All In For Growth
The first thing you notice about Doubledown Media are the contrasts.
The company publishes two lush business/lifestyle magazines for the financial world, but it isn't based in Manhattan's Financial District. Instead, it's located at the far fringe of the Garment District, on 35th Street, a place where noteworthy architecture is an accident, most buildings' main entrances are loading docks and the neighborhood delis' shelves are oddly sparse.
A visit to those Midtown offices in December came on the day when Goldman Sachs became the buzz of the financial world when it said it had put aside more than $16 billion for bonuses and other compensation for its people. Much of that bonus money will go to the firm's financial traders, who are part of an extremely high-income community on which Doubledown Media is betting the company.
But the offices of a company that produces those lush magazines for the richest of the rich are themselves deliberately, defiantly shabby. So why the downscale ethos for a luxury-magazine company? Chairman Jim Dunning, surely one of the wealthier people in publishing, says this: "We're not going to go for the trappings. We're not going to have fancy offices. We're going to have fancy houses at the end of this."
And in that way, Doubledown Media is like the people it serves;pragmatic, focused on the payday, and willing to make the big bet. Doubledown, (founded by journalist-entrepreneur Randall Lane and ex-trader Magnus Greaves in 2004; Dunning joined a few months back as chairman and big-money backer) has created two innovative luxury lifestyle/business hybrid magazines for financial traders and dealmakers in the last 25 months, with startup capital estimated at around $5 million. First came Trader Monthly, a six-times title with a controlled circulation of 150,000 (100,000 in the United States and 50,000 in the United Kingdom), which was launched in November 2004 and serves the trader and hedge-fund world. Then in November came Dealmaker, a 100,000 controlled-circulation title for the transaction side of the financial world.
So Far So Good
The big bet is this: Is it possible to create a trade magazine only for millionaires who share a profession? Can you build a controlled-circ luxury consumer magazine for a particular trade?
So far so good. Trader Monthly generated 349 ad pages in six issues in 2006, averaging 58 pages per issue in a folio that was around 130-150 pages. On a one-time, 2007 ratecard-rate basis that would have produced on average around $1.3 million per issue, or $7.8 million for the year. Discount for an increase in 2007 rates, plus between 25 percent and 50 percent for frequency discounts and negotiating, and you have what the magazine is probably actually generating.
Dealmaker produced 52 pages in its inaugural issue in a total folio of 140 pages. Both magazines carry a mix of luxury consumer products;wine, watches, travel, real estate;and endemic ads, such as transaction tombstones and lending services.
Both Lane, the president and top editor, and Dunning are very clear on the position of their magazines. "The trader community is incredibly homogeneous in both their interests and their psychographic," Lane says. "Trading used to involve men standing shoulder to shoulder;it was as true a community as you can get. This magazine came along as electronic trading caught on, so we said, ï¾Let's keep our community together;and let's keep the community informed through this magazine.'"
Lane says ex-trader Greaves would look at trade magazines on colleagues' desks, and note that they were not being read. "We asked, ï¾Why can't we bring a Conde Nast type of edit to this kind of audience,'" Lane says. "How else are you going to reach 100,000 people with an average income of $500,000? We have an incredibly desirable community and that is why it has worked."
Dunning puts it like this: "We don't view ourselves as a trade magazine. We go to readers with what they do passionately during the day, and then surround them with the 24-hour activities that are around their work. In their social context, they are all interested in fine wines, luxury real estate and high-end watches."
Again the contrasts: However high-end the market, the Doubledown Media offices are in one of those old Manhattan office buildings with slow, tiny elevators. The lobby is crisscrossed with pipes, ducts, exposed wires and unpacked boxes. An old non-functioning mail chute from another era has a sheet of paper scotch-taped to it, warning people not to use it.
There is no executive suite. Lane and Dunning, who is one of the top five or so most significant people in magazine deal-making history, occupy modest quarters.
And to get to the company's small balcony, Dunning, Lane and the Folio: camera crew had to climb over an equipment bag, onto a radiator and through a window.
The symbolism is apt: Creating controlled-circ luxe magazines is also a tricky business. The basic challenge is that consumer advertisers;even the luxury-products advertisers;want reach, a low CPM and edit-to-product synergy. "I have heard scores of consultants, people new to the business, and more talk this concept up," says Don Pazour, CEO of Access Intelligence. "I have not seen it succeed. In terms of traditional CPM, reach and demographic metrics, or any of those tools used by agencies or consumer marketers, b-to-b does not stack up."
And Bill Curtis, owner of Curtco Robb Report (a direct competitor in the luxury-products category), asked whether he could think of a hybrid b-to-b/consumer magazine that has worked, responded this way in an e-mail: "Don't really know of one that has really succeeded. However, the deal biz is so hot these days (Hedge funds and Investment bankers) that it seems worthwhile. With all these bonuses being tossed around it's got to work."
A third source, who asked not to be named, said he thought that "wealthy backers sometimes want to participate in the media world for reasons other than making money -especially if they work in the same industry that the publication covers."
He'd be referring to both Greaves (who is based in the U.K.) and Dunning, but perhaps especially Dunning. Dunning was part of the group of executives that acquired Petersen Publishing with Willis Stein & Partners in 1996 for about $440 million and sold it in 1999 for $1.5 billion to Emap. (Emap later sold it to Primedia for about $400 million, losing about two-thirds of the value when it bought the company.) Dunning later acquired Ziff Davis' magazine group for $780 million in 2000, also with Willis Stein. That deal did not work out and Dunning exited in 2001, making him a participant in one of the most successful private-equity deals in the history of the magazine industry and also one of the least successful.
Lane's background is entrepreneurial. He started at Forbes and in 1995 launched POV, a business magazine for young men that was hot in the mid-to-late nineties before the men's category was overwhelmed by the ï¾lad' magazines. POV shuttered in 2000, having peaked at about 400,000 in circ and $11 million in revenue. "The model we have now seems better," Lane says. "Niches are a good place to play."
A key part of Doubledown's success so far is its events. The company produced 60 events in 2006 and Lane says the events are not just a profit center, but have also allowed the company to directly touch a huge part of its audience. Many are editorial-related parties, and they have definitely generated interest. "Have you been to one of their parties?" a senior executive who ran a competitive publishing company asked recently. "If you get invited to one, get an invite for me."
Going forward, Lane and Dunning say they want to expand both horizontally, in related markets, as well as vertically by taking the existing magazines to new countries. "We're fully backed and fully financed and have an open-ended commitment from me to continue," Dunning says. "We want to see a business of significance, and by that we mean a business of $100 million."
Clearly Define What You Are
For Doubledown, it's a community of businesspeople surrounded by avocational pursuits.
From the start, Doubledown knew it had a homogenous group of people
with a diminishing ability to interact. So it stressed parties and
other events from the start.
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