Sunday, May 3, 2009

Newhouse Dynasty's `Vogue'/Conde' Nast's Garfinkle Connection Historically

(The following article first appeared in the 11/18/92 issue of the now-defunct Lower East Side alternative newspaper Downtown)

Unlike Mr. Conde’ Nast, Samuel Newhouse I was apparently interested in the Conde’ Nast group of magazines only insofar that women benefited him economically—as employees and consumers of his magazines. As Newspaperman: S.I. Newhouse And The Business Of News by Richard Meeker observed:

“Newhouse had always been impressed by the fact that women’s magazines carried vast amounts of advertising…Their only real problem seemed to be an overabundance of competition, but by the time he bought Conde’ Nast, he already had a solution in mind. Street & Smith, the oldest magazine firm in America, was also up for sale, and it published a group of women’s magazines strikingly similar to Conde’ Nast’s—Charm, Mademoiselle and Living For Young Homemakers. Charm was a direct competitor of Glamour.

“The Street & Smith acquisition went through in August 1959, and Conde’Nast was on its way back to profitability. After all, what advertisers could resist a package that included MademoiselleGlamour (incorporating Charm)…and Vogue…”

The year before Newhouse purchased Vogue and the other Conde’ Nast magazines, the publishing operation had lost over $500,000. But after Newhouse reduced its competitive risks by purchasing Street & Smith's Charm and Mademoiselle, the Conde’ Nast operation quickly became a money-making subsidiary, earning a net profit of $1.6 million the year after Newhouse purchased it.

Another reason why Vogue, Glamour and the other magazines began to prosper again under Newhouse’s ownership was because of the favorable business relationship Samuel Newhouse I had with a man in the magazine and newspaper distribution business named Henry Garfinkle. By the time Vogue was purchased by Newhouse, “Garfinkle’s Garfield News Company had become one of several subsidiaries of another company he controlled—American News…” and “through it, he ran the Union News Company, which, with outlets coast to coast, was the largest retailer of newspapers and magazines in the country,” according to the book Newspaperman. The same book also recalled that “Garfinkle, also operated Greater Boston Distributors and Manhattan News, which dominated the wholesaling of magazines in the Northeast Corridor.”

According to Newspaperman, a Wall Street Journal article about Garfinkle “went on to recount Garfinkle’s connection to the Joseph Bonnano organized crime family and to convicted income tax evader, William Molasky.” The same book also described the nature of Garfinkle’s special connection to Samuel Newhouse I:

“As far as Garfinkle was concerned, Newhouse was a special case. The two men’s personal and business ties made them virtually inseparable. After providing Henry [Garfinkle] with the interest-free loans he needed to get started in the newsstand business, S.I. [Newhouse] had signed his surety bonds. He had also arranged for cafeteria concessions at certain of his newspapers to be awarded to a company Garfinkle controlled…

“By the time Newhouse merged Street & Smith into Conde’ Nast, his pal controlled about 50 percent of all newsstand magazine sales in America…Garfinkle’s friendship eliminated any concerns Newhouse might have had about delays affecting his magazines or of the placement they would receive on the country’s newsstands. `Let’s be honest with each other,’ Garfinkle allowed, `If you put one newspaper or magazine at the front of the stand, you know what happens.’”

After its purchase by the Newhouse Dynasty, Vogue continued to bring in profits and its circulation increased. At the time Newhouse purchased it, 450,000 copies of each issue of Vogue were being circulated and it was selling $7.9 million worth of ad space each year. By 1981, Vogue’s circulation exceeded 1.1 million each month and it was earning $68 million per year from its newsstand sales, its subscribers and its advertisers. Of all U.S. magazines in the early 1980s, Vogue printed the third-largest number of ad pages each month—around 225 ad pages in each issue. In addition to marketing its U.S. edition of Vogue, the Newhouse media conglomerate also marketed foreign versions of Vogue in the UK, France, Germany, Italy, Spain, Australia, Brazil and Mexico in the 1990s.

(Downtown 11/18/92)

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