the multimillion-dollar advertising campaign has the ability and character to be president.

The quest for the man behind the ads, however, is more difficult than usual because Forbes has almost no public record to scrutinize. The flat-tax advocate with the quirky smile and the scholarly glasses emerges from the closed world of a billion-dollar private company that makes few public pronouncements. His only major public post was as chairman of the Board for International Broadcasting, which drew some criticism from governmental watchdogs during his tenure. And unlike other candidates, Forbes has declined to release his income tax forms, which some analysts say could show his wealth is somewhere around $440 million.

Still, there are a few clues emerging about who Steve Forbes is and how he operates. In interviews with friends, family, and present and former employees, the heir to the Forbes empire appears to be a far different man from the candidate hurling out such revolutionary ideas as scrapping the tax code, phasing out Social Security for the younger generation and returning to the gold standard.

Within Forbes Inc. he is known as a cautious manager who pursues change in small, careful steps rather than tampering with the company’s structural core. “His view of the way to grow our company is to try to pursue quite a number of things that are fairly modest in scope initially,” said Timothy C. Forbes, who is acting chief executive of the family business while his older brother is on the campaign trail.

“You do a lot of little things, and you do them well and some of them are going to become big things, and you don’t know which necessarily,” the younger Forbes said earlier this week. “Others may not work out, but you do them through an incremental adding of new things, many new things. . . . That doesn’t mean that in another circumstance he wouldn’t have a different view, but that’s been [his method] in the context of Forbes.”

Under Steve Forbes’ stewardship, the magazine has grown in ad sales and revenues. Ad revenues were $169 million when he took over in 1990; they were $205 million in 1995. The magazine’s circulation--741,634 in 1990 and now 776,850--is said to be an advertiser’s dream with one-third millionaires.

And although Forbes has started a few offshoot publications and killed off a pet magazine of his father’s, in many ways he has excelled along the paths already marked for him. As Forbes Editor James W. Michaels exudes about Steve’s term: “Any way you look at it--circulation, advertising or revenue--he’s carried the magazine to new heights.”

But how does he do it? What is his method for dealing with people, for forging compromises? How would he do if his advisors disagreed about sending troops to war?

The questions bring a volley of answers--some flattering, some less so. A few of those who have dealt closely with Forbes worry, like one former editor, that he may be “politically narrow and relatively inexperienced” for the nation’s top public job. Others say he is “vastly underrated,” as one former writer put it, by a national media that “seems to believe only politicians are qualified for serving as president.”

Asked how he would feel about having Forbes in the Oval Office during a political crisis, Michaels said: “I think I would probably feel pretty good. He would listen to the best advice he could get and then make his own decision.

“I’m extrapolating from what I’ve seen him do in a business environment. He does listen and yet he is quite capable of making his mind up and not vacillating once he’s heard the various points of view,” Michaels added. “I realize that’s a lot different than running the United States.”

It may also be different from running as a serious candidate for the White House, as opposed to tossing new ideas into the campaign debate. For example, in New Hampshire on Thursday, Forbes backtracked on his views about a balanced federal budget.

Once an opponent of a constitutional amendment requiring a balanced budget, Forbes said he would propose just such an amendment if elected.

Friends and foes say, however, that unlike his father, Malcolm, Steve Forbes has strong political views--some of them virtually unchanged from his days as a Princeton University student in the 1960s.

But Forbes’ determined political ideas are tempered, some argue, by “the personality of a true old-fashioned gentleman,” as one ex-editor says. He not only writes thank-you notes and inquires after the families of those he meets, but also he gives his managers “their lead” in the Forbes business operations, as another former editor put it.

“He’s a classic delegator, like his father,” said Forbes Managing Editor Lawrence Minard. “We do a lot of stories here about entrepreneurs and they all talk about how they delegate, but the Forbeses really do it.”

Some former Forbes employees dispute Minard’s view. Steve Forbes, they say, does meddle in the magazine’s editorial product, occasionally sending questions when he disputes a story or even objecting to adjectives. Fortune magazine this week has charged that this interference is done to protect advertisers--a damaging charge in the world of journalism and one that Timothy Forbes calls “absolute nonsense.”

Business Week Editor-in-Chief Stephen B. Shepard said he was astonished when he saw Michaels quoted as saying that he submits the magazine to Steve Forbes before it is published.

“That is an admission that they have a system in place for the publisher--the man in charge of ad sales--to make changes from his perspective,” Shepard said. “That violates everything we know about journalistic ethics.”

Some of those who have left Forbes magazine suggested that other business publications indulge in the same vice. Several said that at Forbes, as elsewhere, a subtle form of self-censorship begins to afflict the editorial employees so that friends of the Forbeses are avoided as subjects for coverage.

But others say they have fought for their stories and won. One former writer recalled that there were “two or three sacred cows, but I remember that I gored one of them and there wasn’t any problem.”

The question of sacred cows becomes more complicated when it relates to the Forbes family itself--where politically active Steve, like his socially active father before him, courts publicity at the same time he demands fiscal privacy.

The Forbes 400 list of the richest Americans, considered by many to be among the toughest and most thorough estimates of private wealth, does not include a listing for the Forbes family, though they clearly qualify. Similarly, one of the new satellite magazines, Forbes MediaCritic, is not expected to write about candidate Forbes and his press coverage.

“I don’t know how we could pretend to being unbiased under such circumstances,” Timothy Forbes said of MediaCritic. And as for the Forbes 400, “the basic reason is that if we published estimates about ourselves, people would assume they’re dead-on accurate, and it would be perceived very differently.”

Despite Steve Forbes’ folksy nature and his awkwardness in social settings like campaign receptions, he hails from a family whose wealth is not hidden under tattered clothes and modest dwellings. The company owns an elegant building in lower Manhattan that is full of such dazzling treasures as jeweled Faberge eggs, priceless art. Also in the Forbes collection is Harry S. Truman’s threatening letter to his daughter’s harshest music critic.

Forbes Inc. still owns a palace in Tangier, Morocco; a chateau in France and a private island resort in Fiji worth an estimated $70 million, according to Fortune magazine.

The Highlander yacht ($14 million) and the corporate jet add to the spectacle at Forbes--even though they are believed to be tax write-offs within the corporation.

However, such details, deemed private by the Forbes family, are no longer off limits as Forbes ventures into the public forum.

The 500-acre-plus cattle-breeding estate where Forbes, his wife and five daughters live in Bedminster, N.J., has attracted its share of attention in recent weeks. The local tax assessor told one journalist that an agricultural write-off on Forbes’ land means that it is assessed at $160,000 instead of almost $9 million.

Another local matter that is beginning to find its way into the national media concerns a private airport near his estate that he feared would become a jetport.

Forbes, who has a heliport on his own property, has spent several years fighting changes at the private landing facility, according to his lawyer in the case, Raymond Trombadore. The airport owners have said the changes were improvements and not expansions, and they accused Forbes of trying to obliterate a small businessman in his neighborhood.

Trombadore, who says the matter is now settled, acknowledged that there had been “a lot of posturing and a lot of rhetoric in both camps.”

Forbes’ determination--on matters big and small--may irritate some. But his friends suggest that even if he seems ill at ease, Forbes “is comfortable in his own skin. He knows who he is,” as Timothy Forbes puts it. Indeed, he was self-confident enough to run for president, believing that he would be the only one trying to carry on the Reagan revolution.

Instead of preaching opportunity and growth, the other candidates were “gloomy-doomies” or “root-canal Republicans,” to use a few of Forbes’ favorite phrases.

Fortune magazine and a few Forbes veterans have wondered whether Steve Forbes, like his father, is also running as a publicity stunt to promote the magazine.

While Malcolm Forbes liked hot-air balloons, these doubters suggest, Steve has already spent an estimated $25 million on presidential politics.

“Oh hogwash,” said Timothy Forbes. “That’s a silly idea. Let me tell you, I can think of a lot of simpler and more cost-effective ways of promoting magazines.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

The Man and His Magazine

On Sep. 22, 1995, publishing executive Steve Forbes announced his candidacy for the Republican nomination for president. Financing his own campaign without federal matching dollars, Forbes has moved into second place in several key states, behind Sen. Bob Dole of Kansas.

PERSONAL PROFILE

“If the Washington politicians were really going to change Washington, it would have happened already. They won’t-but we can.”

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Born: Malcolm Stevenson Forbes Jr. on July 18, 1947, in Morristown, N.J.

Education: B.A. in history from Princeton University (1970)

Family: Husband of the former Sabina Beekman and the father of five daughters.

Career: After a brief stint in the National Guard after college, Forbes went to work at e magazine, where he has been ever since. Now as president and chief executive officer, he also serves as chairman of Forbes newspapers, a chain of suburban weeklies, and chairman of American Heritage magazine. His wealth has been estimated in the $400-million range.

Family Tree: Steve Forbes is perhaps best-known as the son of flamboyant Malcolm Forbes, a multimillionaire publisher, former New Jersey politician, art collector and balloonist who died in 1990. Forbes and his four brothers and a sister all share in the ownership of Forbes Inc. (Steve inherited 50.1% of voting stock to avoid family feuds.)

Campaign Issues: Forbes wants to replace the current federal income tax with a 17% flat-tax, no deductions, and no tax on capital gains. He also would replace Social Security with individual retirement accounts for new workers and replace Medicare with tax-free medical savings accounts. Opponents criticize his lack of public service and call his tax plan unrealistic.

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ABOUT THE MAGAZINE

Published every other week, it was founded in 1917 by Bertie Charles Forbes, father of Malcolm Forbes and grandfather of Steve. It was the nation’s only business magazine for a decade until competitors were founded: Business Week in 1929 and Fortune in 1930. Written with an attitude frequently critical of its subjects, it became--under Steve Forbes--the largest of three major general-interest business magazines as measured by advertising pages.

Circulation, Advertising

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Year Forbes circulation # of ad pages 1990 741,634 3,939 1991 740,926 3,572 1992 755,004 3,763 1993 770,008 3,814 1994 777,353 4,153 1995 776,850 4,540

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Competition

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Ad pages Circulation in 1995 in 1995 Forbes 4,540 776,850 Business Week 3,148 752,320 Fortune 3,148 752,320

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Sources: Audit Bureau of Circulation, Advertising Age

Researched by ROB CIOE and PAUL SINGLETON / Los Angeles Times