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?
It’s reflective of the relative value of glamour over cash that many people who know Jim Dunning are likely to describe him not as someone who has made a fortune for himself in the Yellow Pages business but as the guy who – with advances from distributors and bank loans closing in – “saved Jann’s bacon” in the seventies when he was the COO and CFO of Rolling Stone. Indeed, what Jimmy Dunning has really wanted to be all along, people say, is Jann Wenner (who hasn’t?).
After Rolling Stone, Dunning went briefly to Wall Street, and then, for the first time, to Ziff as a ranking executive. Ziff, in the mid-eighties, was probably the most cash-rich media company in the world. It could have bought anything. And my would-be media mogul saw his job as turning Ziff into a real media-mogul-worthy company. On the executive floor of Ziff’s anonymous offices on lower Park Avenue, Jim Dunning prepared the reports and research and tactics and strategy to take over a giant or two. Paramount was his first target; then CBS.
There was a certain comedy to these efforts – the young would-be mogul preparing his takeover binders on America’s premier media empires while other people at Ziff-Davis were buying media properties like Government Computer News – and soon enough a certain humility. In short order, Dunning was out of Ziff and on Long Island, running a Yellow Pages company – which certainly sounds like some Dantesque punishment for overreaching in the media business.
In obscurity, Dunning bought and sold two Yellow Pages companies, the first for $160 million, the second for $300 million. (“What ever happened to Jimmy Dunning?” people would say. “Is he still doing that Yellow Page thing?”)
I have no insight into whether this was horrible or blissful obscurity. Does making money, big amounts of money, calm your ambition, or does it make it all the more heated, insistent? (He looks at me opaquely when I touch on the question – then recites the virtues of the Yellow Pages business.)
From his Yellow Pages exile, he bought a media trade publication, SRDS (Standard Rate & Data Service), then made a move on a no-glam (although more glam than the Yellow Pages or SRDS) media company called Petersen, famous (so to speak) for its car- and gun-buff magazines. Not enough of a known media suit himself, he installed a well-known suit, former Hearst Magazines president Claeys Bahrenburg, in the role. Now, if the Yellow Pages were a circle of media hell, Petersen would have to be purgatory. It’s a limited-growth market – you’re not going to all of a sudden discover a vast new audience of car buffs or gun nuts.
Dunning, who bought Petersen for $465 million, sold it two years later for $1.5 billion.
Good money, but not an Internet rate of return.
To be a mogul requires a whole different level of play (and courage).
“what matters,” dunning says, his hand on mine, “is the depth of your platform.” While I have no idea what that means, I sense these are fighting words. For a man without much experience in the technology industry, he’s already talking the talk.
Dunning swears me to secrecy on all kinds of potential new start-ups and acquisitions and major new thinking he’s planning at Ziff. It isn’t that hard, if I let my imagination run, to see Ziff-Davis – “with its millions of subscribers,” Dunning reminds me, “its vast databases, its history of marketing discipline, its incredible brands, its presence throughout the technology industry” – as a contender for taking over the world. As a matter of fact, as we talk, I find myself with a whole bunch of ideas for putting a little attitude and edge into the Ziff magazines – a little attitude and edge in this context could be worth billions – and, if I’m not mistaken, Dunning starts feeling me out about a job.
I get it – a definite shiver of opportunity running down my spine.
We have a friend in common, though, who says that Jimmy is bullshitting me, that after all these years of making real money, he is not so stupid or silly to want to go for broke this way. “Jimmy,” he says, “buys these companies and just spots some outrageous thing that’s going on and kills it like a skunk.” And then, wham, sells the sucker for a tidy profit.
Maybe. But that sounds very eighties to me – to be such a hard-hearted, no-nonsense, disciplined numbers guy (remember when the Tisches proudly cut the fat from the Tiffany Network?). Nineties mogul macho is about having a vision, expanding rather than contracting; it’s about reinventing the media business and hence the world (and yourself). In the former no-nonsense approach, you look to double or triple or quadruple your money; in the latter vision thing, you’re looking to go 30 or 40 or 100 times better. You choose.
I’m pretty sure it’s a bad idea to buy computer magazines. They seem clearly a part of the rust belt of the Internet age. On the other hand, I would not have bought them when they were a good idea. But any mogul worthy of serious moguldom has to take a leap of faith (and computer magazines are probably a better bet than, say, fashion magazines).
In the same conversation, our mutual friend reflects, “Jimmy and guys like Jimmy do not believe they can fail.” Of course, that describes a lot of people these days.
E-mail: michael@burnrate.com.