Two Cheers for Condé Nast’s Acquisition

Normally, when one of three big players in an industry buys one of its two competitors, you hear rumblings about possible antitrust violations and the deleterious effects of lack of competition. But we’ve yet to hear any such rumblings–except perhaps from advertisers–about Condé Nast’s $650 million acquisition of Fairchild Publications, even though Condé Nast will now own every key fashion magazine in America, with the exceptions of Harper’s Bazaar and Elle. And that’s as it should be. If anything, increasing Condé Nast’s hold on the fashion press may have beneficial spillover effects that no one is really anticipating.

To begin with, even though after the deal closes, Condé Nast will own W and Women’s Wear Daily, in addition to Vogue and Glamour and assorted other fashion-y magazines, it won’t have a monopoly position. And as the example of the auto industry suggests, having two or three major players in an industry is qualitatively different from having just one. As long as Harper’s Bazaar and Elle remain outside the fold, Condé Nast will be limited in its ability to do whatever bad things monopolists generally do.

Actually, that’s the other thing. It’s hard to figure out what the bad things Condé Nast might do are, and it’s just as hard to figure out who is hurt by this deal (hard to figure out who’s being hurt that we don’t want to be hurt, that is). The pricing of magazines is difficult to decipher (it often, in fact, seems irrational), but it’s unlikely that W’s cover price is going to rise just because it’s owned by the same company that owns Vogue. And this is despite magazine consumers’ tendency to be somewhat price-insensitive, which accounts for the fact that so many magazines are sold at the newsstand, even though the price of one copy there is often equal to the price of four or five copies bought by subscription. So, consumers won’t be hurt in the pocketbook.

As for editorial, it’s possible that the Condé Nast mentality–whatever that is–will come to rule the Fairchild magazines, but if a year from now you’re able to tell the difference between the pre- and post-Condé Nast W’s, God bless you. That doesn’t mean, of course, that it won’t be a new experience for the editors of W and Jane to work with James Truman and Si Newhouse, but editors don’t count as a valid constituency to protest antitrust violations.

The one group that probably will be hurt by the deal is the advertisers, but this is a good thing. In a business sense, the deal may make all these Condé Nast magazines less beholden to any single advertiser, which in turn will allow the company to drive harder bargains. The flip side of this is that it will make advertisers think harder about why they advertise and where they advertise. In other words, the acquisition may have the unforeseen effect of making the whole industry more businesslike.

More important, this deal may make it easier for magazines–of all sorts–to take more critical looks at the companies and personalities in the fashion industry. It’s an open secret in magazine publishing that there are some stories that just can’t be done, because running them would result in advertising’s being pulled that magazines can’t afford to be pulled. But now Condé Nast will be in the position of saying to displeased subjects of tough pieces: “You want to pull your advertising? Fine. If you think you can make it without W, Women’s Wear Daily, Vogue, Glamour, etc., etc., more power to you.” Shifting the balance of power away from advertisers is, in that sense, entirely a good thing. So, to take a purely hypothetical example, perhaps we might actually see a serious piece on what Ron Perelman, head of Revlon, has done to many of the companies (Marvel Entertainment, Coleman, Consolidated Cigar, Revlon itself) he’s been in charge of. OK, probably not. But isn’t it pretty to think so?