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It's the premium, stupid."

Just like James Carville's "It's the economy, stupid" sign in the "war room" in the 1996 presidential campaign. Only Joe Armstrong is a publisher, not a politician.

The sign in his office reminds the staff at Meigher Communications to never lose sight of the premise upon which the company is based.

"Everything's based on the premium formula," says Mr. Armstrong, publishing director. Meigher publishes national consumer magazines Saveur and Garden Design; Quest, a controlled-circulation real estate magazine for the New York area; and two custom publications targeted to the medical community.

"That means readers are paying a premium price at the newsstand, they're paying a premium price by subscription and advertisers are willing to pay a premium [cost per thousand] to reach premium people," he says.


Saveur, an enthusiast food magazine, and Garden Design appeal to an upscale audience. The editorial in both niche publications has been described as lush and lavish, with beautiful photography; in-depth, well-written editorial; cleanly designed pages; and heavy paper stock. Luxury advertisers include Rolls-Royce, Infiniti, Hermes and Rolex.

"What makes the publishing equation work is that you have more of a contribution from the reader right from the start," says S. Christopher Meigher III, chairman-CEO and co-founder of Meigher Communications, "and because they've made that investment, they spend more time" with the magazine.

Magazine publishing has evolved under the assumption that circulation should be high to make titles profitable. Higher circulation means more subscription revenue and more ad revenue, because advertisers are charged higher rates to reach more readers.


But subscriptions of higher-circulation, mass-market books are often discounted so much the publisher practically gives the magazine away to readers. Advertisers have long complained that readers should shoulder more of the cost of producing magazines.

Cigar Aficionado and Wine Spectator, published by M. Shanken Communications, are two more examples of niche magazines based on the premium model.

"It's nothing brilliant that we're doing," says Marvin Shanken, chairman of the company and editor and publisher of both magazines. "We're simply attaching a price that we think represents good value. We put out high-quality, unique publications, and we think people are willing to pay for quality."


American Express Publishing Corp. has sharply increased subscription and cover prices in the past two years for Food & Wine and Travel & Leisure, to more closely reflect a premium model.

"Only recently have we charged these prices," says Daniel B. Brewster Jr., president-CEO of AmEx Publishing. "We also increased our spending per page dramatically. Our strategy was to pass that cost onto the consumer, not the advertiser. The result has been, to our surprise, that circulation in both books grew during that period."

AmEx Publishing also publishes Departures, a controlled-circulation magazine sent to American Express Platinum card members.

One problem with the high-ticket approach, critics have charged, is that circulation cannot grow to the point where it becomes profitable. Others believe it's unnecessary to have high circulation if certain factors align.

"You can make money with small circulation," says Dan Capell, editor of Capell's Circulation Report, "as long as it's high priced, efficient at newsstand and you're selling a significant number of ad pages."

Advertisers certainly seem willing to pay to reach these premium prospects, which explains how Mr. Armstrong is able to say that Garden Design is now profitable after four years, and Saveur is about six months away from profitability, way ahead of schedule.

"When you want to reach an affluent group of people, you have to pay a premium to reach those people," says Lisa LaCasse, manager of media planning for Nissan and Infiniti at Nissan Motor Corp. USA.


The Infiniti luxury marque advertises in Saveur and Garden Design.

"There are likely to be more qualified [readers] with less waste than a mass-reach book," Ms. LaCasse says.

Other advertisers and media decisionmakers agree.

"While circulation is usually small in these types of publications, it's really the creme de la creme," says Meg Lynch, VP-director of advertising at Louis Vuitton, an advertiser in both the Meigher and Shanken titles. "Those readers can usually afford to purchase the products you're advertising or they're aspirational."


Since Garden Design's acquisition by Meigher four years ago, the magazine's circulation has grown from 37,000 to 325,000. Three-year-old Saveur is at 300,000. Both magazines' circulation growth has been at prices far above what other titles charge-$5 per issue at newsstand and $4 per issue by subscription.

Travel & Leisure's circulation is 997,000 and Food & Wine is at 850,000, while Shanken's Cigar Aficionado has circulation of 372,000 and Wine Spectator, 190,239.

According to June 1997 Audit Bureau of Circulations Publisher's Statements, 91% of Saveur subscriptions are sold at or above the basic rate, compared with 32% of Food & Wine at the basic rate. In addition, the American Express publishing titles offer gift premiums and run sweepstakes in conjunction with subscription offers, something Meigher does not do.

Mr. Meigher believes a committed, passionate subscriber is more likely to renew. "You have better conversions and better renewals for longer terms," he says. "Once you get them, if you're connecting, if you're delivering, you keep them. That's the name of this game."


The Meigher titles, whose frequencies were increased this year to eight issues from six, will go to 10 a year in 1999.

"We will never do more than 10 a year," Mr. Armstrong says. "There's no reason to do 12, for us or many publishers. No one needs a January issue or an August issue."

Cigar Aficionado is published every other month, while Wine Spectator comes out 19 times a year (twice monthly, except monthly in January, February, March, July and August). Food & Wine and Travel & Leisure are both monthlies.

Optimism for the existing titles as well as a firm belief in a greater universe of premium readers have led the Meigher team to develop new magazines.

It plans to launch a shelter book to compete in an already crowded category that includes the relaunched Conde Nast House & Garden and is considering another title currently under development.


Regarding the shelter book, "There's a magazine in the home field we're noodling around on," says Dorothy Kalins, editor in chief of both Saveur and Garden Design. "It's going to be the third leg to the stool with Garden Design and Saveur."

Another important part of the formula that many advise the industry to watch is where Meigher and Shanken sell their magazines at retail.

Both are aggressive about finding new outlets for newsstand sales, Shanken in specialty smoke shops and Meigher in gardening and landscaping retail environments for Garden Design, and gourmet and delicacy shops for Saveur.

"We've been ahead of our circulation projections, which amasses a lot of evidence that there are a lot more people out there responding to these magazines," Mr. Armstrong said.

"We also know that the universe is still huge for us to penetrate special outlets. We're growing [circulation] naturally . . . by putting [the magazines] into more places where more people with these passions will find them."

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