'THE NEW YORKER' IS TIMELY, TOPICAL, BUT NOT PROFITABLE: EDITOR TINA BROWN: 'WE'RE REALLY ON COURSE'

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Five years after the explosive arrival of Tina Brown, the magazine industry is still awaiting the big bang from The New Yorker.

Despite its cachet as a media brand and the influence of arguably the industry's highest-profile editor, The New Yorker has failed to reap the full rewards of a boom time for magazines.

While circulation has risen over the five years Ms. Brown has been at The New Yorker, ad pages have remained essentially flat during her tenure. And despite repeated predictions of impending profitability, the red ink continues to flow.

That the magazine remains essentially stalled -- neither an overwhelming success nor the disaster some had predicted after Advance Publications Chairman S.I. "Si" Newhouse Jr. shifted Ms. Brown from the hot glossy Vanity Fair to the venerable weekly in 1992 -- is puzzling to observers.

But while outsiders remain skeptical about the magazine's prospects, top executives are confidently boasting that the weekly's time has come.

'BEST YEAR SINCE '87'

Thomas A. Florio, who in 1994 succeeded his older brother, Steve -- now president-CEO of Newhouse-owned Conde Nast Publications -- as president of The New Yorker, said 1997 "will be the best year since 1987 in terms of our overall growth to our P&L.

"We will finish the year with the most ad revenue in the history of the magazine, and the advertising revenue is up 22% from 1993," he added.

Ad pages for full-year 1997 totaled 2,140.36, said Mr. Florio, up 101.9 pages, or 4.9%, over the previous year.

And the younger Mr. Florio, a hard-driving executive who has seen a significant level of churn among senior sales executives, is even more optimistic about the magazine's prospects in 1998.

He said the magazine may break even or turn a profit next year, although according to one estimate its losses this year will top $10 million. Costs, however, will drop over the next few years as the weekly's back office operations merge with those of Conde Nast.

'WE'RE ON COURSE'

Ms. Brown, too, is optimistic about reaching profitability.

"We're really on course," she said. "I've certainly regarded [profitability] as an important part of my assignment, and the magazine has never done better since Mr. Newhouse bought it [than] it has this year."

Editorially, the magazine has gelled, and the idea of what is and what is not a New Yorker piece is easier to grasp, said one of the weekly's writers. Noteworthy, newsy, intriguing and highbrow stories are a staple, strengthened by Ms. Brown's knack for assigning the right writer to the right piece.

TIMELY AND TOPICAL

Ms. Brown also has made the magazine timely and topical. An in-depth profile of Mike Tyson by David Remnick appeared a week after the troubled boxer snacked on Evander Holyfield's ear. And the magazine turned out a special tribute to Princess Diana just days after her death.

Not everyone views the magazine's timeliness as a strength. Critics charge such pieces have caused The New Yorker to lose the qualities that once made it unique, reducing it to just another weekly pop-culture magazine. Others, though, praise Ms. Brown for reviving a magazine they say was on the edge of extinction.

"There is a lot more buzz about it than before. I often hear people talking about stories that have appeared in The New Yorker on a weekly basis, such as 'Have you seen the Jeffrey Toobin piece on the president's genitals?' or 'Have you read Ken Auletta's latest?' " said Marshall Loeb, editor in chief of the Columbia Journalism Review. "Tina Brown has become a legendary editor at a very early age. She has turned The New Yorker into a significant magazine."

SUBSCRIPTION GAINS

Despite a drop this year attributable to increases in subscription and cover prices, circulation has risen during Ms. Brown's tenure. Subscriptions grew from 616,800 in 1992 to 814,100 in 1996, according to the Veronis Suhler & Associates' Consumer Magazine Database. Single-copy sales rose from 27,000 to 43,800 during that period.

Where the magazine remains lackluster, according to the Veronis Suhler database, is in ad pages, which rose just 0.4% between 1992 and 1996. Gross ad revenue per page did rise nearly 11% -- to $41,894 in 1996 from $27,674 in 1992 -- but that does not take into account volume discounts or rate negotiation.

Ad page growth continues to trail the industry, although through November The New Yorker edged closer. Overall, the industry is up 5.6% in ad pages for January through November, according to Publishers Information Bureau. In that same period, ad pages at The New Yorker rose 5.3% to 1,891.7

The New Yorker ended 1996 down 4.4% at 2,038 ad pages, while industry ad pages were flat at 213,780. In 1995, the industry finished with 208,378 ad pages, up 5.1%, while The New Yorker tallied 2,132 ad pages, up just 1.4%

PREDICTIONS OF RUIN

When Mr. Newhouse bought The New Yorker in 1985, the literary elite predicted the purveyor of glossy fashion magazines would ruin The New Yorker's tradition of sagacious journalism. The pundits genuinely panicked when Ms. Brown, a Brit who made her mark in the U.S. by successfully blending celebrity profiles and serious journalism at Vanity Fair, arrived in 1992.

Every minor change she made to the magazine's editorial mix was closely scrutinized; many were met with groans.

With the passage of time, however, the laments have subsided. Changes this year in the "Talk of the Town" section, which now includes bylines, drew barely a murmur. Likewise, the additions of a contributors' column and a cryptic crossword puzzle hardly registered on purists' radar screens.

Even the special issue devoted to Princess Di, which would have been met with much hand-wringing four years ago, caused barely a ripple. It did make a splash on the business side, selling more than 140,000 copies at newsstand, the most for any issue in 30 years.

"One thing that has not changed is the quality of the writing, which I feel we have really maintained," Ms. Brown said in a recent interview, adding that the magazine is now closer to what she wants it to be than ever before.

Since 1992, Ms. Brown has hired 30 new writers, including Mr. Auletta, Henry Louis Gates Jr., Kurt Andersen and Joe Klein, and 12 department editors. She also invested heavily in technology upgrades and created the magazine's first photo department.

MANAGING CIRCULATION

Managing circulation profitability is a key goal for 1998.

Circulation dropped to 799,043 in the first half of 1997, according to the Audit Bureau of Circulations, down from 868,651 for the same period the previous year. The magazine is still delivering a bonus to advertisers over its rate base of 725,000, and Mr. Florio said circulation is more profitable because of price hikes.

ATTRACTING YOUNGER READERS

Under Ms. Brown, The New Yorker has attracted younger readers willing to pay more money for the magazine.The average age of its reader has gone from 50 to 45, while the number of readers in the 18-to-34 age bracket has grown 30%, according to a recent subscriber study commissioned by Mr. Florio.

"What is happening right now, believe it or not, is that we seem to be having an increased renewal rate even with the increased subscription price, which is very unusual," said Ms. Brown, who believes the basic subscription price of $39.95 could be even higher.

"Probably the best route for us to go is to keep charging more rather than growing . . . We don't need to be at 1 million; it's much better if we sell 850,000 [copies] and are very expensive."

Increasing the revenue stream on both the circulation and advertising fronts also figures into the strategy of Mr. Florio, who said the profitability of ad pages has increased as the number of discounted pages has decreased.

One of his goals when he succeeded his brother was to get the title back on rate card. Though the weekly continues to negotiate rates, Mr. Florio said, "We have raised the price to advertisers."

Mr. Florio also is confident in the sales staff he has assembled. New Yorker veteran Carmen Lopez, senior VP-managing director, and David May, also senior VP-managing director, are the remaining deputies under Mr. Florio. In July, he hired VP-Marketing Director Annie Williams from Newsweek.

"We've been building for the last few years, but now we are beginning to see the fruits of our labor," Ms. Lopez said.

The sales staff recently gave presentations for 1998 that "show they really own their business now," she said. "They know how to present us to their advertisers. I think next year will be the year for us."

SALES STAFF CHURN

Churn has been high among top-level sales staffers in recent years. High-level sales executives who have passed through the magazine's offices since 1994 include Lawrence Burstein, now exec VP at Ziff-Davis' Consumer Media Group; Lance Ford, now publisher of Maxim; Julie McGowan, now publisher of Food & Wine; and John Campbell, who left in 1996 to become publisher of Forbes' custom media group.

Some tenures have been remarkably short. Peter Krieger, who after 12 years with Time Inc. became senior VP-managing director at The New Yorker this year, returned to Time Inc. after only five months.

SILBERSTEIN SUIT

The most tumultuous departure was that of Diane Silberstein, who on Oct. 22 filed suit against the magazine for discrimination in U.S. District Court in Manhattan.

In November 1994, Ms. Silberstein, 41, was named publisher of The New Yorker, moving from the same title at Hachette Filipacchi's Elle. In December 1996, her title was changed to VP-managing director and she began sharing responsibilities with Ms. Lopez, then elevated to VP-managing director from associate publisher.

At the time, Ms. Silberstein was pregnant with her second child. Her lawsuit claims Mr. Florio showed "obvious disapproval" at the news of her second pregnancy, and that the change in title to VP-managing director occurred a few days after she announced she was expecting. It goes on to say that Mr. Florio advised she could accept the new structure or a severance package.

According to the suit, she chose to stay though the change reduced her salary by $155,000 to $185,000. Ms. Silberstein also charges Mr. Florio later discouraged her from accepting another job at The New York Times Magazine and that she was earlier discouraged from pursuing the publisher's job at Conde Nast's Mademoiselle.

Mr. Florio declined to comment on the suit; Ms. Silberstein could not be reached.

MARKETED AS A MONTHLY

Several former New Yorker sales executives blamed the management turnover on a lack of a clear strategy from Mr. Florio. Perhaps because of his Conde Nast background, they said, the magazine has been marketed more like a monthly than a weekly, relying heavily on such fickle categories as fashion and travel while not doing enough to develop a steady stream of business from such areas as pharmaceuticals, corporate image advertising and technology.

Ms. Lopez said that in the last year Mr. Florio has focused the sales staff on business that makes the most sense for a weekly, including technology and direct-to-consumer drug advertising.

"We've really started to concentrate on business that we can win," she said. "To me, that is the biggest difference . . . We've always done business across a wide range of categories, but in the last year we have really begun to understand how to position ourselves."

NEW ADVERTISERS

In just the last three months, The New Yorker has won business from an impressive list of new advertisers, including American Honda Motor Co., Apple Computer, Brown-Forman Beverages Worldwide's Finlandia vodka, MasterCard International, Sharper Image and Visa USA.

Mr. Florio denied marketing the magazine as a monthly, saying it is positioned as a "cultural newsweekly." It does, however, compete with monthlies, he said.

But when the weekly is lined up against monthly titles in ad pitches, it appears too expensive, said Melissa Pordy, VP-associate media director at Hill, Holliday/Altschiller, New York.

Ms. Pordy believes the weekly suffers in comparison to monthlies because of a shorter shelf life and said one way around that is "if you buy one of their special issues, which has more of a shelf life. It's a tactical way to buy them."

The downside for the magazine is that rather than building a steady weekly base, it can become dependent on special issues to bulk up ad pages.

SPECIAL ISSUES

Special issues have already become a core component of The New Yorker's business strategy. This year alone, it produced six double issues on topics ranging from love to crime. It also published three other theme issues, two on fashion and one on book publishing.

The latest such special is Dec. 8's "Cartoon Issue." Billed as a collector's edition, it will be left on newsstands for a month.

"Those nine issues represent 35% of our ad pages" for 1997, said Mr. Florio. The future-oriented "Next Issue," published in October, sold more than 800,000 copies and carried 178 ad pages.

Nine more special issues are planned for 1998, including one in February devoted to California and one in August on "Private Lives."

Although purists no longer lose sleep over Ms. Brown's editorial tinkerings, they may view another impending change with alarm.

Long kept separate from Conde Nast's glossy monthlies, The New Yorker will soon be getting a lot closer to its siblings. The weekly will move its offices into the new Conde Nast headquarters building in New York in 1999. It is also merging its back-office operations with those of its siblings.

WEEKLY'S NEEDS

According to one insider, there is a three-year plan to completely fold the weekly into the larger publishing company. Both Florio brothers denied that.

"We are a weekly and we do have different needs. And for those needs, we will continue to control them even after we move into the new building," said Tom Florio.

Steve Florio also denied rumblings that his younger brother will report to him, but said he is serving as an informal adviser to the weekly at Mr. Newhouse's request.

"The plan is [that] anywhere we can help The New Yorker with back-office operations, we will. We are not merging ad sales, or editorial or any of that. It is just in areas like accounts payable and payroll where we can help them out and get their costs down a little bit," Steve Florio said.

Some functions, like circulation, are already handled by Conde Nast departments. And joint marketing opportunities for The New Yorker and Conde Nast titles are being explored.

One observer said the consolidation of back-office functions will save "a couple million bucks, but probably not enough to let them make money."

LONG-TERM VIEW

Even if The New Yorker does not turn a profit in the next few years, no one questions Mr. Newhouse's commitment to a title that has become a crown jewel of his privately held publishing empire. Ms. Brown said while she's been impatient for profits, she was reminded not long ago that Mr. Newhouse always held a long-term view.

"I recently found a memo to me when I started from Si which said something like, 'You know, this will take at least five years.' So I guess I knew it would but

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