In the early 20th century magazines of speculative fiction began to acquire both science fiction and fantasy works. Prior to this fantasy seems to have been mostly romantic sagas or fairy tales, and science fiction was already its own genre with somewhat different influences. Despite the contrast, many fans today avidly read both. Did this overlap in readership exist prior to magazines combining the two genres? If it already existed, when did publishers or editors realize it was viable to include both fantasy and science fiction in the same publication?
There was not really any period in the development of modern science fiction and fantasy writing in which the two were sharply distinguished. It appears that there was always presumed to be a significantly overlapping readership, and important authors wrote in both genres back in the nineteenth century, when the conventions of the genres were being established.
The close relationship between fantasy and science fiction goes back to the period when the modern notion of fantasy writing was being developed. In particular, William Morris (1834–1896)—an important figure in the development of modern fantasy conventions—is probably the key figure in this regard. Morris created works in both genres, including writing that blurred the already tenebrous boundary between the two. He also ran a publishing house that published both fantasy and science fiction.
Morris's two most famous novels are News From Nowhere (1890), which is clearly science fiction, and The Well at the World's End (1896), which is just as unambiguously fantasy. He had first gained fame as a fantasy writer with his epic poem The Earthly Paradise (1870), retelling a number of European myths, and his subsequent writings—both fantasy and science fiction—prominently advertised Morris as "the author of 'The Earthly Paradise'" (as can be seen on the title page of the above-linked Project Gutenberg edition of News From Nowhere). This seems to indicate that his fame as an epic fantasy author was felt to be relevant to readers who might be interested in picking up his utopian science fiction.
News From Nowhere is actually probably the most manifestly science fictional work Morris authored. It concerns a contemporary Englishman who travels forward in time as he dreams, visiting a utopian, socialist, agrarian society in the early twenty-first century. Besides being a work of political science fiction, the book features advanced technology, such as "force-barges" that carry cargo without the need for animal power or coal-fired engines.
In contrast, The Well at the World's End—and also The Wood Beyond the World (1894) and The Water of the Wondrous Isles (1897)—represented a modern revision of the medieval Chanson de geste genre, which consisted of sprawling tales of noble knights questing across the landscape of medieval Europe. For these stories, Morris created fictional worlds—although ones that were based on idealized versions of Middle Ages Europe. Morris was, along with his contemporary George MacDonald, one the pioneers in developing fantasy settings that were completely divorced from the real world. Although such settings are commonplace in twentieth and twenty-first century fantasy writing, they were somewhat controversial when Morris and MacDonald introduced them. Before that, it was much more common to set fantasy works in "lost worlds," hidden locales cut off from modernity, but still imagined as being locations on the planet Earth.
Of course, there were similarities in theme between Morris's fantasy and science fiction stories. News From Nowhere shared with his chivalric epics a romanticized view of the rural-medieval lifestyle. Another one of his works A Dream of John Ball, concerns another nineteenth-century protagonist who travels across time via a dream—in this case going back to the Peasants' Revolt of 1381. In addition to observing the political events of Wat Tyler's Rebellion, the narrator talks with another one of the rebel leaders (the titular John Ball) about the changes that will occur in English society over the subsequent five hundred years. Although this novel clearly falls into the category of what is now often termed speculative fiction, it is not really straightforward to classify this work as either strictly fantasy or strictly science fiction; the nature of the dreamer's time traveling abilities is never really explained, with either a magical or scientific cause potentially permitted.
Finally, Morris was also a publisher, founding in 1891 the Kelmscott Press, which operated until 1898, publishing Morris's own later works, as well as works of other writers and poets. Morris, who had first risen to prominence as a graphic and textile designer, particularly made a effort to publish works that could benefit from lush black-and-white or color illustrations or embellishments. This included quite a few fantasy works and some science fiction, especially political science fiction, including a reprint of Thomas More's Utopia (1516). (The Kelmscott Press did not publish science fiction and fantasy exclusively, however; they also reprinted political works by Percy Bysshe Shelly and others.)