Burn Rate by Michael Wolff

Author:Michael Wolff
Language: eng
Format: epub
Publisher: Simon & Schuster

The issues of raising money are broad at first: Is there anyone who will give you anything? And then increasingly complex and subtle: Among the field of bad and worse alternatives, whom will you choose? Or, more accurately, in front of which unhappy alternative will you get on your knees?

I flew into La Guardia and headed out to Long Island for an impromptu meeting with CMP Media, a $500 million-a-year company that, with Ziff-Davis and IDG, dominates the most lucrative area of the publishing industry today—computer magazines.

CMP, whose headquarters housed a couple of thousand people, was in the bedroom community of Manhasset, at a purposeful distance from the glamour-pusses of Manhattan. CMP, which held the distinction of being the largest private company on Long Island (although it, too, would go public before this story is through), got started in the early 1970s and came to specialize in magazines for the travel business—free magazines for travel agents with advertisements from resorts, hotels, and airlines. By the late 1980s, by creating more free magazines, this time with ads for computer hardware and peripherals, the company became another of those improbable and outsized technology industry successes—more improbable, because it was not the success of young techno-geeks, but the success of an elderly Long Island couple, Gerry and Lilo Leeds.

The magazine business has always maintained a hierarchy between consumer magazines, which emphasize editorial content, and trade magazines, which emphasize advertising matter. Successful (or prideful) journalists made their living from the former and dreaded a descent into the latter (you might have to go to work for Lab Rat magazine!). Almost no one I know in the mainstream publishing business ever gave a serious professional thought to trade magazines. Computer magazines changed that.

As a young lawyer, Alison was approached in the early 1980s by a company called Ziff-Davis, which, I was of the vague impression, published comic books or off-brand men’s magazines (Gent, “Home of the D Cup,” perhaps). It turned out to publish a stable of magazines for the travel and aviation industries and other magazines for hobbyists and sporting enthusiasts. Against my strong advice—what would we say to our friends?—Alison went to work for Ziff-Davis and promptly helped it go on a buying spree of magazines about personal computers, including PC Magazine, bought for pocket change and now among the world’s most profitable magazines. (Alison sent in the Pinkertons to eject the existing staff, which then went on to start PC World for IDG, one of Ziff’s main competitors.)

In 1984 Ziff sold its hobby and trade magazines for almost a billion dollars and ten years later sold its computer magazine properties for nearly $2 billion, making Bill Ziff the most successful man in the publishing business (and putting him among the top billionaires in the technology industry). These sales undermined many of the comfortable snobberies of the magazine business: that fashion, style, and attitude equal money and prestige.

The Ziff formula was to create magazines specifically designed for buyers of particular products. Under this formula, the ads were often more interesting than the editorial matter.

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