The New Yorker was always a winner, but David Carey turned it into a breadwinner
What on Earth does a New York City taxicab have to do with the bottom line at Condé Nast's The New Yorker?
Just ask Mike McHale, group media director of the agency Optimedia International in New York. McHale recently witnessed firsthand the famous penny-pinching ways of TNY vp/publisher David Carey, credited by virtually everyone in the know with transforming one of America's most beloved and venerable publications from a notoriously cash-draining enterprise into one (at long last!) with a solid tally in the profit column. For that accomplishment, Adweek Magazines has designated Carey its Magazine Executive of the Year.
As McHale, whose clients include BMW and British Airways, and Carey emerged from a business lunch in lower Manhattan a while back, the ad man fully expected to find the obligatory black Town Car waiting curbside to take the publisher back uptown to the magazine's Times Square base. (Condé Nast publishers and editors are famous for cruising the city streets in such high style.) But no cushy ride for this cost-conscious exec. McHale stood there on the street, more than a bit surprised as Carey shuffled off to flag down a taxi.
Cost-cutting and profit growth have become nothing short of obsessions for the 42-year-old Carey, who arrives at his office every morning by 7:15 from his suburban Scarsdale, N.Y., home, where he and his wife are raising not one but two sets of twins. Besides favoring cabs to shave a dollar here and there, Carey has managed to sop up all the red ink at TNY by cutting the considerable fat from the near-80-year-old institution (without gutting staff—TNY's employee rolls have actually grown in recent years, according to the publisher)—all the while striving to ensure that the vaunted TNY editorial product, under the leadership of editor David Remnick, remains as vital as ever. (In the course of Remnick's six-year editorship, the magazine has grabbed an impressive 13 National Magazine Awards.) Carey reports having saved some $200,000 a year by halting delivery of the magazine to advertisers via messenger every Monday morning. He has also curbed the use of outside consultants, slashed the number of comp copies TNY sends out, and trained the troops to "be more mindful" of travel and entertainment expenses. And if you happen to get a lunch invitation from the publisher these days, you're more likely to find yourself at Condé Nast's cafeteria than The Four Seasons.
In the six years since Carey was appointed TNY publisher (minus six months in 2001 when he left to take the job of president and CEO of G+J USA Publishing's Business Information Group), the magazine has racked up many accomplishments, including a 15 percent bump in total paid circulation. In the last six months of 2003, circ jumped 5.2 percent, to a record 987,288 copies, compared to 2002, according to the Audit Bureau of Circulations.
Meanwhile, TNY reports that under Carey ad revenue has grown by a whopping 50 percent (last year, ad volume shot up 9 percent, to 270.52 pages, versus 2003, according to Mediaweek Monitor). TNY claims to be somewhat protected from trends that drag down other publishers. As Carey explains, while many other magazines count on a single category for as much as half their ads, TNY gets most of its business from nine categories that contribute virtually equal shares. Lately, entertainment/media has been a major growth area, with big spenders including HBO and USA Networks, as has luxury goods. TNY also has benefited from advertisers running large units including gatefolds and pullouts. Last October's fat Hollywood issue sported elaborate appeals from BMW's Mini, Absolut, Lands' End and Lexus. And, since 1999, when the formerly stand-alone title was was folded into the Condé Nast stable, it has benefited from the corporate sales packages that came with that union.
Most significantly, and undoubtedly to the delight of Condé Nast chairman S.I. Newhouse Jr., TNY for the first time in 18 years is generating a profit. "People who think Si doesn't care about profits are wrong," Carey says flatly during an interview in his well-appointed, cavernous office suite high above 42nd Street and Broadway. "It's an easy thing to write about the company, but it simply is not correct." Carey allows that prior to former Condé Nast president/CEO Steve Florio's reign beginning in the mid-'90s, "there were really no budgets." But he adds that since he came to the company from SmartMoney in 1995 to oversee the launch of House & Garden, "budgets are real—and if you miss a budget, it's not good." In fact, Carey is known for exceeding the financial expectations he lays out for his title, leading fellow Condé Nast execs to bestow on him their annual "B.S. Award" three years in a row. Knowledgeable sources inside the privately held company put last year's net earnings at between $8 million and $10 million, up from $1 million in 2002. The achievement is especially impressive considering the bruising advertising and circ results many publishers have suffered lately.
TNY is making circulation work for the bottom line. Over the past five years, the magazine has raised its cover price by 10 percent, to $3.95, and its regular subscription price by 18 percent, to $37.05. The magazine boasts an unheard-of 78 percent renewal rate. In 1999, Carey famously was the first publisher to disclose his magazine's renewal rate in a Statement Plus report accompanying ABC's circ figures. The move seemed radical at the time, he points out, but full disclosure is becoming more fashionable due to circulation scandals plaguing the industry.
The magazine has upped its rate base five times in the last six years and next August will once again take it up, to 925,000.
TNY's readership stats are changing as fast as its circulation. Last year, for the first time, the title claimed more readers in California than in New York. And its audience is getting younger—TNY's median reader age dropped to 44.6 from 48.4 in a single year, according to fall 2003 Mediamark Research Inc. findings.
The editor of a magazine as highbrow and formidable as The New Yorker—with its ambitious, 10,000-word works of fiction and serious, award-winning reporting from the front lines of Iraq and Afghanistan—might not be expected to concern himself with profits. But David Remnick readily admits he's thrilled the mag's in the black at last. The return to profitability means that "you can do your work without having to worry about this hobgoblin," he maintains, musing, "I don't ever want to put an owner in the position of having to be a Medici, a benefactor. It's always been a great magazine, but there's no reason in the world it shouldn't also be a healthy business." He calls Carey "a deeply intelligent leader of people" and "the singular reason why The New Yorker is back in business as a business—there's no doubt in my mind."
"David Carey, as an individual, is truly a very, very special young guy," asserts Chuck Townsend, the Advance Magazine Group exec who took over from Florio as Condé Nast president/CEO in mid-February and someone who has been intimately involved in TNY's budgets for years. TNY "was always a special publication, but its long suit wasn't its profit contribution," Townsend admits. "Now it can be said that it is a very healthy contributor to our operating overhead." Townsend says the magazine is on track this year to beat last year's financial results. "Our goal is to operate the magazine in the 15 percent–net–profit range, keeping with the industry standard," Townsend says, adding that it's "certainly possible—real possible" for TNY to exceed that.
"David Carey is always putting his people or his book or his advertisers in front of what his own goals and aspirations are," says McHale. The publisher "constantly delights and amazes" him with his willingness to go the extra mile for an advertiser. One of Optimedia's clients, British Airways, was the first advertiser to buy the back of TNY's wraparound cover flap, which on its front carries the TNY logo, cover lines and writer credits. Carey was a bit reluctant at first. "We had to badger him into doing it," McHale reveals. But at the end of the day, the publisher became single-mindedly devoted making the placement happen.
"I've read every issue since 1973, and in the last few years, David has brought that brand to life in ways that it hadn't lived before," contends Brad Brinegar, president/CEO of the agency McKinney+Silver in Raleigh, N.C., whose clients include Audi, Nasdaq and Lands' End. "The team [at The New Yorker] is very aggressive in working with advertisers to find new ways to take advantage of what is both a special magazine and a special list of readers. It's one of the places we have to be to reach affluent, intelligent readers." Brinegar adds that there's probably no one in the business he bumps into more at airports than the peripatetic Carey.
Steve Swartz, executive vp at Hearst Newspapers, recalls that he spent more than a little time jumping on and off planes thanks to Carey, back when Swartz was founding editor and Carey was the first publisher of the Hearst Magazines/Dow Jones & Co. joint venture SmartMoney. And Swartz's wife will never forget one such business trip. In 1994, while on his honeymoon in Los Angeles, Swartz got a call from Carey, who wanted the editor to join him immediately on a sales call—in San Francisco. "I don't think we got that business, but we certainly got an A for effort," remembers Swartz. "He never stops selling."
Carey "has a combination of big, brilliant marketing ideas coupled with a sales ability that is very rare," seconds Chris Lambiase, vp/publisher of Reader's Digest, who was ad director of SmartMoney under Carey. "Doing business with David goes well beyond the printed page and becomes a holistic relationship where everybody wins."
Wilma Jordan, founder/CEO of the New York media investment bank The Jordan, Edmiston Group—who, as COO of the Esquire Magazine Group in the early '80s, gave Carey his first job in the magazine business—recalls that Carey was "a go-getter from day one. He has a great feel for promotions that are going to work. His marketing instincts are just excellent."
In addition to growing the bottom line through circ hikes and cost-cutting, the magazine also has found a most dependable revenue source in the licensing of its famed cartoons and the sale of reprints of its covers. (TNY content now appears on everything from T-shirts to shower curtains.) The $300,000-plus that The New Yorker took in from the sale of reprints of Art Spiegelman's 9/11 cover, depicting faint, haunting shadows of the fallen Twin Towers, went to charities benefiting victims of the terrorist attacks. But other covers have served to feed TNY's coffers—most significantly, the iconic "New Yorkistan" cover by Maira Kalman and Rick Meyerowitz, which "Afghanistanicizes" New York City's neighborhoods (the Bronx is transformed into "Bronxistan," while the Upper East Side is re-christened "Pashmina"). Carey reports that the whimsical cover sold more than $1 million worth in just four months.
Meanwhile, the magazine is adding to its lineup of special issues. The Feb. 16 & 23 issue this year celebrated TNY's 79th anniversary and included a 34-page, stand-alone retrospective of the magazine's covers that carried 17 pages of ads from the likes of Morgan Stanley, Starbucks and Eddie Bauer. The April 19 & 26 TNY will mark the magazine's first-ever humor issue, and a politics issue is scheduled for sometime in the fall. Last August, TNY produced its first-ever family issue, which also further distinguished itself as the magazine's first issue to sell in excess of 1 million copies. (Four months later, the winter fiction issue hit the same benchmark.)
Carey may have elevated cost-cutting to an art form, but he has also opened the checkbook to promote TNY. The most successful of its events by far is The New Yorker Festival, an annual, weekend-long series of happenings in Manhattan that features lectures, readings and walking tours. Launched in 2000, the event draws an estimated 17,000 participants annually. Other events include the college tour Nights on Campus and Fiction Live, in which celebrities such as Ethan Hawke and Janeane Garofalo read from the pages of the magazine. Other TNY-sponsored events are in the works, including the Cartoon Tour, a traveling exhibition featuring the magazine's most memorable illustrations that will kick off next January. Those events aren't cheap, Carey admits. When pressed about whether they pay for, or even come close to paying for, themselves, the publisher says, "On a straight [profit-and-loss] basis, they're not something to write home about, but they weren't intended to be."
EDITOR REMNICK, 45, who beams like a proud big brother when talking about Carey, says that in selling TNY to advertisers and putting together major events like the festival, the publisher "is not pretending to sell a different magazine than what we are. He sees what The New Yorker is, which is serious, ambitious reporting, criticism in the arts, humor—all these elements that are not the magazine equivalent of Survivor or Fear Factor. He finds a way to sell [the magazine] against all the odds, because the culture tells you that everything has to be the same, everything has to be dumbed down…We don't publish The New Yorker and sell it as if it were Rolling Stone or Maxim. Those places are fine, but they do what they do."
In a doff of the cap to his friend Remnick, Carey maintains that all of TNY's celebrated business successes are "rooted in the quality of the [editorial] product," offering that he's "blown away" by how solid some issues of the magazine have been. When asked how a busy publisher who's the father of two sets of twins finds the time to slog through those monstrous, 10,000-word pieces, Carey admits to reading "about 80 percent" of each issue. The articles, he insists, "almost always pay off."
Like Remnick, Carey acknowledges that TNY is something of an anomaly in an age when "the rest of the media landscape seems to be chasing the same three people: Madonna, Britney and J.Lo, or some combination of the three."
Echoing the sentiments of his new boss Townsend, the publisher muses, "The magazine was always seen as an editorially great product, but not a good business—and we're fortunate that we've turned it into a pretty good business with, I think, even greater ambitions to come." Tony Case is a contributing editor to Mediaweek.