All right, so maybe you can’t teach “old media” new tricks. But why try, when the old tricks seem to work just fine? Case in point: On May 4, Wired staff members got word that Robert Miller, whose Miller Publishing Group owns Spin and Vibe , was on the verge of signing a $75 million deal to buy their magazine from its financially strapped owner, Wired Ventures Inc. By May 8, Advance Publications chairman S.I. (Si) Newhouse Jr. had swooped in to add the digital culture magazine to the glossy ranks of his Condé Nast Publications unit, and his lieutenant, Condé Nast editorial director James Truman, was already on the scene, poking around Wired ‘s San Francisco offices. The deal surprised staff members because, back in February, a meeting between Mr. Truman, Condé Nast president Steven Florio and Wired investors ended abruptly when Mr. Florio told the Wired side they didn’t have their act together. So what happened?
Mr. Newhouse was apparently inspired to bid for the magazine after reading a May 4 Wall Street Journal report about the impending sale. Mr. Miller was scheduled to ink the deal in just two days. So on May 5, Mr. Newhouse sprang into action, offering slightly more than Mr. Miller’s $75 million figure, sources close to the deal said. (Advance Publications already owned 13 percent of Wired as of May 1996.) Mr. Miller offered to pay $77.5 million, these same sources contend, and Mr. Newhouse upped his bid to just over $85 million, a figure accepted by Wired ‘s board at a meeting on May 7.
The real loser in the deal seems to be Wired co-founder Louis Rossetto, who never wanted to separate his magazine from Wired Ventures’ on-line arm, Wired Digital, which publishes Hot Wired and Wired News . Mr. Rossetto has long had ambitions to turn his Wired franchise into a global media empire, but a scenario provided by company sources suggests that Mr. Rossetto’s grandiose vision may have got the better of him.
In 1996, Mr. Rossetto attempted to take his company public at a time when Internet-related stocks were all the rage. But the initial public offering fell flat when investors became wary of the company’s dodgy financials, and was withdrawn. Colleagues say he blames others for the debacle. “His story is that he was pushed by investors to do the I.P.O.,” said a Wired Ventures source. “He feels terribly victimized, that he wasn’t told what was going on.” (Mr. Rossetto refused to comment.)
The real problems began to occur soon after the failed I.P.O. According to company insiders, in anticipation of the stock offerings, Wired Ventures had overextended itself, particularly in its on-line projects and on Wired UK , a British version of the magazine that was hemorrhaging money. ( Wired UK subsequently folded in March 1997.) Soon, the mother ship found itself strapped for cash and in need of new investors. In mid-1996, a Providence, R.I., firm called Providence Ventures invested $21.5 million in Wired Ventures. But to get Providence’s cash, Mr. Rossetto had to make a fateful compromise: If Wired Ventures failed to live up to its financial projections over the course of the next several months, Providence Ventures would gain control of the company’s board. That stipulation, sources familiar with the deal say, ultimately led to the breakup of Mr. Rossetto’s mini-empire. Wired Ventures indeed failed to meet its revenue projections, and in mid-1997 Mr. Rossetto was out as the company’s chief executive.
The new board hired the investment banking firm of Lazard Frères & Company in fall of 1997 to search for possible partners. Sources say Mr. Rossetto was hellbent on preserving his company, but that Providence wanted to maximize its return by selling Wired to the highest bidder. That led to friction between Mr. Rossetto and the Providence partners, and caused consternation among potential buyers. At a meeting of then-Wired Ventures chief financial officer Jeff Simon with Messrs. Florio and Truman, an exasperated Mr. Florio is said have caustically asked, “Who’s driving this deal anyway?” before cutting the meeting short and heading back to New York. In the end, the answer to that question proved to be Providence.
Wired was launched in January 1993, and made its name with motion sickness-inducing graphics and apocalyptic predictions about the future of the printed word. Those predictions seem shortsighted in view of the recent sale; potential purchasers like Mr. Miller and Mr. Newhouse eagerly sought the magazine – which according to Wired Ventures has turned a profit for the last five fiscal quarters – but wanted little to do with Wired Ventures’ various digital projects.
Condé Nast has pledged that Wired will stay in San Francisco and that editor Katrina Heron, an alumna of such old media standbys as The New Yorker and Vanity Fair who took over editing the magazine in December, will stay at the helm. Ms. Heron has not so subtly steered the magazine toward hard news about information-age issues and away from its cultish cybergeek ethos. “I’m not interested in signaling to readers, ‘Either you get it, or you’re road kill,'” Ms. Heron said. “What you want to do is make a challenging magazine that’s not exclusionary.”
After setting off an optimistic frenzy about a cure for cancer, New York Times science reporter Gina Kolata’s May 3 story on Dr. Judah Folkman and his study of the effect of angiostatin and endostatin on tumors in mice has caused the paper and its reporter nothing but grief. First, the Los Angeles Times reported that Ms. Kolata was shopping around a book proposal on Dr. Folkman and questioned her motives in so highly touting the doctor’s work in her article. (Ms. Kolata withdrew the proposal.) Then, Nobel laureate Dr. James Watson publicly denied ever having said that “Judah Folkman will cure cancer in two years,” as Ms. Kolata claimed in her story. Now, on May 12, the National Cancer Institute issued a lengthy statement that implicitly questions The Times ‘ decision to run the story and suggests that Ms. Kolata may not have been very well informed about her subject.
“I have to say, the reaction to the story was startling,” said Times executive editor Joseph Lelyveld. “Were we to do it over again, I think we still would have put it on the front page. But the caveats which were in the story probably would have been more forceful and marshaled higher.”
Ms. Kolata’s story focused on “anti-angiogenesis,” a strategy for blocking the growth of new blood vessels to tumors. The piece was full of “caveats” about the efficacy of such treatments, but its general drift was summed up in the lead: “Within a year, if all goes well, the first cancer patient will be injected with two new drugs that can eradicate any type of cancer, with no obvious side effects and no drug resistance-in mice.” Effusive quotes from sources added urgency to the article: Scientists were “electrified” and “almost overwhelmed” by the drugs. Flagged as “a special report,” the lion’s share of the article was devoted to detailing the process by which Dr. Folkman – working with funding from Entremed Inc., the pharmaceutical company licensed to produce angiostatin for testing in humans-identified and then utilized the two proteins against cancer.
The problem, according to the National Cancer Institute, is that there are at least 11 other similarly promising anti-angiogenesis compounds currently undergoing clinical trials in the United States-and three of them are in the third and final stage of testing. By contrast, angiostatin and endostatin aren’t even in the first stage. Ms. Kolata, who didn’t return phone calls, was either unaware of the other drug experiments or made the curious decision not to mention them.
“As I understand it, and I’m not an expert on this, the difference is the results on mice are more ambiguous in the other cases,” Mr. Lelyveld said. “Some of them are farther along, but the results have not thus far been as dramatic.” At any rate, Mr. Lelyveld said, The Times hadn’t intended to get into the business of comparing cancer research data. “We’re not a medical journal, and we’ve never sworn to only publish peer-reviewed stuff,” he said. “We were reporting, we thought, on science and process, and not on the scientific conclusion.”
The existence of the other drugs was hardly a secret. An April 27 article in Business Week by Catherine Arnst entitled, “Starving Tumors to Death: A New Approach Cuts Off Cancer’s Blood Supply,” provided a more circumspect view of anti-angiogenesis. Ms. Arnst named a dozen or so doctors, including Dr. Folkman, though neither he nor his two proteins came in for special treatment. Ms. Arnst also mentioned Entremed, but unlike the Times story, which prompted Entremed’s stock to quadruple in a day, the Business Week piece had no effect on the company’s stock. In fact, according to the National Cancer Institute, no new information has come out on the drugs at all since a November 1997 report in the medical journal Nature . “Was there new information in the [ Times ] article?” the institute’s press release asked. “No.”
Mr. Lelyveld doesn’t exactly see the story the same way. “We ran it on the front page because we sensed-and our reporter sensed-that there was an unusual excitement [about the drugs],” he said. “We have a front page language that our readers understand. If we were reporting that cancer was going to be cured in two years, we would have had a banner headline.”
The marketing wizards at Condé Nast are at it again. In an attempt to build the largest reader database of any magazine company, the market research department recently mailed a five-page survey to “loyal subscribers” of all 16 Condé Nast titles, asking them to come clean about some really embarrassing stuff.
Under the guise of something the company calls the “Preferred Subscriber Network,” publishers at each magazine signed a cover letter that expressed a desire to “maintain an open dialogue … not only about what you like to read, but also about what you buy and do.” According to a letter signed by New Yorker president Thomas Florio, members of the special network can look forward to “the occasional preview of a dynamic new product. A sample for you to try. A request for your input on the creation of a major new line of high fashion or high tech … fast cars or adventure travel … whatever suits your life style.” The only thing you have to do to become a member of this ever-so-exclusive club is fill out an enclosed questionnaire.
So what does Condé Nast want to know? After grilling readers about travel and shopping habits, their hobbies and preferences in booze, apparel and footwear, Condé Nast gets down to the nitty-gritty: “Which of the following conditions listed below do you or someone else in your household have?” Among the listed conditions: acne, being overweight, clinical depression, infertility, menstrual pain, nail fungus, ulcers and vaginal yeast infections. The survey then asks its readers if they use over-the-counter drugs like Monistat, Rogaine, Tums, Vagisil and K-Y lubricant.
One New Yorker subscriber, a Jennifer Kahn of Berkeley, Calif., was inspired to write a parody of the questionnaire, which has fallen into the hands of Off the Record. Written on letterhead from something called “The New Hawker,” the missive invites readers to join the “Compromised Magazine Network,” and offers them “a free box of Prozac” to complete an accompanying survey. Among the questions: “Which of the following activities do you participate in at least twice a month?
· Hawking products by direct mail.
· Eroding your loyal readership base.
· Debating whether the number of subscribers and amount of respect lost through a direct mail campaign will be balanced out by an additional full-page Hennessey ad.”
