In HG's wake, rivals are ready to move in - House and Garden magazine

Folio: The Magazine for Magazine Management, June 1, 1993 by Lorne Manly

Conde Nast's shuttering of the 91-year-old HG on April 20, one day after the company took title to HG's more prosperous rival, Architectural Digest, shocked media directors and competitors alike and was a bitter acknowledgment that HG's decade-long campaign to move upscale had not pushed Architectural Digest off its perch.

"I'm totally astounded," says Paula Brooks, executive vice president and director of media services at Margeotes Fertitta & Weiss in New York.

Adds Roberta Garfinkle, senior vice president and director of print media at McCann-Erickson, "I didn't think anyone seriously thought they would fold it."

The conventional wisdom held that Conde Nast would return HG to its past by downscaling the monthly to its pre-1983 populist roots, when it had a circulation of more than one million. Instead, Conde Nast in effect traded up for the "gold standard" in the shelter category, says Brooks. Architectural Digest has a more affluent audience, more ad pages, a higher cover price and a higher subscription price than HG. In addition, Architectural Digest is profitable, a characteristic many suspect HG didn't share. Conde Nast president Bernard Leser acknowledges, "We considered that option |going downscale~, but felt it was unacceptable to us as a company and to the staff and the readers."

The two upscale shelter titles were close in paid circulation, according to the latest Audit Bureau of Circulations figures: HG with 695,958 actually delivered about 40,000 more than AD, which reported a total circulation of 653,648.

The circulation numbers mask the true strength of AD, however. While AD sells the bulk of its subscriptions for $39.95 a year, HG sold its annual subs for $12. That price advantage helped AD immensely when advertising softened with the recession. Even in the down business climate of 1992, AD held a commanding lead with 1,155.5 ad pages and ad revenues of $33.2 million, according to Publishers Information Bureau. That was 395 more ad pages than HG's 760, and $10.5 million more than HG's ad revenue tally of $22.7 million in 1992.

Still, there was surprise that S.I. Newhouse, Jr., moved so quickly. "I was stunned," chief editor Nancy Novogrod says. "We felt newsstand sales and advertising were going up this year. We feel we're going out in a blaze of glory."

Leser insists that he will not be forced to make a similar decision between Gourmet and Bon Appetit--the other title picked up in the $170 million acquisition of Knapp Communications: "We think they are complementary to each other." HG publisher Kevin Madden becomes the sixth publisher at Bon Appetit in six years. Martha Murray is bumped down to ad director. Paige Rense continues as AD's chief editor, while former top Knapp executive Thomas Losee Jr. becomes AD publisher.

The real ad-page winner may be Hearst Magazines' House Beautiful, according to Ira Weinblatt, senior vice president and director of print media at Saatchi & Saatchi. "It's HG's straight competitor," closest in editorial mission and reader profiles among the shelter books. Indeed, Monroe Mendelssohn data from 1992 show identical median household incomes ($88,000) of affluent readers between the two magazines.

But Meredith Corp.'s Traditional Homes and Hachette's Home Group--consisting of two bimonthlies, Elle Decor and Metropolitan Home, and the monthly Home, a more do-it-yourself remodeling book--won't concede without a fight. Traditional Homes hopes some of HG's advertisers relate to the Zeitgeist the four-year-old bimonthly embodies. "Traditional Homes doesn't show celebrities' or socialites' homes," says publisher Deborah Jones Barrow. "It shows homes and lifestyles of affluent people down the street--real people in real homes." That formula resulted in a 30 percent ad-page increase last year, while pages are projected to be up 22 percent through the first half of this year. Hachette would like to nab some of HG's fashion advertising for Elle Decor and Met Home.

Although some see HG's death as representative of a return to hearth and home, Hachette takes the contrarian view. "We just don't buy into the |belief~ that just because it's 1993, everyone will go out and buy farms and milk cows," says John Miller, vice president and group publisher of the Home Group. "A lot of this country thing is just a fad."

And with bimonthlies, Hachette can charge subscribers more per copy, obtain dramatic pick-up at the newsstand, and improve the cost/revenue structure. When Hachette bought Met Home from Meredith last year, it cut the title's frequency in half but dropped the subscription price by only about a quarter. Elle Decor, which cut its frequency in 1992, has seen its newsstand sales grow by 50 percent, its circulation double to 400,000, and ad pages increase by 40 percent in the first half of 1993, compared to the same period last year. Doubling a magazine's frequency doesn't pay off in twice the amount of advertising. Four is the median number of times that endemic advertisers run in shelter books annually, says Miller.