Meet Me at Forbes Media Tower? Magazines Turn to International Licensing for Growth

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A rendering of the Forbes Media Tower in the Philippines.
A rendering of the Forbes Media Tower in the Philippines. Credit: Century Properties/Mitsubishi Corporation Rendering
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Sometimes, it's relatively easy for media companies to make money. How easy can it be? In exchange for lending its name to a building in the Philippines, Forbes Media has collected an upfront fee plus a promise of a share in lease revenue and condomium sales once the tower opens in 2019.

"We have all kinds of interests in making sure the quality and every use of the name is done in the proper way," Forbes Media CEO Mike Perlis said. But, he concluded, "It's a very low-cost relationship to the return we receive."

Forbes Media is already looking for other, similar real estate opportunities. The company is also interested in opening up Forbes-branded business clubs around the world, but particularly in Asia, where the brand is especially popular with businesspeople.

Earlier this year, Forbes Media opened an "entertainment space" on Fifth Avenue in lower Manhattan, which Mr. Perlis said will serve as a "prototype" for what these international business clubs could look like.

It's all part of a larger push by the company, and particularly by Mr. Perlis, who recently handed over day-to-day managerial responsibilities to president Michael Federle, to diversify the company's revenue mix. Some day, Mr. Perlis said, more than 50% of the company's revenue could come from non-media, non-advertising activity. For now, he said, 30% is a closer and more attainable target. In 2015, that figure was 22%.

Forbes Media will be competing with companies like BandLab Technologies, which recently purchased a 49% stake in Rolling Stone from parent company Wenner Media. As part of the deal, a newly created entity called Rolling Stone International will seek to extend the brand into global merchandising, live events and hospitality.

Playboy magazine, which has been licensing its brand in China for 20 years, has a big head start on brands like Forbes and Rolling Stone. For all three companies, though, international brand extensions and licensing are a great hedge against the uncertainties of the media business, which has manifested in declining print advertising and subscription revenues for magazines.

Licensing businesses are not sure things, of course. Rolling Stone's ventures into domestic brand extensions and licensing deals include a Rolling Stone Restaurant & Lounge in Los Angeles that closed in 2013.

And Maxim, the struggling men's magazine, licensed its name widely in better days, including a Maxim hair dye from Just for Men. Those products are now defunct.

Jared Dougherty, a management consultant who was named chief marketing officer at Playboy this summer, recently returned from a week-long business trip to Asia with Cooper Hefner, the company's chief creative officer (and one of Hugh Hefner's sons). In Taiwan, the two met with a partner that was working on a fashion collaboration with the Hello Kitty brand. In Japan, they met with the design teams for two partner brands, Joyrich and Hysteric Glamour. And In South Korea, the company is working with retailer Topten on launching a Playboy clothing line.

"The key is to find the right partner, locally, that understands the market and understands how to incorporate the brand or the brand imagery into what they're doing in the local market," Mr. Dougherty said. Playboy magazine covers are used as in-store marketing for branded products, he said.

Every year, more than $1 billion is spent on Playboy-branded products, according to the company.

While international licensing is the cash cow, Mr. Dougherty said the magazine's recent decision to strip nudity out of the U.S. edition has "opened some doors" with domestic brands interested in either partnering with Playboy or working out a licensing deal. "We're getting more interest and more conversations on the licensing side in the U.S. than we have ever," he said.

Both Mr. Dougherty and Mr. Perlis suggested that Rolling Stone has the brand awareness and global reputation necessary to be successful in the international licensing and brand extension game. Rolling Stone and Playboy can similarly trade on powerful "nostalgic images," Mr. Dougherty said.

While Mr. Perlis is bullish about the opportunities for Forbes Media to create new lines of business, he made clear that there's a line he won't cross. "We're only going to do things that absolutely enhance the Forbes brand," he said. "We're not going to do cheesy, Forbes-branded products just because someone gives us a license to do that."