Brewster's Blue Print

Folio: The Magazine for Magazine Management, April, 2001 by Michael Kaplan

HOW THE NEW CEO OF GRUNER JAHR STARTED THE INDUSTRY BUZZING WITH HIS LIGHTNING SPEED AND UNFINISHED REINVENTION OF A QUINTESSENTIALLY MIDDLE-OF-THE-PACK COMPANY.

Eight magazines are laid out on the conference room table. They are set up in the before-and-after style once seen in hokey bodybuilding ads found in the back pages of comic books. Like those hyped-up spreads, this display is designed to show transformations that go from weak to wonderful, from flabby to fab, from bullied to bullish.

The publications in question--YM, Fitness, Homestyle and Child--have long been known as laggards in their categories, and were routinely beaten up by competitors. Daniel Brewster, the recently installed CEO of Gruner Jahr USA Publishing, the magazine division of Bertlesmann AG, is positioning himself to be a Charles Atlas of the print world. His five-year plan for corporate improvement involves bulking up these titles and others, making them--as well as G J USA itself--more important and more profitable.

Over the last six months, Brewster has spent something like $600 million acquiring properties, hiring employees and improving publications that the company already owns. And he's just getting started. Brewster has vowed to double the size of Gruner Jahr USA within the next five years--and, he says, he will increase the publisher's profitability to a muscular $100 million annually.

His strategy is to achieve this through a four-pronged plan; producing magazines that deliver what their particular readers want; maintaining a broad array of titles (which will avoid dependency on any one ad category and reduce the company's vulnerability to consolidation); reconfiguring G J's distribution (he's waiting for an in-house analysis that will help determine the company's direction in this area); and, finally, recruiting and keeping top-tier talent.

Historically, the situation at G J has been much different. "The company had been sending hundreds of people into the market every year," says one source, commenting on the instability that has plagued the company and its perpetually dissatisfied staff. "That meant that a lot of people were out there saying negative things. Plus, those who leave for other jobs are usually your most talented, most desired employees. It makes for a vicious cycle."

Will Brewster be able to turn that around? "Before Brewster got there, they had a lot of defections," says Valerie Muller, senior vice president and

director of print services for MediaCom. "There wasn't investment spending for a number of years. Most people these days want to be with properties that are leading the times. That is what G J under Brewster is attempting to do."

Whether Brewster can do everything he promises for G J USA has been a subject of debate. Maybe because he generated impressive results during his six-year term as CEO of AmEx, no one is laughing at his current goal of putting G J USA on equal footing with the Conde Nasts and Time Warners of the world. During Brewster's reign (he led the company from 1993 to 1999) AmEx Publishing's ad pages grew 71 percent, to 4,246 total pages, and the circulation of magazines there spiked to their highest levels ever--growing almost 50 percent across the titles.

"The challenge will be to manage a German company in an American environment," says Muller. "Dan has a lot of work ahead of him, but he has already altered every product there. He's refreshed the management staff and the actual editorial product itself."

But G J, with revenues of an estimated $600 million and a dip of 30 percent in operating profits for the last fiscal year, is still just the number-eight publisher in the country (see chart, page 26). But up in the conference room at G J's midtown Manhattan headquarters, Brewster has little patience for industry speculation. He is more interested in the job at hand. Along those lines, he looks at the newly designed and editorially enhanced publications, taking in the sleeked-up cover of Homestyle, the rejuvenated YM, the freshly sophisticated Child, and Fitness with its newly aspirational approach.

"Only the fittest publications will survive," he says, speaking of a future where once rival publishers are deeply consolidated, postage is through the roof, and cost-effective distribution is a challenge. "Those who are sixth, seventh and eighth in their categories will have problems."

Muller says she has no doubt that Brewster will increase the company's market-share. "He will definitely be in competition in the four or five area. Reaching out to be competitive with Time when it has a 24 percent share of ad revenue spending is a gargantuan task," she says. "But Conde Nast is a little more within reach."

Brewster, dressed casually in an open-collar sport shirt and possessing an easygoing charisma, has wasted no time in making his presence felt. During his first year at the once-sleepy company, he has already overhauled the above titles; purchased a pair of business magazines (Fast Company and Inc., for a reported total of $542 million); enlisted Rosie O'Donnell to help Oprah-fy McCall's into a cooler magazine with the celebrity title of Rosie; shuffled around editors; scuffled the ineffective Internet operation; snagged David Carey away from his vice president/publisher post at The New Yorker, and established a magazine laboratory for Gruner Jahr USA.