Since Primedia put New York magazine on the block in September, several parties have openly expressed interest in buying the sexy title. American Media, the odd alliance of smart Wall Street money and tabloid journalism that owns the National Enquirer, wants in. Paul Corvino, a former AOL executive, has hired an investment bank to explore a bid. And in a case of life imitating punditry, New York’s media columnist Michael Wolff has loudly proclaimed that he and adman Donny Deutsch are in the hunt.
Several other media types may be mulling a bid: William Reilly, the founder of the company that became Primedia, who now runs Aurelian Communications; Rolling Stone godfather Jann Wenner; real-estate mogul/publisher Mortimer Zuckerman. And, naturally, magazine powerhouse Condé Nast may be interested as well.
In other words, everyone and everybody is interested. And yet nobody is interested. So far, no formal bid has been submitted on a putatively trophy property that has been officially on the block for several weeks (and unofficially on the block for many months). The no-action auction speaks volumes not just about the changing fortunes of the original city magazine, but of the dynamics of vanity publishing.
Vanity publishing—the practice of wealthy people or corporations backing money-losing or barely profitable publications for the psychic and social rewards—is alive and well. Vanity publishers tend to attach to high-brow or ideological magazines. TheNewRepublic brought new owners aboard last year but has kept the same money-losing ways. Entrepreneur David Bradley bought the unprofitable Atlantic Monthly in 1999 and has upgraded it sharply, while incurring further losses. TheNew York Sun, a neo-conservative daily newspaper with neo-con sugar daddies, was launched in April 2002.
But New Yorkmagazine, with its heavy lifestyle focus, is a different kind of vanity publication. Today, it’s not something you own because you have a personal agenda. It’s something you own because you want to meet celebrities and date models. It wasn’t always this way. Founded in 1968 by legendary editor Clay Felker, New Yorkhelped incubate the New Journalism and laid the groundwork for profitable city-based magazines like ChicagoandLos Angeles. It was acquired in 1976 by Rupert Murdoch, who in turn sold it to K-III (which became Primedia) in 1991.
At 35, New Yorkhas settled into middle-age: It’s a consumer-friendly weekly, a magazine much looked-at, but not passionately read. New Yorkought to be printing money—that’s what city magazines are designed to do. But New Yorkhas too much competition for limited advertising dollars. Time Out New York, an ever-more consumer-friendly New York Times, and free weeklies like the Village Voice and New York Press—none of which competed directly with New Yorkin its heyday—all offer similar packages of serious journalism, opinionated columnists, and comprehensive listings.
Both the New York Times and New York Post have reported that Primedia wants at least $50 million for the magazine. But New York, which has a circulation of about 430,000, has reported declining ad sales. Last year, if the Times and Post are to be believed, it earned a profit of between $1 million and $2 million on revenues of about $40 million. Those aren’t the types of figures that would excite a banker or a deal maven.
New Yorkmagazine—for which I’ve written a few times—has room for improvement. (The editors could start by, for example, expanding their concept of New York to include places besides Manhattan, a few gentrifying neighborhoods of Brooklyn, and the Hamptons.) But it’s hard to see how any buyer could wring more profits out of it without investing a lot in content, staff, design, and sales. In other words, the sale price would be the beginning of the investment, not the end.
Today, New Yorkis a financially marginal magazine in need of investment. Which is precisely why Primedia, troubled and debt-ridden, wants to sell it and focus on its trade and hobby publications, which throw off cash.
New York’s buyer will have to be someone who has a lot of cash on hand, has demonstrated a great deal of patience, and doesn’t have to pay back investors anytime soon. But few of the interested parties fall into that category. This also explains why big media companies aren’t bidding. If you’re a public company (like magazine titan Time Warner) it’s tough to justify buying a property that doesn’t immediately add to earnings. Meanwhile, large privately held magazine companies such as Hearst and Condé Nast have a strong distaste for magazines that don’t turn profits. And it’s hard to see why any group of investors would bother shelling out for such a low-return proposition.
If I were a betting man, however, I’d guess American Media will walk away with the prize, such as it is. Why? It would be a kind of sophisticated vanity play. Owning a highly reputable and coveted property like New Yorkcould provide some needed juice to an unglamorous company whose profitable titles are frowned upon by sophisticates. American Media has feverishly been trying to build an empire with muscle magazines, tabloids like National Enquirer, and super-editrix Bonnie Fuller. Having New Yorkin the stable might bring some needed Wall Street credibility (and glamour) and pave the way for a lucrative initial public offering and long-term stock appreciation.
Of course, that’s precisely what Primedia—a low-prestige publisher—thought when it bought New Yorkway back in 1991. But New Yorkcouldn’t shine up Mini Truckin’, and it wouldn’t glamorize the National Enquirer either.