American Media Inc
American Media, Inc.
American Media, Inc.
1000 American Media Way
Boca Raton, Florida 33431-1000
Telephone: (561) 997-7733
Fax: (561) 272-8411
Web site: http://www.americanmediainc.com
Incorporated: 1991 as Enquirer/Star Group, Inc.
Sales: $560 million (2006 est.)
NAIC: 511120 Periodical Publishers
American Media, Inc., (AMI) was incorporated as The Enquirer/Star Group, Inc., in 1991 to serve as a holding company for the best-selling supermarket tabloids in the United States. Since then the company has acquired its main tabloid rival, the Globe. A line of mini-magazines rounds out the company's supermarket checkout offerings.
Tabloids are not the whole story at AMI, however. The company has amassed a number of top-selling consumer magazines relating to active lifestyles. AMI claimed a monthly readership of more than 35 million even after the proposed sale of five special interest titles in 2006. A number of mainstream publishers use the company's Distribution Service Inc. (DSI) subsidiary to get their magazines into supermarkets.
NEW YORK ORIGINS
The National Enquirer, the Group's flagship publication, traces its history to 1926, when newspaper magnate William Randolph Hearst lent his protégé William Griffin money to found the New York Evening Enquirer. This Sunday afternoon paper was distributed throughout New York City. As partial payment of his loan, Hearst asked to use the Enquirer as an experimenting ground for new ideas. Hearst used the good ideas in his successful publications; the less successful ideas stayed with the Enquirer, and as a result the Enquirer 's sales never soared. They were further undercut during World War II, when Griffin wrote such fiery editorials against U.S. military involvement in the war that he was indicted for subverting the morale of U.S. troops. (Charges were later dropped.) By 1952, circulation had dropped to 17,000 copies.
In 1952, Generoso Pope, Jr., son of the founder of New York's Italian language daily newspaper Il Progresso, purchased the Enquirer for $75,000 (financed by the Mafia, his son later said). Pope planned to gradually change the format of the paper to that of a national news-feature weekly. He dropped the paper's Democratic partisanship, increased its staff, and added a new, anonymously written "world-wide intelligence column." Although Pope initially said the newspaper would not convert to the tabloid format, the paper became a tabloid in 1953.
The greatest change Pope instituted, however, was in the paper's editorial content. Gory stories of murder and mutilation became regular features. Confessions such as "I'm sorry I killed my mother, but I'm glad I killed my father," appeared. Headlines declared: "I say 'no' to passionate potentate and he has his half-men beat me into submission!" The Enquirer 's content was so salacious that New York City Mayor Wagner frequently voiced his displeasure, which eventually led to Pope's resignation from the city's Board of Higher Education in 1954. At that time, Pope also announced that he was handing control of the publication over to former general manager Roy Moriarity, although he did not disclose whether he still owned all or part of the paper.
In 1957, the paper was renamed the National Enquirer. Pope broadened its focus to include national stories of sex and sadism and also expanded its distribution. Sales grew steadily, despite content so offensive that the Chicago Transit Authority temporarily banned its sale at station newsstands. By 1966, however, sales had reached a plateau at 1 million copies per week, prompting Pope (who had once again taken control of the publication) to clean up the paper's image. "There are only so many libertines and neurotics," he told Newsweek in 1969. In defense of his earlier editorial choices he declared, "Every publication starts out by being sensational. I intended to make it a quality paper all along."
FINDING A PLACE IN THE SUPERMARKET
Analysts cited the declining number of newsstands as the real reason for the paper's stagnation. As mom and pop grocery stores and corner newsstands were gradually replaced by supermarket chains, outlets for the National Enquirer diminished. Pope sought to clean up the paper's image in order to tap into the enormous market of women who frequented supermarket check-out lines. He hired seasoned journalists, paying them some of the best salaries in the business. In keeping with the publication's new pristine image, company headquarters were moved from New York to Lantana, Florida (population 8,000), where the Enquirer soon gained acceptance in the community by sponsoring Little League teams and purchasing a new ambulance for the local fire station.
Pope also hired a vice-president for corporate planning and a public relations firm to broadcast the paper's new content. Stories such as "Poor Italian Immigrant's Son Starts Chinese Food Business in a Bathtub" were more zany than distasteful. The new Enquirer also began covering politics, albeit with its own special bent. Senator Edward Kennedy's much-publicized accident at Chappaquiddick, in which he survived a watery car crash that killed his female companion, received thorough coverage in the Enquirer. The paper even went so far as to hire clairvoyant Jeane Dixon to foretell the Senator's future.
Despite its improved image, supermarkets were initially reluctant to sell the Enquirer. Pope courted them by promising the supermarkets 22 percent of the cover price. Free subscriptions were given to wives of supermarket executives, and endorsements from Hubert Humphrey, Barry Goldwater, and Joan Crawford were made into a promotional film narrated by a well-known newscaster. When that did not work, Pope claims that he enlisted the help of a friend, Melvin Laird, Secretary of Defense during the Nixon administration, who took supermarket executives on a private tour of the White House and allowed them to meet with the President for half an hour.
Within three years, the Enquirer was available in most supermarket chains across the United States. By 1969, circulation had climbed to 1.2 million copies per week, and the National Enquirer ousted Reader's Digest from the newsdealer's top-five bestseller's list. Sales continued growing to just below 4 million a week by 1974. Gross revenues in 1973 were $17 million; the next year they hit $41 million. Advertising sales were so good that the company allegedly turned down accounts, and analysts were calling the publication "outrageously successful."
At AMI, we take pride in being always in tune with today's fast paced times and constantly changing tastes. With annual revenues in excess of $500 million, AMI will continue to grow, pursuing strategic acquisitions and maintaining its leadership role in the markets we serve.
In 1978 circulation reached 5.7 million copies, but slid to just under 4.6 million by 1981. The decline was attributed to the growing number of competing supermarket tabloids, including one created by Pope. In 1979, Pope launched Weekly World News, a black-and-white tabloid that published unusual stories similar to those found in the early days of the Enquirer, printed at the Enquirer 's printing plant in Pompano Beach, Florida. Within two years of its debut, Weekly World News began making a profit, with a circulation of over 700,000. By 1984, Australian media mogul Rupert Murdoch introduced the Star, a four-color gossip sheet, to take advantage of consumer desire for naughty news.
WOOING CORPORATE ADVERTISERS
In 1982, Pope raised the Enquirer 's cover price by 20 cents, to 65 cents an issue. Circulation, fueled by an enormous advertising campaign, rose by 11 percent. Gross revenues climbed 54 percent to $140 million. Pope also sought to improve the bottom line by luring blue-chip companies such as General Motors, Procter & Gamble, and Sears to purchase advertising space in the paper. Until the early 1980s, approximately 12 percent of revenues came from advertising. Most were small, mail-order companies offering everything from biorhythm charts to seeds for growing six-pound tomatoes. Calculating that revenues could increase by 25 percent if these small ads were replaced by full-page ads from major corporations, Pope began an all-out effort to woo advertisers, using the tag line, "You may not like the Enquirer, but 14 million people do."
Luring respectable advertisers prompted another change in editorial content, as Pope directed cutbacks in the gossip columns in an attempt to become "a service and entertainment publication for middle America." Pope used the same strategy he developed to get the Enquirer into supermarkets, giving free subscriptions to the wives of advertising executives, recording celebrity endorsements, and courting the approval of decision-makers. His strategy worked. By 1986, color ads for cigarettes, clothing, brand-name foods, and household products had replaced many of the smaller ads. Advertising revenues for 1985 were $31.1 million, up from $29.2 million in 1984.
NEW OWNERSHIP IN 1989
Generoso Pope, Jr., passed away in October, 1988. Several of the world's leading publishing companies bid for the family-owned business, including Diamond Communications, Maxwell Communications Corp., and Hachette S.A. In June, 1989, GP Group Acquisition Limited Partnership (a partnership created by Boston Ventures Limited Partnerships III and IIIA and Macfadden Holdings, L.P.) purchased the operations for $413 million in cash.
GP Group Acquisitions instituted a number of reforms to boost revenues and cut costs. The Enquirer 's outmoded printing plant in Pompano Beach, Florida, was closed, television advertising was discontinued, and editorial expenditures were reduced. In addition, mail order and classified advertising rates were increased substantially and the cover price of the National Enquirer was boosted to 85 cents in the United States, and 89 cents in Canada.
- New York Evening Enquirer is formed by William Griffin, protégé of William Randolph Hearst.
- The Enquirer is acquired by Generoso Pope, Jr., for $75,000.
- The increasingly sensationalistic paper is renamed the National Enquirer.
- The Enquirer has weekly sales of one million copies.
- The Enquirer is available in most supermarket chains.
- Headquarters are relocated from New York to Lantana, Florida.
- Annual revenues reach $41 million in a sales boom.
- Star rival tabloid is formed in New York by Rupert Murdoch's News Corp.
- The Enquirer 's circulation reaches 5.7 million copies.
- Pope launches Weekly World News.
- An advertising campaign and a price increase help lift revenues 54 percent to $140 million.
- GP Group Acquisition LP buys Pope's business for $413 million following his death.
- GP Group buys the rival, Star, in a $400 million deal.
- The Enquirer/Star Group, Inc., holding company is formed and soon goes public.
- Weekly World News TV show debuts.
- The Enquirer/Star Group is renamed American Media, Inc. (AMI).
- A group led by David Pecker acquires AMI for $850 million.
- AMI is among the media organizations targeted by anthrax letters; the company relocates to Boca Raton.
- AMI announces it is selling off five specialty magazines to focus on celebrity weeklies and active lifestyle magazines.
In early 1990, GP Group purchased the Star, National Enquirer 's rival publication, from Rupert Murdoch's New America Publishing Inc. for $400 million in cash and stocks. At the time of purchase, the Star 's 3.6 million weekly circulation was just below National Enquirer 's weekly circulation of 4.1 million. That year, the company took the name Enquirer/Star Group, Inc. The Enquirer/Star Group went public in July 1991, with an initial offering of 13 million shares of Class A Stock. Also that year, the group launched Soap Opera Magazine, a weekly publication that provided in-depth coverage of daytime soap opera and was sold at supermarket checkout lines for $1.19 in the United States and $1.29 in Canada. Distribution of the National Enquirer and Weekly World News soon spread to the United Kingdom, Europe, and Asia.
Circulation declined across the publishing industry in the early 1990s, due to increased competition from television celebrity news programs. The Enquirer/Star Group responded by expanding its overseas market. The Group also entered into a number of other ventures in the early 1990s, including trademark licensing, story syndication, and the launch of What People Are Wearing, a monthly spin-off of the Star devoted to celebrity fashion and beauty. In 1993, the company entered into a joint venture with Brandon Tartikoff (former chairman of Paramount Studios) to begin production of a one-hour television program produced by the staff of the Weekly World News to be aired on network television. Stories on the one hour pilot included the usual Weekly World News fare, including a faith healer/mechanic who fixed cars by laying his hands on them and photos proving "beyond a doubt" that humans lived on Mars.
Although the Enquirer/Star Group churned out some questionable stories, the company's bottom line remained solid. Net income grew by 15 percent to $19.4 million in 1993. With a strong cash flow and bold expansion strategies, Enquirer/Star Group's future as the world's primary news source on alien sightings and celebrity romances seemed strong.
NEW NAME IN 1995
The owners of GP Group, which held 53 percent of Enquirer/Star's common stock, proposed buying out the remainder and taking the company private again in 1994. However, the offer was withdrawn as a number of major tabloid stories helped push the company's share price far beyond the price suggested for the buyout. Instead, Enquirer/Star underwent a recapitalization, issuing $200 million in junk bonds to reward its shareholders with a $7 per share dividend. The company's name was changed to American Media, Inc., (AMI) in 1995.
The largest celebrity story of the day was the O.J. Simpson trial, and AMI's National Enquirer covered it closely. Some of its exclusives were grudgingly acknowledged in the mainstream media, conferring, some said, a new level of respectability on the tabloid. This did not stop the Enquirer 's circulation by slipping by a third, to about two million readers, from 1994 to 1999. At the same time, mainstream magazines were devoting increasing attention to celebrity gossip stories.
PRIVATE AGAIN IN 1999
A group led by David Pecker, including the investment firm Evercore Partners, acquired AMI in May 1999 for $850 million. Pecker, an accountant by training, had previously tried to buy Enquirer/Star as CEO of Hachette Filipacchi Magazines but was outbid by GP Group. One of Pecker's first projects after acquiring AMI was to buy its nearby rival Globe Communications Corp., which published the Globe, National Examiner, and the Sun, for $105 million. The Star was relocated from New York to the Globe 's Boca Raton offices; AMI soon moved its own headquarters nearby. At the same time, the Enquirer and Star were given makeovers and bolstered by a $50 million TV campaign. In fiscal 1999 AMI had revenues of $275 million, the bulk of which came from newsstand sales rather than advertising.
2001 ANTHRAX CRISIS
AMI was one of the news outlets targeted by anonymous letters containing anthrax in 2001. The spores killed a photo editor and sickened another employee. AMI had to evacuate its 63,000-square-foot headquarters near Boca Raton following the incident, and ultimately abandoned the building—and an archive of five million photographs collected over 50 years (it was able to save many that had been scanned into digital files).
The company's papers were in a sales slump. By 2003, the Enquirer, Star, and Globe combined were selling fewer than three million copies a week. In a move to broaden its consumer base, AMI bought Weider Publications from Weider Health & Fitness for $350 million. Weider's health-oriented magazines included Muscle & Fitness, which dated back to 1940, and Shape. About one-fifth of Weider Publications' 400-strong workforce was cut after the buy. The acquisition helped lift AMI's revenues from $315 million $515 million in fiscal 2004.
A new partner was brought in to AMI in 2003. Thomas H. Lee Partners invested $250 million as AMI's was valued at $1.5 billion. Evercore Partners participated in the restructuring with a new fund. AMI's revenues were up to $375 million for the year.
HIRING A STAR EDITOR IN 2003
Also in 2003, Star magazine was relocated back to New York. To lead it, Pecker hired editor Bonnie Fuller away from the celebrity-oriented US Weekly she had helped revitalize. (Her resumé also included the editor's spot at Cosmopolitan and Marie Claire.) The next year, Star was relaunched as a glossy magazine. AMI had also moved its mini-magazine business, valued at $40 million a year, to New York, where it was easier to recruit staff and meet advertisers.
Other titles, including the Enquirer, and Men's Health, were being retooled. The company also tested new concepts, such as magazines produced with Sylvester Stallone and Latina singer Thalia Sodi. A shelter magazine called Happy Home was aimed at young women. Looking Good Now was a cut-price health and fitness title originally distributed exclusively at Wal-Mart.
In June 2006, AMI announced it was selling off a handful of specialty magazines to focus on celebrity weeklies and active lifestyle magazines. The titles for sale were Muscle & Fitness, Flex, Muscle & Fitness Hers, Country Weekly, and the Spanish-language celebrity magazine Mira! Together, they represented sales of $84 million a year. AMI was keeping Shape magazine and Men's Fitness.
AMI's remaining titles had a total monthly readership of 35 million. Pecker told Business Week the company was expecting revenues of $560 million for 2006. The Star was being moved back to Florida yet again in the name of cutting costs.
Updated, Frederick C. Ingram
American Media Operations, Inc.; Distribution Services, Inc.
Celebrity Journalism; Health & Fitness; New Media/Brand Development; Distribution Services Inc.
Bauer Publishing USA; Rodale Inc.; Time Inc.; Wenner Media LLC.
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Carr, David, "A Tabloid King Looks Beyond Elvis," New York Times, Bus. Sec., June 30, 2003, p. 1.
――――, "Tabloid King Seeks Makeover from Sassy to Stable," New York Times, Bus. Sec., April 19, 2004, p. 1.
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――――――, "Tabloid Turnabout: Why Investors Withdrew Bid for Enquirer/Star Group," Barron's, July 18, 1994.
American Media, Inc.
American Media, Inc.
600 East Coast Avenue
Lantana, Florida 33464-0002
Fax: (561) 540-1018
Web site: http://www.nationalenquirer.com
Incorporated: 1990 as Enquirer/Star Group, Inc.
Sales: $307.7 million (1998)
Stock Exchanges: New York
Ticker Symbol: ENQ
SICs: 2721 Periodicals: Publishing & Printing
American Media, Inc. is a leading U.S. publisher best known for the periodicals National Enquirer, Star, Weekly World News, Soap Opera Magazine, Country Weekly, and Soap Opera News, with a current aggregate weekly circulation of over five million copies. National Enquirer and Star have the second and third largest single copy circulation, respectively, of any weekly periodical. American Media Operations, Inc., a wholly owned subsidiary of American Media, conducts all of the company’s business operations and owns substantially all of the company’s assets including the capital stock of its subsidiaries. American Media derives more than 85 percent of its revenues from circulation, predominantly single copy sales in supermarkets and other retail outlets, with the remainder from advertising and other sources. Another subsidiary, Distribution Services, Inc. (DSI), markets American Media’s periodicals, as well as those of its client publishers, in approximately 175,000 locations in the United States and Canada. In addition, DSI provides merchandising and information gathering services for nonpublisher third parties.
Pope Acquires the New York Evening Enquirer: 1952
In 1952 the 25-year-old Generoso Pope, Jr., acquired the New York Evening Enquirer, a weekly that focused on horse racing news and crime stories, for $75,000. He modified the paper to a tabloid format and altered it to include unique and unusual news items. He also gave the paper more of a national focus and in 1957 renamed the paper National Enquirer. By the mid-1960s weekly circulation reached one million copies. Anticipating that urban newsstands would become less numerous, he had the paper distributed through supermarket chains. To make the paper more acceptable to shoppers and the general public, he reduced coverage of crime stories and increased coverage of celebrity and human interest stories.
Pope moved the National Enquirer to Lantana, Florida, in 1971. Circulation of the National Enquirer peaked in the late 1970s at about six million copies a week. Pope began publishing Weekly World News in 1979. It was a black and white tabloid devoted to entertaining and unusual news and feature stories. Most of its content was derived from stories and purchased photographs from agencies and periodicals around the world.
1989 Sale of the Company
Pope died in 1988, and in June 1989 GP Group Acquisition Limited Partnership acquired the National Enquirer and Weekly World News from Pope’s estate for $413 million in cash. The general partners of the GP Group Acquisition were Boston Ventures Limited Partnerships III and IIIA and Mcfadden Holdings L.P. Management of the company consisted of several key executives associated with Mcfadden and Boston Ventures. Mcfadden was known as the publisher of True Confessions, True Stories, and other magazines.
Following the acquisition, a program of revenue enhancements and cost reduction measures began. The cover price of the National Enquirer was raised from $.75 to $.85 in the United States and from C $.75 to C $.89 in Canada. The subscription price also was increased, as were mail order and classified ad rates. These actions resulted in an additional $15 million in annual revenues.
Cost reductions included renegotiating major supplier contracts and new printing contracts. An outmoded printing facility in Pompano Beach, Florida, was closed, and the page count of the National Enquirer was reduced. Television advertising was discontinued because it was ineffective. Editorial staff was reduced, and free-lancers were paid less for articles and photographs. These measures resulted in an estimated annual savings of more than $20 million.
Enquirer/Star Group, Inc. Forms in 1990
In June 1990 the Enquirer/Star Group, Inc. was organized as a holding company for the purpose of acquiring the Star from News America Publishing Inc. and one of its affiliates for $200 million in cash and $200 million in convertible preferred stock. Enquirer/Star, Inc. was a wholly owned subsidiary, originally incorporated in 1981 under a different name, of the Enquirer/Star Group that conducted substantially all of the company’s operations and represented substantially all of the Group’s assets.
The Star was launched in 1974 by Murdoch Magazines, a division of News America Publishing Inc. It was a weekly periodical focusing on celebrity news and feature stories and was distributed through the same outlets as the National Enquirer. The Star’s editorial staff worked from offices located in Tarrytown, New York, and operated independently of the editorial staffs of the National Enquirer and Weekly World News, whose offices were located in Lantana, Florida.
Cost reduction measures were introduced following the acquisition of the Star. Production of the Star was changed from heatset offset to the more cost efficient rotogravure printing. The change also improved reproduction quality and allowed for the use of lower-cost newsprint. Certain distribution, print, and pre-press operations were combined to achieve additional cost savings, as were advertising sales staffs, accounting, and other support functions. These measures resulted in annual savings of more than $20 million.
Enquirer/Star Group Goes Public: 1991
In July 1991 13.5 million shares of Class A common stock were offered to the public at $14 per share, and the stock of the Enquirer/Star Group began trading on the New York Stock Exchange. Just prior to the initial public offering (IPO), the National Enquirer began distribution in the United Kingdom. The tabloid was so well accepted that the company began printing a separate U.K. edition in Switzerland and was exploring the possibility of selling Weekly World News in the United Kingdom as well.
Soap Opera Magazine was launched in October 1991 as a weekly publication, with editorial offices in Tarrytown, New York. Within three months of its launch it was being sold at 70,000 checkout counters across the country, and after nine months it had reached the break-even point in sales. The 48-page weekly provided in-depth coverage of 11 network daytime soap opera programs, with circulation consisting primarily of single copy sales. Its content included summaries of current story lines, exclusive interviews, and extensive photo coverage of soap opera stars.
During fiscal year 1991 (ending March 31) the company began publishing special issues of the National Enquirer and the Star. Each issue was topic-specific, had 72 color pages, and stayed in circulation for six to eight weeks. They were priced at $1.95 in the United States and C $2.25 in Canada. During fiscal year 1992 six special National Enquirer issues and five Star special issues were published.
For fiscal year 1992 (ending March 30) the company reported excellent financial results, with increases in operating cash flow, operating income, and net income. It realized net income of $5.7 million on sales of $283.7 million. Newsstand circulation and advertising sales continued a downward trend, due in part to a continuing recession and competition from other media who were devoting more space to personality journalism. The company planned to launch a brief television ad campaign to boost circulation and improve ad sales. Cover prices for the National Enquirer and the Star were raised to $.99 from $.95 to cover promotion costs. The company planned to grow its business by launching new magazines, expanding distribution to Europe, and exploring the possibility of television production. DSI, the company’s distribution and merchandising subsidiary, was expanding its operations by increasing its client base. During fiscal year 1992 it added US and Rolling Stone magazines.
In May 1992 the cover prices of the National Enquirer and the Star were raised to $1.25. At the same time a substantial television ad campaign was launched. For fiscal year 1993 the company reported net income of $19.4 million on sales of $275.4 million. During the year a new distribution agreement for the United Kingdom was completed. The company also formed a joint venture in Australia with Australian Consolidated Press to publish an Australian version of the National Enquirer, which went on sale June 9, 1992. It suspended publication in December 1993 after 29 issues, because of lower than anticipated single copy sales. With no plans to resume publication of the Australian version, the company resumed distribution of the U.K. version in Australia.
In June 1993 the GP Group Acquisition Limited Partnership was dissolved and its assets, consisting primarily of 21.5 million shares of common stock, were distributed to its general partners and two limited partners. These general partners, The Boston Group and Mcfadden Holdings L.P. submitted a proposal on April 28, 1994, to acquire all of the outstanding shares of Class A Stock not owned by them for $17.50 per share in cash. At the time the majority stockholders controlled about 76 percent of the company’s voting stock. The proposal involved taking the company private, with all stock being converted into cash and no longer being traded on the NYSE.
In May 1994 the board established a committee to consider the proposal. In April and May a total of seven lawsuits were filed by the company’s shareholders. These lawsuits all claimed the same thing, namely, that the proposal was “a scheme to eliminate the public shareholders of the [company] at a grossly unfair or inadequate price in violation of Delaware law and that the defendants, in either pursuing or acting on this scheme, have breached their fiduciary duties of good faith, loyalty, fair dealing, due care and candor to the minority public shareholders.” The plaintiffs generally alleged that the proposal was made at a time when the company’s stock price was severely depressed and that the offer price of $17.50 per share did not adequately reflect the company’s prospects for earnings growth. The proposal to take the company private was rejected because of the opposition of the minority shareholders.
American Media, Inc. is Created in 1994
The company’s fifth periodical, Country Weekly, was launched in April 1994. It was devoted to all aspects of country music, lifestyles, events, and personalities. In its first full year of publication Country Weekly had average weekly sales of 290,000 copies, of which 225,000 were single copy sales.
The company changed its name to American Media, Inc. on November 21,1994, to reflect its broader publishing base of five major periodicals. The name American Media became available when the former American Media, an owner of several radio stations, was acquired and merged into another company.
For fiscal year 1995 the company reported net income of $11.8 million on sales of $315.3 million, compared with net income of $27.8 million on sales of $300 million the previous year. Sales of the National Enquirer were down about ten percent from 3.3 million copies per week in fiscal year 1994 to 3.0 million in fiscal year 1995. The Star’s average weekly copy sales fell from 2.8 million in fiscal year 1994 to 2.7 million in fiscal year 1995, and Weekly World News fell from 558,000 copies per week in fiscal year 1994 to 510,000 copies in fiscal year 1995. In addition to declining sales, which could be offset by higher cover prices, the company’s financial results continued to be affected by higher paper costs, declining advertising revenue, and higher interest expense due to increased debt.
Sales of four of the five major periodicals declined even more during fiscal year 1996, while the recently introduced Country Weekly gained about 15 percent in sales. Average weekly sales of the National Enquirer dipped to 2.6 million copies, and sales of the Star dropped more than ten percent to 2.4 million copies. Weekly World News also declined about ten percent to 459,000 copies, and Soap Opera Magazine fell below the 300,000 mark to 284,000 copies for the first time since it was introduced.
Television coverage of the O.J. Simpson trial was having a big effect on sales of the company’s periodicals. Not only were people buying fewer tabloids, they also were watching daytime soap operas less faithfully. As a result, American Media reported a net loss of $1 million for fiscal 1996 on declining sales of $295.1 million.
For fiscal year 1997 (ending March 31) American Media reported higher sales of $316.0 million and net income of $12.0 million. Average weekly sales of Soap Opera Magazine and Country Weekly both increased by approximately 15 percent, and the declining sales of the National Enquirer, the Star, and Weekly World News leveled off at less than ten percent.
Steve Coz, a Harvard University graduate, was named editor of the National Enquirer in 1996. Coz pledged that the tabloid would feature more stories on celebrities and contain less sensationalism. Reviewing his first year as editor, he noted that the National Enquirer refused to publish such sensational items as the autopsy photographs of Ron Goldman and Nicole Simpson or the murder pictures of six-year-old JonBenet Ramsey, even though its main competitor the Globe did. Publishing those photographs helped the Globe reach the one million mark in circulation.
Time magazine named Coz one of the most influential people of 1997, and under Coz’s editorship the National Enquirer won praise for its coverage of the O.J. Simpson case, the JonBenet Ramsey murder case, and the murder of Bill Cosby’s son. The National Enquirer also broke the story of President Clinton’s advisor, Dick Morris, leaking presidential secrets to a female “acquaintance.”
Nonetheless, in Coz’s first year as editor, the National Enquirer had six lawsuits brought against it by celebrities, including Don Johnson, Dabney Coleman, Lisa Marie Presley, and Tammy Wynette. Eddie Murphy’s lawsuit was dismissed, but Clint Eastwood won a $150,000 judgment when the National Enquirer was found guilty of misrepresenting a syndicated interview as an exclusive. Then in 1997 Martha Stewart brought a $10 million lawsuit against the National Enquirer for an article entitled, “Martha Stewart Is Mentally 111.”
Entering Television Entertainment in 1997
Production of a one-hour National Enquirer special, “25 Years of Scandals,” marked American Media’s entry into television entertainment. The program aired in June 1997. The company had been exploring television shows based on its tabloids since the early 1990s. In 1993 television executive Brandon Tartikoff announced he would produce a show based on stories from Weekly World News. In 1994 Celebrity Entertainment, Inc. produced a one-hour television pilot based on stories from the National Enquirer. Other television projects that never aired included an “Enquiring Minds” game show, which was considered by a major network for the 1992-93 season, and an infotainment show based on Soap Opera Magazine. A third project being explored was a series of one-hour specials tentatively titled, “From the Secret Files of the National Enquirer.”
American Media launched its sixth periodical, Soap Opera News, in March 1997, with editorial offices in Tarrytown, New York. Circulation for the weekly digest-sized publication was 163,000 for its first year, of which 146,000 were single copy sales. It covered all aspects of daytime television’s soap opera programming, including news, features, and behind-the-scenes stories about the shows and their stars.
For fiscal year 1998 American Media reported net income of $5.5 million on sales of $307.7 million. In its annual report it noted that adverse publicity resulting from the August 1997 death of Princess Diana affected single copy circulation of the National Enquirer and the Star. Greater coverage of celebrity news in other forms of media also was having a negative impact on the company’s revenues. The company continued to raise cover prices in an effort to offset declining sales. Of the company’s six periodicals, only Country Weekly showed circulation gains, as its average weekly sales rose from 389,000 copies in fiscal year 1997 to 416,000 copies in fiscal year 1998.
Following nearly a decade of declining sales since it was incorporated in 1990 as the Enquirer/Star Group, American Media will continue to build on its strong trademarks such as the National Enquirer, the Star, and Weekly World News. Interest in celebrity news remains high, and the company will face significant competition as other forms of media devote more time and effort to covering celebrities and personalities in the news.
American Media Operations, Inc.; National Enquirer, Inc.; Star Editorial, Inc.; SOM Publishing, Inc.; Weekly World News, Inc.; Country Weekly, Inc.; Distribution Services, Inc.
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