Lightning struck the New York magazine sweepstakes Dec. 16 in the form of Bruce Wasserstein, the taciturn, driving deal magnate who dropped $55 million in cash on Henry Kravis’ Primedia and won the right to take charge of a glossy part of journalism history.
It was the stealth assault of 2003, stealing the march on the noisy parade float of city moguls led by Daily News owner Mort Zuckerman, who had placed an all-over-but-the-shouting bid that most analysts expected to be successful.
Late in the afternoon on Dec. 16, Mr. Zuckerman called Mr. Kravis, the co-founder of Kohlberg, Kravis and Roberts, which controls Primedia. Only the day before, Mr. Zuckerman and his team had all been declared as winners by The New York Times in their bid to take over the 35-year-old magazine that had begun as a weekly supplement to the New York Herald Tribune, then was bought and started as an emblem of a revitalized New York of the 1960s and 1970s by its founding editor, Clay Felker.
Now Mr. Zuckerman, who wanted the magazine, and had joined with an all-star team of New York power-including movie studio head Harvey Weinstein, fast-food mogul Nelson Peltz, advertising legend Donny Deutsch and the increasingly disillusioned matchmaker for the whole mob, media columnist Michael Wolff- learned that Primedia had agreed to sell the magazine to leverage buyout king and Lazard CEO Bruce Wasserstein for $55 million.
When, according to sources familiar with the situation, Mr. Zuckerman offered a higher bid, it was “rebuffed.”
A Primedia spokesman declined to comment. Mr. Zuckerman through a spokesman also declined to comment, saying only, “We wish Mr. Wasserstein well.”
Thus climaxed one of the more rococo episodes in recent media history, one that New York itself would have delighted in. Since October, when the company first announced the sale of the magazine, it had a barrage of offers, spurring the passion of groups from the Learning Annex to Miramax and Cablevision. Only the Church of Scientology and the Boy Scouts of America seemed to be uninterested, and even that can’t really be ascertained.
In more recent days, with the submission of final bids on Dec. 11 one of two candidates seemed poised to win: former Hachette Filipacchi CEO David Pecker’s tabloid empire, American Media, owner of the National Star, editorially being reshaped by turnaround diva Bonnie Fuller. And of course, Mr. Zuckerman’s giant Al Hirschfeld mural of limited partners that included Bill Clinton cohort Jeffrey Epstein, Arby’s czar Mr. Peltz, Miramax co-chairman Mr. Weinstein and ad man Mr. Deutsch.
According to one source familiar with the situation, American Media’s bid came in the low-to-mid $40 million range, a bid that matches New York’s current annual revenues. The same source said Mr. Zuckerman’s bid was around the mid-$40 million area.
“We’re very pleased that the sale is complete,” said New York’s Caroline Miller, the valiant and beleaguered editor in chief who had somehow seen the weekly through the ordeal not only of the sale but of life with Primedia, which never seemed quite sure what to do with it.
“It’s been a long, rather dramatic process,” she said, “and we’re very comfortable we’re going to be in great hands. We’ve met with the Wasserstein people several times. We’re delighted. They’re very careful. They know what they’re buying. They’re not just buying the romance of a magazine in 1968. And they’re serious about making some investments.”
In other words, Ms. Miller and her staff were euphoric. They were thrilled that the magazine was not going to either one group that may have been the strangest team assembled since the X-Men, or another they considered threateningly downmarket. And to an owner who seemed to appreciate the currency of what the current New York staff had done with it, not besotted with the city magazine’s past, when it participated in the birth of the New Journalism as well as service journalism.
Ms. Miller said she had met with Mr. Wasserstein twice: the second time coming on Sunday, Dec. 14. Mr. Zuckerman, according to sources, expressed concern about Mr. Wasserstein’s bid the evening of Monday, Dec. 15, but remained confident of his group’s chances as late as Tuesday morning.
However, the magazine now belongs to Mr. Wasserstein. The brother of playwright Wendy Wasserstein, Mr. Wasserstein, 55, a highly-educated financier who attended the University of Michigan, Harvard Law School, Harvard Business School, Cambridge University, where he was Knox Fellow. He was known in the business press as “Bid ’em up Bruce” for persuading clients to spend high on acquisitions, first did time at First Boston Corp. from 1977 to 1988, before founding the investment banking firm Wasserstein Perella with Joseph Perella. While currently C.E.O. of Lazard, Mr. Wasserstein remains the head of Wasserstein and Co., the private equity fund that controls American Lawyer Media, which publishes the American Lawyer and the National Law Journal.His firm also controls The Daily Deal, and Real Estate Media, which includes a number of real estate trade publications.
“It’s a great brand,” a spokesman for Mr. Wasserstein said. “They see a great future for it. They’ve shown a great deal of expertise on other publications dealing with so-called `professional New York.’ One of the things they’re looking for from New York magazine is to take it upscale and maybe expand business coverage, and, for example more coverage of the fashion industry. They’ve been involved with the process from very beginning,” the spokesman continued. “They took a very low profile as way of operating and it served them well.”
But Mr. Wasserstein, still C.E.O. of Lazard-and questions have arisen about the conflicts that his position there as well as the owner of a journalistically aggressive publication will add up to-has paid a lot of money for a magazine that will take a great deal more in reinvestment to restore to a profitable position in the media.
“It’s really weird,” said one private equity investor who spoke on the condition of anonymity. “I don’t understand why he’s doing it. This may be an interesting hobby, but it’s not an investment. There is some economic value to the magazine. This is a real entity. But in order to justify $55 million, you have to have cash flow north of $5 million annually. At the moment, it’s $1 to 2 million.”
“I think one of the things that helped the deal is that a rebound is anticipated, certainly next year,” said Reed Phillips, managing partner of the media investment firm DeSilva & Phillips. I think that helped push the price on the deal. They wouldn’t have got $55 million if there wasn’t a rebound in the future. Another tough year would have reflected in the price. I think the price reflects the optimism.”
There’s optimism, and there’s $55 million worth of optimism-a price, sources indicated, that even Mr. Zuckerman and his group weren’t willing to reach until late Tuesday, when it no longer mattered. From the beginning, according to multiple sources, Mr. Zuckerman aggressively sought people he knew were dreamy eyed for New York. According to sources, when he learned that Michael Wolff, the magazine’s media columnist had lined up Mr. Deutsch and Mr. Epstein as potential investors, Mr. Zuckerman swooped in, convincing them that if they wanted to do this, they should do it with him.
Mr. Wolff declined to comment and Mr. Epstein did not return a call seeking comment. A spokesman said Mr. Deutsch was unavailable for comment. As did a spokesman for Mr. Weinstein, who had been considered well distanced from the magazine business with the wreckage and closure of Talk in early 2002. While the staff of New York was jubilant over Mr. Zuckerman’s failure, the media press missed out on the greatest potential limited partnership collision in New York since George Steinbrenner cames to the Bronx.
“I think the consortium was the weakness,” said Mr. Felker, the magazine’s founding editor. “I mean, the thing is that it’s very difficult to have a consortium run a publication, because the editorial process becomes pulled in many directions.
The thing is that a successful magazine must have one voice behind it, and if you have a strong voice like Wasserstein, then the magazine has a chance to work. And some very powerful people have run very tough publications, and they’ve had all the legal and financial and social entrée and position that anybody can want: Kaye Graham, Henry Luce and Rupert Murdoch. I mean, the power comes from running honest publications with a point of view.”
From Off the Record’s special correspondent, Michael M. Thomas:
Some three weeks ago, I sent an e-mail to an acquaintance telling him I was thinking about him and rooting for him. It was the most I could do; it-like the prayers and good wishes of all his friends and fans, like the best modern medicine could do-simply wasn’t enough. Bob Bartley died last Wednesday, Dec. 10.
Once upon a time, when a gallant and worthy opponent went down, one doffed one’s hat and stood aside and paid tribute to a fight well fought, a race well run.
I should like to do so now. In the 15 years I wrote a column for this newspaper, Robert Bartley (and his column in The Wall Street Journal) was the most fun and the most challenging of my targets of choice.
I first met him back in the old days at the Lehrman Institute, in the early Reagan years, when he played the role of Suslov to the new regime’s men of the moment, putting bright words in the mouths of idiots, at least one of whom still operates at the very summit of federal influence. Like many persons of strong theoretical conviction, Bob tended to downplay the corrupting human element in the working-out of grand designs in the real world and in real time, and it was there that we had our differences-symbolized by one name: Michael Milken.
But that means nothing now. Bob was smart, he was committed, he was talented, he was influential-largely for the better, I think-and he was honorable and decent. He will be missed enormously, and I can do no better than dip my ensign to him as the last salute is fired.
To his family and colleagues, I extend condolences and sympathy. In the long goodnight, I wish Bob Godspeed.
-Michael M. Thomas