How David Bradley and Justin Smith Saved ‘The Atlantic’

A sinking magazine comes back from the brink (or why all print media stories don’t have to end badly)

Four years ago, David Bradley, the chairman and sole owner of the Atlantic Media Company, came up to New York from Washington, D.C., to have dinner at The Carlyle with Justin Smith, who was then president and publisher of The Week. Bradley was desperate. For eight years, he’d been trying to staunch the flow of red ink at what was then called the The Atlantic Monthly, only to see the losses increase (one year, to more than $10 million). He admired Smith’s work at The Week, a news digest that publisher Felix Dennis had imported from the U.K. in 2001, and wanted to hire him to, hopefully, turn around the magazine.

“Nobody had ever heard of The Week before, and they were stealing market share from us,” Bradley recalled in a recent interview at his office in the Watergate Complex in Washington, overlooking the Potomac.

But Smith had other plans, and he said no. He’d already decided to take a job as worldwide publisher of BusinessWeek, which hadn’t yet been sold to Bloomberg. Bradley persisted. The next day, he emailed Smith a three-page, single-spaced letter in which he implored him to change his mind and move with his family to Washington to work for him.

“I told him he had the talent to be the whole show,” says Bradley, who felt Smith would be but a cog in the wheel at BusinessWeek. “And he cheated himself by not doing it.”

Smith responded to Bradley with a challenge: He would bring The Atlantic, which had been founded in the 19th century, into the 21st if Bradley were willing to run it like a startup. “I told him, this is the first time a private ship can have the opportunity to disrupt the Royal Navy,” Smith says. 

Bradley agreed and, soon after, Smith was on board as president of Atlantic consumer media. It was a good move by both. Smith had told Bradley he’d make The Atlantic profitable by 2010. He hit that goal, even in the face of the recession, making $1.8 million, and putting it on track to make $3 million this year.

“What he did to expand the influence of The Atlantic, both in print and online, was extraordinary,” says Norman Pearlstine, chairman of Bloomberg Businessweek, who’s known Smith for years. “He’s a guy who clearly comes out of the business side, but he thinks as much like an editor as a businessperson.”

When the story of The Atlantic’s turnaround is told, the credit tends to go to the 58-year-old Bradley. But Bradley himself believes his greatest talent is finding talent, and he gives the majority of the credit to Smith, who he calls “unmatchedly gifted.” In 2010, Bradley promoted his wunderkind, making him president of Atlantic Media, giving him responsibility as well for the National Journal Group and a third, smaller unit, Government Executive, a biweekly trade magazine and website.

The Atlantic’s change in fortune is impressive by today’s publishing industry standards, but it’s all the more so considering the periodical, a 154-year-old journal on politics, culture, science, tech, and world affairs, belongs to a small group of so-called “thought-leader” publications like The New Yorker and The New Republic that are better known for their intellectual contributions than their commercial value. By rethinking everything about the company, however, Smith found a way to make that pay. Think Silicon Valley, but without the free food and massages. (Smith did away with perks like free bagels in the mornings.) “We don’t have foosball machines, but we filter for entrepreneurial talent,” Smith says.

He wanted to make The Atlantic a place where the traditional wall between the editorial and business sides could be broken down, but in a way that would encourage innovation, not stifle journalistic independence. In a show of transparency, Smith, with Bradley, started giving employees financial information at quarterly town hall meetings. He created joint editorial and business groups to incubate new ideas that have spawned sites like The Atlantic Wire, a news and opinion aggregator; and the new Atlantic Cities, the brand’s first stand-alone, single-topic site, devoted to urban issues.

Pivotal to the turnaround was Smith’s decision to lure Jay Lauf from a plum job as publisher of Condé Nast’s Wired. Lauf told salespeople it didn’t matter how much they sold in print or online dollars, as long as they met an overall revenue target. Digital advertising went from contributing 9 percent of ad revenue to a projected 45 percent this year. Print ad revenue, meanwhile, grew 24 percent in 2010 and is projected to be up 7 to 10 percent this year. Lauf said while his salespeople lured digital-focused advertisers by emphasizing digital properties, clients still wanted print. “A lot of the conventional wisdom was, you’re going to take your eye off print and you’re going to trade dollars for dimes,” he said. “It hasn’t cannibalized the print; it’s actually bolstered the print.”

The edit and business sides of publishing historically can be at odds, but James Bennet, editor of The Atlantic, says he feels the two speak with a shared vocabulary. When he’s asked for resources to expand editorial coverage, Bennet says, “we’ve gotten more ‘not yet’ than we’ve gotten ‘no.’ That’s what’s made this work so well.”

The teamwork can be seen in the joint meetings Smith regularly holds with his top editorial and businesspeople. They toss out ideas and try to find ones that would make sense for readers as well as advertisers. Smith takes pride in the harmony that pervades these meetings. At those times, he says, he can close his eyes and not know if the speaker is from the editorial or business side. “We’ve created a process where everyone’s in the boat rowing the same way,” he says.

Smith is now actively looking to launch other Atlantic verticals on sports, science, tech, and business (the last of which The Atlantic had planned to introduce before, but tabled when the economy soured). “Our vision is to have a general-interest brand at the center, but then we’re going to be deploying our editorial lens against a business model that makes sense,” he says.

Smith has also been successful in finding different sources of revenue for the company. He’s expanded The Atlantic brand’s events business, which includes the Aspen Ideas Festival; this year, that business will account for 14 percent of the company’s total revenue, up from 6 percent in 2007. He added the Washington Ideas Forum three years ago; next year, he’s bringing a similar event to New York. And having seen other publishing companies get a bigger share of marketing dollars by offering more services to advertisers, he recently started a marketing-services division.

Bradley, looking back, is candid about his own failings. After selling the research companies that had made him rich, the then 44-year-old embarked on a career in publishing. It seemed like the next best thing to a political career, a goal he’d abandoned after deciding he didn’t have the gift for it. He bought the National Journal in 1997 and, two years later, paid Mort Zuckerman $10 million for The Atlantic.

“What I think he must consider his happiest day,” Bradley says, with a smile.

The Atlantic’s losses mounted quickly under Bradley’s hands-off ownership style, growing from $4.5 million to more than $10 million. “I’ve never seen a more difficult business problem,” he says. “I had the idea I was going to be a good steward, and every human endeavor atrophies.” Realizing he had to be more involved, he then tried every fix he could think of: He upgraded the paper stock, moved subscription prices up, then down, took advertisers on exotic retreats, to no avail.

Then Bradley found Smith, who understood that while The Atlantic was losing a lot of money, it was part of a company with capital, strong brands, and a sole owner who was ambitious and interested in innovation.

A superficial glance at his resume might have suggested that Smith—a boyish 42-year-old who’s moving a little stiffly these days as he recovers from an accident he had while biking with his wife and two children—wasn’t the natural candidate for the job, much less the kind of person who’d be willing to upend a comparatively ancient company. He’d been something of a suit for most of his life, having started out at the International Herald Tribune in Paris, where he grew up, and in Hong Kong, where he helped the IHT build its conference business. Then he worked in corporate strategy for The Economist Group, helping plot the British newsweekly’s U.S. expansion, before joining The Week in 2001.

But Smith, as it turns out, has an entrepreneurial, innovative streak, and is highly driven. (He’s known for being relentless; his deputies get emails from him at 6 a.m. some weekends.) He had gotten restless at The Week, where he wanted to push the brand online more aggressively than did Dennis. And while working at The Week, he started a side project, Breaking Media, a small collection of blogs, including Dealbreaker and Fashionista, in which he still has an ownership stake.

It was this creative drive that made him the right person to re-create The Atlantic as a company, and that has informed almost all of what he’s done there.

“One of the great flaws in traditional media companies is they pay lip service to innovation,” Smith says. “They can’t restructure because they’re supertankers. They don’t reinvent themselves to their core.”

Not everyone, however, believes Smith is The Atlantic’s knight in shining armor.

Nick Denton, for one, the founder of Gawker, feels Atlantic Media has not made enough changes. “They’ve had some audience success with the Atlantic Wire,” he wrote in an email. “And Andrew Sullivan was a draw until Bradley lost him to the [Newsweek] Daily Beast. But I’m still not sure whether there’s a theme that unites all The Atlantic’s digital initiatives. The group’s greatest asset is David Bradley’s social power; if he could persuade his friends to contribute regularly online, The Atlantic would be worth reckoning with.”

The company also faces a major challenge with its National Journal Group and, indeed, the past year has been spent trying to replicate the success that The Atlantic has enjoyed online at the company’s other primary business. For more than 40 years, the flagship National Journal magazine had been an authoritative source of Beltway news for politicicans and policy wonks, commanding a subscription price of $2,165 per year. Bradley bought it in 1997, his first media acquisition, and it did all right—until 2007, when Politico, which turned the business of reporting on Washington on its head, began to erode its business. By 2010, advertising and circulation revenue had plummeted.

“It was a huge wake-up call,” Bradley recalls, as if still dumbfounded by it all. “I’ve never been part of a company that lost so much of its value in 15 months.”

To get it back on its feet, Smith set up nine task forces to review the National Journal from top to bottom, making it what he would call a “petri dish of experimentation.” He overhauled the group, turning over almost half the National Journal’s staff and hiring Ron Fournier, the former Washington bureau chief for the Associated Press, as editor in chief. The group’s three newsrooms were merged into one and NJ launched a free website to compete with Politico.

Most radically, with other players like Bloomberg LP and the Economist Group bulking up their offerings to the market, Smith converted the group from an individual subscription to an organization-based membership model. Organizations would pay for their employees to access the National Journal Group’s three media properties, which used to cost more than $10,000 annually, plus extras like policy briefings, seminars, and research for the time-starved.

The membership idea grew out of Bradley’s experience from the service-based research firms he founded in his early years, The Advisory Board and The Corporate Executive Board companies. One of the most interesting aspects of the membership model is its flexible pricing, which suggests that fees are negotiable and that if a member is having a bad financial year, Atlantic Media will continue to service them without charge. Bradley actually sees that aspect of the plan as low risk. “I have a lot of experience there,” he says. “People are honorable. Virtually no one takes advantage of you.” The group also has set up a system to get ongoing feedback from members. Fournier, who as an AP vet is used to the membership-based model, says he’s “stoked” about the change. “What’s scary about getting closer to your readers? That’s kind of what we got into the business for,” says Fournier.

There are more changes to come. Smith wants to double Government Executive’s business within the next five years. He hired a new president, Peter Goldstone, who plans to relaunch the magazine this October, add digital elements to all its products, and roll out other new products.

The year ahead will be a test for the National Journal as it battles new Washington rivals, and while Smith claims his offering is distinct, he’s not ignoring the competition. “There’s no doubt we’re going to be bumping into each other,” he says.