Media Fortune Fame & Folly

After NY deal will Vox go global?

In a deal which will surely inspire many others, digital publishing star Vox Media is acquiring New York magazine. The all-share deal is thought to value the 51-year-old, very digital, twice-monthly magazine at $105m (1 x revenue). It is likely to give the Wasserstein family owners a shareholding of 15-20% in the enlarged Vox Media, which is expected to have revenue of some $300m in 2020.

Vox was founded in 2005, as the SB Nation network of sports sites. CEO Jim Bankoff (ex AOL) joined in 2009. He launched and acquired a whole range of new sites covering tech and gaming and marketing, including: The Verge, Polygon, Recode, Eater, Curbed and the five-year-old Vox itself which has become the flagship of “explainer journalism”. Earlier this year, he did a deal with Disney-owned streaming service Hulu to create food and family TV shows and also renewed a production agreement with Netflix for “Explained”.

Vox has also generated revenue by building its conference, podcast, and events business – and by licensing its Chorus content management system to other media companies. It is said to have attracted 77.9m US monthly uniques in August, ahead of BuzzFeed, the UK’s Daily Mail – and New York magazine’s 50m. The NY-Vox combination will clearly provide scope for enhanced sales of advertising , sponsorship and content marketing.

Pam Wasserstein, CEO of New York Media, which also operates the digital spin-offs Vulture (culture), Grub St (food), The Strategist (shopping), Intelligencer (politics) and The Cut (women), will keep her current role and also become president of Vox Media, reporting to Bankoff.

New York Media, which has been loss-making for years, is believed to have incurred a deficit of $15m in 2018. But the losses have been cut back this year by revenues which have reportedly increased by almost 40%. By contrast, Vox is reported to have made 2018 profits of almost $10m from revenues of $185m, although it is still thought to be burning some cash.

New York magazine was launched in 1968 by legendary US editor Clay Felker, first as a supplement to the former New York Herald Tribune in 1964. When that newspaper folded, it became an independent magazine.

Felker and graphic designer Milton Glaser (the man who created New York City’s much-imitated I ♥ NY logo) produced a magazine that was a distinctive combination of long narrative articles and short, witty ones on consumer services. The headlines were bold and the graphics even bolder.

The emphasis on business and culture was pure New York. It was entertainingly obsessed with the rich and powerful and what its creator described as “the high jinks of wise guys”. Journalist’s son Felker was the perfectly-tailored New York insider who lived the life, but was actually from Missouri in the US mid-west. Like Scott Fitzgerald’s fictional Jay Gatsby, he never quite lost the outsider’s sense of wonder at the glamorous outspoken city to which he had moved in his 20s. Newsweek magazine once described Felker as having “a Gatsbyesque drive, a zest for power and an uncanny knack for riding the trendy currents of Manhattan chic.”

Tom Wolfe, Jimmy Breslin, Gloria Steinem, Nora Ephron, Pete Hamill, Ken Auletta, and Gail Sheehy were among the writers who made themselves and the magazine famous. But Felker never forgot the ‘bread and butter’ coverage of where to eat, shop, drink and live that kept readers hooked. For New Yorkers and those who admired the city from afar, the magazine perfectly captured the city’s energy and excitement.

New York magazine has also become known for its competitions and cryptic crossword puzzles which, initially, were compiled by composer Stephen Sondheim, no less.

In the 1970s, when the magazine ridiculed President Ford on the cover as Bozo the Clown, political commentators said he never recovered. Its 1976 story, “Tribal Rites of the New Saturday Night”- about a young man in a working-class Brooklyn neighborhood who, once a week, went to a local disco – became the movie blockbuster “Saturday Night Fever”. It made John Travolta into a superstar but, years later, journalist Nik Cohn admitted that he’d done no more than drive by the door of Brooklyn’s Odyssey disco. This week, the magazine is all over Donald Trump’s dealings with Ukraine.

In 1977, New York magazine itself made the news when it (and the Village Voice which Felker had acquired in 1974) was bought by Rupert Murdoch after a fierce fight with Felker, whom he had befriended several years before. The magazine editor-founder was neither the first nor the last to be charmed by the Aussie entrepreneur’s life story of an outsider once motivated only by the need to rebuild his father’s lost newspaper empire in small-town Adelaide.

The scuttle-butt was pure New York magazine content: at lunch together, Felker was railing against Alan Patricof, the founder of Apax private equity which owned a controlling share of “his” magazine. Murdoch reportedly sensed an opportunity, sneaked out, and arranged to buy Patricof’s shares without telling Felker, who later spat: “Rupert Murdoch and I disagree on the meaning of friendship, of human values and the meaning of journalism.”

New York magazine journalists had, for the previous year, watched horrified as Murdoch (fresh from his UK triumphs with The Sun) brought his racy tabloid skills to bear on the newly-acquired New York Post newspaper. Angry at the unfriendly takeover, 40 NY journos resigned in protest. Time magazine marked the event with a memorable cover story featuring Murdoch as King Kong seizing media properties as he climbed skyscrapers.

The magazine’s spirit survived the loss of its founder-editor, and had its most profitable decade in the 1980s. But, in 1991, Murdoch’s News Corp was forced to offload its magazines, after being almost drowned by debt. New York and other magazines were bought by Primedia. But editors came and went amid stories of NY’s poor financial performance. In 2003, it was sold again, to master-dealmaker Bruce Wasserstein who trumped a pack of media suitors with a last-minute cash bid of $55m, reportedly besting former New York Daily News owner Mort Zuckerman by a cool $10m.

Wasserstein’s deal-making reputation initially alarmed his new employees. But they soon realised there was another side to the Brooklyn-born banker who was a sometime writer (of four books) who had once wanted to be a journalist. He made clear that New York magazine was a different kind of investment by transferring it to the Wasserstein Family Trust from his private equity firm. It had certainly been priced as a trophy asset.

The magazine which, in the mid-1990s, had made some $8-10m of annual profit, was down to an estimated $1m on revenues of $45m in 2002.

Wasserstein said that making New York magazine successful again was a straightforward, if difficult, task: ”At best, the magazine is the embodiment of New York, a very exciting city. All you have to do is be a good mirror of this city.” From the banker who had amassed a $2bn personal fortune with deals like Texaco’s takeover of Getty Oil, it was an uncharacteristically frothy comment. But he followed up the post-deal celebrations by quickly injecting new enthusiasm and investment into a magazine he had read since he was a student. And, then, there was his inspired appointment of editor-in-chief Adam Moss, from the New York Times.

Two years later, New York began an aggressive digital expansion with the relaunch of the magazine’s website and a series of super-blogs. The magazine was quicker than most to embrace the web as a potential source of profit. Way back in 2010, the New York Times noted: “In a way, New York magazine is fast becoming a digital enterprise with a magazine attached.” No mean credit to the direction Wasserstein was pushing his favourite magazine at a time when print was first being battered by all things digital.

But, in 2009, there was another shock: Bruce Wasserstein died suddenly, age 61, after a routine heart operation. New York Media has since been overseen by the Wasserstein family and, since 2016, by Pam.

In 2013, ago, Moss and his team were celebrating their latest “Magazine of the Year” award for continuing achievements in print and digital. But, within six months, they announced New York would be cutting back to fortnightly frequency. Like weeklies everywhere, the loss of classified advertising had destroyed profitability.

Journalists and advertisers responded to the news with predictions about the demise of print. The New York Post (still published by Rupert Murdoch’s News Corp) gloated, while Time magazine was sad and pessimistic: “If New York cannot hack it as a weekly, no magazine can.” The then formidable Gawker blog said: “We were not joking when we told you thousands of times that print is dead”.

It seemed as if it was only a matter of time before shrinking print advertising finished off the printed New York. The magazine’s ad pages had declined 9% in the nine months leading up to the announcement of reduced frequency. But there was a surprise: the planned reduction from 42 to 29 issues a year would involve not a reduction but an increase in staffing as it committed to investing the $3.5m print savings into digital expansion and into 20% more pages in every issue. By 2015, NY was claiming success for “doubling down on the stuff that’s already working”, namely the web sites. 

Four years on, advertising revenue is now 60% digital (compared with 85% a few years ago). The digital growth has helped ensure that the value of the magazine-centric business is, counter-intuitively, almost twice what Bruce Wasserstein paid for it – despite the continuing losses.

For all the seismic shocks of the magazine sector, New York’s print circulation has remained steady at some 400k for the past five years. Its 2m total readership is evenly divided between men and women.

The digital expansion has continued under David Haskell who succeeded Adam Moss in April after 15 years. But nothing is easy for magazines whose profitability traditionally depended so heavily on advertising and the sit-back-and-enjoy habit of readers.

That’s another reason why Pam Wasserstein must privately be even more euphoric about the Vox deal: “As I began talking with Jim about what the future might look like together, it quickly became apparent that our companies pair incredibly well. No one had to do this. It’s a brilliant opportunity so that’s why we leaned into it. It’s not out of need. It’s out of ambition”.

But there is some painful reality for New York magazine which brought in a paywall for all its online sites in 2018 and, earlier this year, laid-off 16 employees, 5% of its full-time staff and some 16 freelances. The Vox deal is, inevitably, expected to deliver scale economies (and further job losses) across sales, marketing, tech and back office. That’s how the enlarged Vox Media expects to be soundly profitable in 2020. But the cultural fit is genuine.

In so many ways, the deal brings together two companies with remarkably similar approaches to digital media, underlined by the far-sighted way in which, a whole decade ago, New York magazine deconstructed its content to produce strong digital media. Both companies are hot on editorial quality and cold on clickbait.

NiemanLab greeted news of the deal by saying: “So the most print-like digital publisher is joining up with the most digital of print publishers.”

The disclosure that there would be no loss of content jobs or media brands as a result of the ‘merger’ underlines how complementary are the two businesses: New York is mostly entertainment, Vox Media is mostly sports. Both cover politics but differently and there’s not much overlap in either tech or fashion. Perhaps they even share global ambitions.

Next up for New York is a stand-alone UK site for The Strategist shopping site, being launched next month by Irish journalist and author Aibhe Malone is building a small London team for the magazine’s first overtly international move. There is insider talk also of a 2020 UK launch for The Cut. The plans have been pushed through by Haskell who once published a UK literary magazine while a graduate student at Cambridge University and was also a guest editor of a New York magazine special on London. Jim Bankoff is believed to have international ambitions for the enlarged company.

He might look no further than Time Out, the London-based magazine brand which launched in the same year as New York. After almost a decade of post-digital financial pain, Time Out (which has long been been a global youth brand with its city guides and magazines) launched a food market in Lisbon in 2014 bringing “the best of the city under one roof: its best chefs, drinks and cultural experiences”.

That first Time Out Market has become Portugal’s most popular tourist attraction, attracting 3.9m visitors last year and, now, it’s powering a whole new global strategy. The £177m listed company will this year have opened Time Out Markets in Miami, New York, Boston, Chicago and Montreal with further launches planned for Dubai, Prague and London. Suddenly publishing is not the core business.

It’s an ambitious roll-out of a clever concept (just go and see a Time Out market). It is reasonable to speculate that the strategy will lead Time Out Group Plc to divest its loss making print-digital magazine interests. The markets are branded Time Out and (sort of) use magazine editors to “curate” the choice of pop-up restaurants. But sustained success may persuade Time Out to sell or licence-out its media to a strategic partner which could leverage the media brand digitally and globally.

This week’s news from New York may already have got Time Out’s chairman and 36% shareholder Peter Dubens thinking about the possibilities. New York-Vox-Time Out could be a great collaboration in 2020. Start spreading the news…

Vox Media

New York magazine