Washington Post Staff Writer
So you think you know Washington's big-time sports moguls?
Snyder. Leonsis. Lerner.
You probably never heard of Bruce Levenson and Ed Peskowitz, twoquiet area businessmen who own the largest share of an Atlantasports empire that includes the NBA's Hawks and NHL's Thrashers andthe operating rights to their home, Philips Arena.
I have been bugging Levenson for an interview for years,wondering what kind of business threw off enough cash for them tobuy the Atlanta professional teams in 2004. The teams together areworth almost half a billion dollars, according to Forbes magazine.
Now I know where they got the money.
Levenson, 61, and Peskowitz, 65, created United CommunicationsGroup 33 years ago. Gaithersburg-based UCG, which has offices fromBoston to New Jersey to Singapore, is an assembly of highlyspecialized newletters and information services that serve health-care, energy, mortgage banking, telecommunications, tax and even thefuneral and cemetery industries.
You want to know the price of premium gasoline arriving on atanker in New York Harbor? UCG's OPIS division has it. The effect ofHurricane Katrina on New Orleans funeral homes? UCG's AmericanFuneral Director reported it. The latest regulations on Medicarereimbursement are found in DecisionHealth. The tax pros and cons ofhomeownership is in their mortgage finance division. They also holdindustry conferences in these sectors.
This is very lucrative stuff.
UCG wouldn't discuss revenue or profits, but it makes a lot ofmoney on these subscription businesses. They earn enough to laughabout a $20 million misfire a few years back when they tried tobuild 'the mother of all petroleum exchanges.'
The company now has about 620 employees, down from more than1,000 a couple of years ago before it sold some businesses. Onerespected financial information company, Gale, estimated UCG salesat $463 million in 2008.
'We have had a bunch of home runs,' Levenson said. 'We never lostmoney. It has really been profitable.'
One reason is the culture. There are no business cards. Nosecretaries. Everyone answers their own phone.
Most of the office furniture is used. I didn't see any glass-enclosed corner offices, founders' portraits or plush leather chairsat UCG's corporate headquarters, which is on the first floor of anameless office tower in Gaithersburg. I did see some toy models ofBP, ExxonMobil and other oil industry tanker trucks.
'In the beginning, all we cared about was the content and themarketing,' Levenson said. 'The trappings we didn't care about. Wereally focused on those two areas, and that has served us well.'
The UCG founders know a good business when they see one. Theylove the fact that customers would pay their annual subscriptionsupfront, creating tax advantages and 'a float,' which allows them toinvest the money until the expenses roll in.
UCG began in 1977 when, unhappy at the oil industry newsletterwhere they worked, the pair decided to start a rival publicationcalled Oil Express. Oil Express began above a C Street liquor/convenience store owned by Levenson's father. They had no money,worked 70 hours a week and lived on half-smokes and ice cream thatthe store sold them on credit.
Their first big success came fast when Peskowitz, who had deepcontacts in the oil industry, got hold of Texaco's five-year plan.Soon they had 4,000 subscribers paying $49 a year for their weeklynewsletter (the price has since grown to $499).
'It was the biggest scoop,' said Peskowitz. Texaco employees werecalling them asking for the plan because it reported that the oilgiant was going to eliminate 20,000 jobs.
The story gave Oil Express instant credibility. They used thatstanding to sponsor an oil industry conference at the Hyatt atEmbarcadero Center in San Francisco, which has spawned a UCGconference business that is lucrative to this day.
The next moneymaker began on a Friday afternoon in early 1978,when Peskowitz and Levenson came up with the idea for a decal thatgas stations could put on pumps. The decal was designed todiscourage motorists from using polluting leaded gasoline instead ofthe newer and more expensive unleaded.
They charged $1 for a decal that cost them less than a nickel.They sold 1 million in a month, ranging from small orders from mom-and-pop service stations to 200,000 for major oil companies.
The windfall gave them enough breathing room to think about theirnext business move. They acquired two newsletters that covered thepostal and financial regulatory sector that were being sold by aWashington-based company called Computer Data Systems.
It was the Oil Express model all over again.
'We understood the [newsletter] business,' Levenson said. 'Wewere identifying opportunities to deliver information in a varietyof formats into a segment we had captured through the newsletter. Westarted going into other industries and replicating the model.'
Several more hits followed.
When one employee said he could help them provide oil prices totheir customers through computers that communicated throughtelephone hookups, they became pioneers in online content. As theoil price data slowly dribbled across the phone lines, UCG raked inthe dough: They charged by the minute.
They repeated that online model with Commerce Business Daily, theshopping list that the federal government sends out to get bids oneverything from pencils to jet engines. The CBD online business wasa cash cow for Levenson-Peskowitz for almost a decade.
As profits rolled in and the staff expanded, UCG moved toBethesda, then to Rockville and a couple of years ago to an officepark in Gaithersburg, where the company headquarters occupies 60,000square feet.
Levenson and Peskowitz have loosened their hands-on managementstyle just a tad so they can spend time on their Atlanta sportsteams. They have owned 40 percent of the teams and arena operatingrights since they purchased them in 2004 from Time Warner. (Theyhave been in a nasty court fight with one of their Atlanta sportsteam partners for several years.)
The company is very closely held. There is no private equitymoney. There are no outside investors. They have decided againstgoing public.
The founders plan to stay deeply involved in the business, butthey have prepared their next generation of owners for decades.Numbers and acquisitions guy Todd Foreman, sales and marketing wizNancy Becker and journalist Dan Brown are all part owners who willsomeday take over.
Foreman said UCG sold a bunch of companies in 2006 because 'itwas getting to the point . . . where we want to maximize the valueof our assets. We sold some businesses, bought some businesses and,in the future, we are going to do both.'
Levenson prides himself on a relaxed, democratic atmosphere. Theinformal division of labor makes Levenson the strategic thinker andcompany voice, while the cerebral, soft-spoken Peskowitz tends tothe all-important content.
'There is no bigger voice in the [ownership] room than anybodyelse,' said Levenson, speaking in a conference room between bites onhis sandwich. Behind him is a list that represents his company'svalues. The list includes 'Partnership Agreement as a livingdocument.' 'Lunch together.' 'Not all lawyers.' 'Collaborate.''Trust.'
As he explains the list, Levenson says, 'We don't have votes. Wedon't have a chairman. We disagree, we debate and then we decide. Itreally does work that way.'
And apparently, it really does work.
heatht@washpost.com
