There is a long tradition of rich guys overpaying for trophy media properties. But when Wall Street wizard Bruce Wasserstein nabbed New York magazine at the end of 2003, he seemed to be setting a new standard for vanity acquisitions.
The Lazard banker, who owned a number of trade publications, not only paid $55 million for a title earning only $1 million a year but also bested Mort Zuckerman in the dealmaking equivalent of a sumo match.
Since then, conditions have only gotten worse for print properties. But Mr. Wasserstein no longer looks like a media parvenu.
He has just sold American Lawyer and related titles for $630 million, more than double what he paid for them. And the pricey gambles he has made at New York, starting with luring Adam Moss from The New York Times to be editor in chief, have clearly been paying off.
Surging web traffic
The title won a record five National Magazine awards this year, including the coveted General Excellence award for the second straight time. Traffic is surging at the expanded Web site, spin-off titles are in the works and advertising has risen steadily.
Mr. Moss says the magazine is hewing closely to its roots.
"New York gives you an opportunity to talk about pretty much anything, all funneled through a single topic that its readers are passionate about, which is New York," he says. "That's the formula [founding editor] Clay Felker invented, and it's a great one."
Improvements in editorial content as well as design have made an impression beyond awards committees.
An increasingly attractive vehicle for reaching affluent readers, New York can now count on national companies for half of its advertising pages--up from about a third a few years ago.
Ad pages grew 30% between 2003 and 2006, while ad revenue spiked 83%, to $196 million, according to Publishers Information Bureau.
Substantial investment in Nymag.com--it has 46 full-time staffers, over four times as many as three years ago--has paid off in a 60% jump in traffic since last year. Online ad revenue is expected to double in 2007.
Breaking even
"We're beyond thrilled, both with the financial performance and the quality of the [magazine and the Web site]," says Anup Bagaria, chief executive of New York Magazine Holdings. He adds that New York has been reinvesting its profit for the past two years; next year, even with continued investment, it will have earnings left over.
That's if advertising continues to grow. Ad pages were down 4% through July 2, according to Media Industry Newsletter. Pointing to recent bulging special issues, New York Publisher Lawrence Burstein promises that New York will end the year up in ad pages.
Circulation has also been mixed. Newsstand sales dropped 5% in the second half of 2006, according to the Audit Bureau of Circulations. The rate base, the number of copies New York guarantees advertisers, has been stalled at 425,000 a week for years.
Mr. Burstein says that circulation revenue is up. The magazine has cut bulk subscriptions--the copies found in doctors' offices--by about half in the past two years. Subscription renewals and the introductory price are also up.
New York can also offer advertisers a growing audience on Nymag.com. The site had 1.7 million unique visitors in May, according to Nielsen//NetRatings.
"The site is doing particularly well," says Mark Edmiston, a managing director at investment banking firm AdMedia Partners. "In another year [New York] may be able to make a case that the magazine is the core of a multiplatform business."
In addition, buyers at the major media agencies say that the magazine is increasingly on their radar, and certainly more than other regional titles.
"New York is in a different ballgame," says Brenda White, vice president of publishing activation at Starcom USA.
The company is also expanding its offerings. It will will publish a coffee-table book based on the "Look Book" section in September and launch a twice-yearly fashion title, New York Look, in November.
There will also be changes within the magazine. "It's dangerous to get too complacent," Mr. Moss says. "The magazine is a work in progress."
