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Mogul on the Verge

Can a strictly below-the-radar mogul take a group of creaky computer magazines and refit them (and himself) for the new economy?


I am talking to a media mogul you've never heard of. He talks with the urgency and distraction of a mogul. He looks like a mogul -- a slightly less buffed-up Ronald Perelman. Certainly, he's short. A good mogul should be short. And he's made billions for himself and his investors. But you don't know him.

He's from another media world, one that has nothing to do with AOL Time Warner, or Tina Brown, or Puffy Combs, or Internet IPOs. Rather, a big thing in his media universe might be something like . . . the Yellow Pages. Which is where he made his first few hundred million. Of course, some of the best moguls have crossed over from anonymity: Ted Turner from billboards, Mel Karmazin from radio spots, Sumner Redstone from movie theaters, Edgar Bronfman Jr. from, well, just ordinary riches, to name a few.

My anonymous mogul has just agreed to buy a company that might just make him a household name (at least in a media household): He is about to become the king of computer magazines.

Now, this could be problematic on two fronts. There is nothing on my anonymous mogul's résumé to suggest he knows much of anything about computers (but does such technical interest or proficiency matter anymore?), and computer magazines, once a safe and amazingly profitable example of niche publishing, with a what-military-music-is-to-music relationship to other magazines, are now up against fierce competition. There's Fast Company and The Industry Standard (the two hot magazines of the year); then you have the big business magazines -- BusinessWeek, Forbes, and Fortune -- which have more or less turned themselves into computer magazines. In fact, Fortune is soon to launch a new title called eCompany (how that will be different from Fortune itself is unclear). And then, of course, there is the Internet itself. The medium is the message, etc.

But over lunch, my anonymous mogul gives me some deep eye action and sketches a vision of a new sort of media company for a new sort of media age. He's compelling too -- after all, a good mogul is almost always a good salesman. In his vision, he's growing, expanding, acquiring, reinventing, globalizing -- putting himself and his new company at the center of the information age.

"Computer magazines are like girlie magazines. For a long time, they were the only place a man with certain sorts of interests could go."

He reaches over and closes my notebook -- don't reduce this, don't trivialize it, he is saying. These are grand plans.

Up until now, my mogul has been pretty strictly a bottom-line mogul, leaving the glamour to the glamour-pusses, but he probably realizes that there is no such thing anymore as an anonymous mogul (if a tree falls in the forest, etc.). The market can't value anonymity -- it's a branded world (indeed, he's named a football field after himself in New Canaan, Connecticut).

Ironically, the company my anonymous media mogul -- his name is James D. Dunning Jr. (like the football field) -- is about to buy is the business created by and bearing the name of the patron saint of no-glam, no-celeb, high-cash-flow anonymous media.

This patron saint, Bill Ziff, whose faceless name you might associate with a generic brand of computer magazines (PC-this, PC-that) but who surely you have never seen on a talk show, or in People, or at Balthazar, made 3 or 4 or 5 billion in the media business. Not paper billions, either -- real cash billions. Return-on-investment-wise, Bill Ziff may be the most successful media entrepreneur ever -- he may well be the most successful person you wouldn't recognize ever.

The Ziff formula was to stay off the radar. But that was seriously yesterday. Now we say: Get me on everyone's radar.

What I am trying to decide is whether, if I were a wanna-be-known mogul with an extra $780 million, I would be buying the Ziff-Davis computer magazines. (Another part of the Bill Ziff formula was that as soon as he sensed that the other media, the glam media, was taking an interest in his media, he sold. In the early eighties, Ziff sold to CBS and News Corporation his collection of back-of-the-newsstand magazines -- including Stereo Review, Yachting, Popular Photography, Car & Driver, Hotel & Travel Index, Meetings and Conventions -- and a few television stations to another investor's group for a billion or so. In 1994, sensing perhaps that the Internet was going to make his niche uncomfortably hot, Ziff sold his computer magazines for $1.4 billion.)

When Softbank, the Japanese Internet financiers who own the Ziff magazines, put them up for sale this year, the bidding for the titles wasn't what you would call intense. There was a certain kind of feeling that nobody who was anybody wanted to touch them (this is a moment of opportunity for an anonymous mogul).

Computer magazines are, in a sense, like girlie magazines. For a long time, they were the only place a man with certain sorts of interests could go. PC Magazine, for instance, became possibly the most profitable magazine since Playboy's dominance of the magazine market in the mid-sixties. But then a cultural revolution took place, and, like sex, technology and people talking about technology were everywhere. You didn't have to take a computer magazine up to your bedroom. (Notably, Ziff's current owner brought in several former Playboy executives to give Ziff's twelve magazines some sex appeal.)

The media irony is that out of the limelight, computer magazines were some of the greatest creators of legal cash wealth of our time; in the limelight, profits in the category dwindled but glamour increased. This trade-off can be good, sort of, because glamour is more valuable than profits these days. On the other hand, glamour is a much different game from evaluating hard drives.

I wonder if my anonymous mogul knows this.

If he is to compete in this suddenly hot publishing space, he will have to take his dullsville computer magazines and refit them as hip voices for the new economy. The Industry Standard, which in the 21 months since its launch has become such a voice, recently took a round of investment that values the magazine at $200 million. Soon it will go public at, what the hell, a billion.

I wonder if he's thinking: How hard could that be?

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