Correct problem, wrong solution: While others may not consider state-owned Arizona Highways Magazine a custom publication, it fits my definition (note to self: come up with a definition). To cope with a state budget deficit, some lawmakers are seeking to “privatize” it. However, their definition of “privatizing” means “selling.” That is not the only solution, however.
Arizona Highways is part of the Department of Transportation but has not received General Fund appropriations for more than two decades. It is funded via subscriptions and sales of other products such as books and calendars. The publication brings in about $13 million annually, said Publisher Win Holden. That money goes toward operations. Holden said the magazine has been running $100,000 to $300,000 deficits the past several years. The travel magazine reconciles those shortfalls by taking money from a self-funded reserve account. The state Legislature itself has dipped into that pool of money to the tune of $6 million over the past 12 years, transferring magazine reserves into the General Fund.
While I’m all for privatizing non-core government functions, and I am perhaps one of the most passionate advocates for outsourcing publishing services, in this case, I would like to first point out the accomplishment of the state employees who run the magazine. In addition to generating the $13 million in direct sales (how many other state tourism offices can boast that), the magazine undoubtably generates untold millions in repeat travel bookings from the hardcore Arizona travelers who subscribe to it. (Heck, when I was a growing up in Alabama, my mother subscribed to Arizona Highways and planned a crosss-country family car trip so that we could drive through it.)
So, for between $100,000 and $300,000, the state generates $13,000,000 in direct sales and untold millions in indirect revenue via travel-industry generated tax dollars. This has to be the most incredible return on investment of any state tourism marketing expenditure in the nation.
Rather than “selling” the magazine, I think the state would be better off “privatizing” its publishing arrangement for Arizona Highways. (Use a custom publisher!) To close a $100,000 gap on an operation with $13 million in revenues should not be that difficult. And, if the magazine generates $13 million today, a savvy custom publisher can leverage that into increased revenues. I can think of a great custom publisher in Tennessee who could handle it, but I’m helpful enough to even suggest an Arizona custom publisher who I’m sure could find a way to “privatize” the magazine, protect a state asset, and generate annual revenue for the state.
I predict, however, there will be no change in the magazine’s ownership. Those who love it are probably among the state’s most powerful citizens and tourism-related industry leaders. A few strategic phone calls from some of them will end this “privatization” effort. The magazine’s staff has done the one thing necessary to protect the status quo: They’ve consistently produced a quality product that is loved passionately by its subscribers. And they’ve broken even. But there could be room for improvement.