Media Fortune Fame & Folly

Why magazines are the new trophy assets

The Atlantic is the 164-year-old US political, scientific and literary magazine that once campaigned for the abolition of slavery and featured the writings of Ernest Hemingway and Mark Twain.

Ironically, the liberal print-digital brand also benefitted from Donald Trump’s presidency. Whether audiences were thrilled or infuriated by the former president, the sheer volume of comment pouring daily from the White House was good for the news business. At a time when traditional news brands had collectively realised their future depended on readership not advertising revenues and on subscriptions not casual sales, the New York Times, Washington Post – and The Atlantic – grew strongly, especially when the president chose to attack them individually.

Just ahead of the November election, Trump slammed The Atlantic as “a third-rate magazine that’s not going to be in business much longer”, after it reported he had denigrated dead American soldiers as “losers”. The story struck a nerve with the president – and with readers.

The following month, it added some 60k new paid subscribers – probably the best month since the start of its paywall in 2019 which is believed to have added a total of 400k subscribers. The Atlantic now has some 650k subscribers print and digital subscribers. Like the New York Times, The Atlantic benefitted substantially from the “Trump bump”.

But that is only part of the story of the three years since 2017 when majority control of The Atlantic was acquired by Emerson Collective, the “social impact” organisation led by Laurene Powell Jobs, gilded widow of Apple founder Steve Jobs. It is believed to have paid David Bradley about $110m for 70% of the company which was believed to have been making profits of some $10m – equivalent to what Bradley had paid for the then Atlantic Monthly back in 1999. But that was then.

Its been an eventful four years for Emerson, which was actually named after one of The Atlantic founders, Ralph Waldo Emerson:

  • Up to 100 (30%) additional recruits, among them reporters and engineers
  • Introduction of the paywall: $59.99 for print-digital and $49.99 for digital-only
  • 68 laid-off (17% of the workforce) during the pandemic
  • Losses believed to be more than $20m in 2020, exacerbated by cancelled advertising and live events
  • 2021 appointment of Nicholas Thompson as editor in chief from Condé Nast’s Wired magazine. He had been credited also with the successful introduction of a paywall on the New Yorker.

The lay-offs and the manner in which they were announced upset employees and seemed to underline the mixed blessing of a philanthropic owner which has invested in media business (including Concordia movies, Axios, and Gimlet podcasts) as often as non-profits like Mother Jones, ProPublica, Texas Observer and journalism organisations. Given its erratic trading history and also Emerson’s decision itself to ramp up the costs before the pandemic struck, no one is sure whether Powell Jobs sees The Atlantic more as a charity or a business.

But the experience serves to highlight some basic truths about the magazine market, which may be divided into three:

  • Mass market: Traditional, advertising-dependant brands for which magazines may eventually be much less important in the future than, say, e-commerce, digital services, or broadcast. This might apply to the wide range of magazines in entertainment and lifestyle. Even in major sectors like homecare, the brands may eventually be much less concerned with magazine-like content, in print or digital. They may have better ways to make money.
  • Specialist: Sports, hobby, craft and technical magazines may benefit both from ‘slow’ print and live digital content. Many of these “for enthusiasts by enthusiasts” brands will continue to make good money from magazine content as well as other products and services.
  • Commentary: political, literary, cultural and scientific brands with an emphasis on longform journalism. For all the digital potential of such magazines, print might remain the flagship medium – principally paid-for by readers. Print and print-like digital may continue to fit the needs of these readers.

In general terms, those categories define the distinction between magazine audiences that become online ‘users’ and those that remain predominantly ‘readers’, in print or online.

Print is most sustainable where the content is exclusive, distinctive – and paid-for by readers. That explains why many more high net worth individuals will want to own and support magazines: they are affordable, controllable, and (sort of) safe.

Those same people, who may once have craved the influence or prestige of ‘press’ ownership, may now find newspapers markedly less attractive because:

  • They are still susceptible to fierce disruption because of a stubborn dependance on commoditised news that is available cheap or free elsewhere – and on advertising. The ‘special’ content of columnists might increasingly defect to magazines and/or new-style online services like Substack. The knives have not stopped falling.
  • They tend to be large-ish media businesses with relatively high fixed costs – and greater financial risks for investor-owners.

It’s another way of saying that – for people who themselves want influence or to sustain viewpoints or political, cultural or scientific platforms – magazines may be lower cost and also more likely to survive longterm. Not all magazines, of course. But you can see that the $190m paid by Salesforce founder Marc Benioff for the legendary 97-year-old Time magazine would not get him a newspaper anywhere near as influential – or as likely to be sustainable.

In the UK, the Barclay family may be considering selling the Daily Telegraph whose £265m/ £10m revenue/profit would probably justify a price of some £250m+. That’s for a newspaper whose 300k daily circulation is one-third of what it was less than two decades ago – and may continue to fall. But, for perhaps £40-50m, a buyer might persuade the very same family to sell its 100k-circulation, influential UK political weekly The Spectator, with its small but steady revenue/profit of £14m/ £1m.

Dennis Publishing’s The Week, in the US and UK, is another magazine that can be as prestigious and influential as many daily newspapers on both sides of the Atlantic. You might be able to persuade the owner, Exponent private equity, to sell the £25m-profit brand for £200m which would be 40% more than it paid for the whole media company less than three years ago.

Thailand’s Chatchaval Jiaravanon paid $150m for Fortune magazine, and the Daily Mail Group this week paid £70m (10 x prospective EBITDA) for the internationally-respected New Scientist. But why not for a magazine and digital brand which has kept a steady 130k of weekly subscribers worldwide for more than a decade?

Magazines as diverse as National Geographic, Scientific American, Harper’s, The Economist, New Yorker, The New Republic and many more across the world are influential, high-value brands whose longterm success is secured by revenue from a loyal readership and huge brand value. Some like The Economist, Nature, New Scientist, and the UK’s Radio Times can also be valued conventionally as longterm, profitable business. But others – like Rolling Stone, New Statesman, and Variety – have a value unrelated to their modest financials.

In the struggle by publishers to wean themselves off vanishing advertising revenue, more magazines than newspapers are winning. That’s why the ownership of The Atlantic and Time is the shape of (many) things to come. Magazines are the new media trophies for wealthy people with something to say or preserve.

The Atlantic