May 1, 2000
Tumbling Dice

In the biggest gamble of his career, Jann Wenner rolls a $50 million bet on Us Weekly

Tom Wolfe will carry the memory to his grave. One night in 1968, shortly after the publication of “The Electric Kool-Aid Acid Test,” which cemented his reputation as one of the fathers of new journalism, the author agreed to take a ride with a brash young magazine editor who wanted him to write an article for his fledgling publication. Even then, Jann S. Wenner was not the kind of man who liked to take no for an answer. After flying from San Francisco, where Rolling Stone was then based, to New York, the 23-vear-old Wenner showed up in front of Wolfe’s black stretch limousine. His blue jeans and long brown hair, which fell over his shoulders, made him look more like a Merry Prankster than a publishing mogul.

Every window in the limo—including the front windshield—was tinted a deep raspberry, which shrouded the outside world in darkness. As the charismatic young editor turned on the charm, pitching Wolfe on his vision for a new kind of magazine that would cover the world through the prism of rock ‘n’ roll, the limo driver, a hippie with a ponytail and sunglasses, barreled through the streets of New York like a blind man, dodging pedestrians, cars and curbs as he executed hairpin turns and tire-squealing stops. Wenner seemed oblivious, but Wolfe couldn’t stop wondering: How can this guy see the road through all that tinted glass?

“That was one of the wildest rides I’ve ever had,” recalls Wolfe, who could not imagine, at that moment, how inexorably his fortunes would be linked to Wenner’s. “By the time we had gone 10 blocks, I was willing to do anything Jann wanted, just to get out of that car.”

For Wenner, the wild ride was just beginning. Like millions of young people coming of age in the ‘60s, to Wenner, rock ‘n’ roll wasn’t just music, it was a life force, and when he dropped out of lie University of California-Berkeley and scraped together $7,500 from family and friends to launch Rolling Stone in 1967, the grand plan was quite simple: He wanted to hang out with rock stars.

But something unexpected happened at the party: Jann crossed the diamond with the pearl. Rolling Stone became the voice of a generation, transforming Wenner into an icon of both rock and publishing and, eventually, making him a very wealthy man. As much as the stars his publication covers, he embodied the lifestyle of sex, drugs and rock ‘n’ roll, parting as hard has he worked.

Today, the 54-year-old Wenner and his wife Jane (from whom is he separated) are the sole owners of a media empire with an estimated worth in excess of $500 million. Wenner Media, a private company with no investors and no debt, includes the cash cow Rolling Stone (1.25 million circulation, according to the Audit Bureau of Circulations) as well as the nine-year-old, critically acclaimed and profitable lifestyle magazine Men’s Journal (circulation 575,704).

But now Wenner faces the greatest challenge of his career.

After years of watching Us magazine bleed red ink as a monthly, in March, Wenner opened his wallet to relaunch the entertainment magazine as Us Weekly, effectively declaring war on Time Warner’s People juggernaut. Clearly, it represents the most audacious gamble in recent magazine history— Wenner’s $50 million personal bet on a bold circulation strategy and the transcendence of his editorial vision.

While the Us Weekly launch is a story intertwined with the public’s insatiable hunger for celebrity news and the vagaries of an increasingly competitive retail environment, it is also the tale of one man’s appetite for entrepreneurial risk in an industry dominated by corporate giants.

“People wonder why Jann’s doing this,” observes one former Rolling Stone editor. “It’s really quite simple. He’s never been satisfied with being a great editor. Part of him resents being known as the enfant terrible who founded Rolling Stone. He wants to be Henry Luce.”

Inside his corner office overlooking Sixth Avenue in Manhattan, Jann Wenner sits facing away from his desk, feet dangling toward his computer. The middle-aged man with the light beard and the full head of neatly trimmed hair is talking about his friend, Mick Jagger.

“That’s how this whole thing began,” says Wenner, chairman and editor in chief of the company bearing his name. “I just wanted to meet my heroes.”

While allowing him to run with a famous crowd and indulge his various passions, including racing motorcycles and shepherding the Rock ‘n’ Roll Hall of Fame, the success of Rolling Stone demanded that Wenner learn how to be a businessman. By all accounts, he is a very astute one, although Wenner Media (formerly Straight Arrow Publishers) has endured several high-profile missteps. The company invested millions in Family Life and Outside before unloading both—Wenner concedes he now regrets selling Outside—and even the boss wonders what might have been if he had merged with MTV years ago.

“You go through life and you learn from your mistakes,” he says. “But I’ve always had fun. I just wish I’d known way back then what I know now, without the muscle aches and pains and the potential of oncoming arthritis.”

Often described as a mercurial force by those who have worked for him, Wenner “could be quirky and impetuous... capable of great ideas and terrible ideas... erratic and brilliant,” says Anthea Disney, who edited Us and is now executive vp/content for News Corp.

In the old days, when associates say his self-destructive tendencies held powerful sway, the wild-and-crazy image of the rock ‘n’ roll editor came to life when, in the middle of editorial meetings in his office, he would reach into his refrigerator and starting swigging from a bottle of vodka. “The impact of his drinking was that decisions often were made in an atmosphere of hysteria and at Jann’s whim,” says one former editor.

But the driving force behind Wenner Media’s success has always been Jann’s connection to the readers. He created and nurtured a product that humanized rock stars, validated the music’s contributions to the culture, and took on important world issues, providing a platform for writers such as gonzo journalist Hunter S. Thompson. “He has terrific instincts as an editor, and he understands the audience,” says longtime Rolling Stone contributor P.J. O’Rourke.

Clearly, those who know him say Wenner, who successfully timed the men’s adventure wave with Men’s Journal in the early ‘90s, wants to prove he can strike gold once more with Us Weekly. In an industry dominated by giants like Time Inc. and Condé Nast, where corporate boards analyze every strategic move in minute detail, Wenner is one of the last of a breed, a publishing maverick who calls his own shots. Writers write. Painters paint. Entrepreneurs like Wenner risk, not merely for the sake of making money but also for the validation that comes from being right.

“Jann is a guy who thinks big,” says Kent Brownridge, Wenner’s longtime general manager. “This is big. The biggest. This is the culmination of his publishing career.”

“See that,” says Terry McDonell, Us Weekly’s editor in chief, pointing to a table-of-contents photo of Tom Cruise and Julianne Moore talking privately, in the premiere issue. “That sends a message: that we’re getting behind the velvet ropes.”

Us was launched by The New York Times Co. as a competitor to People in 1977, but its emphasis on celebrities proved a poor corporate fit for all the news worth printing, and Times Co. unloaded it to a consortium headed by Peter Callahan, who sold it to Wenner in 1985. For years, the unprofitable title was known within the company as “Jann’s Vietnam,” as he continued to lavish money on it, looking for a winning formula.

Publishing a monthly entertainment book was inherently problematic, especially the six-week lead times, which can seem like light years in the context of the fast-moving celebrity culture.

“Plus, it kept coming back to me, as someone who has an intense level of interest in entertainment, that I wasn’t being satisfied with the coverage out there,” Wenner says. “And there are a lot of people like me.”

After running Wenner’s Men’s Journal for several years, turning readers onto manly adventures like mountain climbing and white-water rafting, McDonell accepted the challenge of transforming Us Weekly into a news-driven celebrity book aimed primarily at twentysomething and thirtysomething women. Stories are, for the most part, short, include dominant art and feature young people in movies, television and music. “Young people doing interesting things,” Wenner says. “That’s what we’re about.”

The book also offers a healthy dose of celebrity-derived fashion tips, and now McDonell, a veteran of serious, hardhitting journalism at Newsweek, Rolling Stone and Esquire, can talk all day about how his new style section will fundamentally alter the way fashion is covered. “We’re going to show our readers what’s hot now, give them information they can use,” McDonell says.

Rather than trying to provide a comprehensive listing of entertainment options, the book includes a section, “This Week,” which recommends certain music, movies and TV shows. “We want to be the authority,” McDonell says. “So, hopefully, the readers will trust us and keep coming back.”

The decision to go weekly was like a salvo across Time Inc.’s bow, where the 3.5 million-circulation People is the magazine world’s 800-pound gorilla. Is it a zero-sum game? Well, that is the billion-dollar question. Whether Us Weekly can succeed without taking significant share from People and its cousin, Entertainment Weekly, will show up in audit statements over the next few months and, eventually, in ad page counts.

Clearly, officials at both Wenner and Time Inc. agree, there are significant differences between Us Weekly and People. Us Weekly, which hopes to skew at least a decade younger than People’s demographics, will rely completely on celebrities, eschewing People’s additional concentration on ordinary people who do extraordinary things. “We will not be doing the mayor of Dubuque who’s trying to save the school system,” Wenner says.

“I don’t know how smart it is to depend totally on celebrities when the number of major celebrities is dwindling,” snipes People editor Carol Wallace, a former editor at Us.

“Yes,” Kent Brownridge says one morning in his office, “I know whether Matt Damon sells better than Ben Affleck...”

Most magazines are willing to spend lavishly to obtain readers who bring little or nothing to the bottom line, in order to create a community large enough to attract advertisers. Not Us Weekly. Wenner Media’s strategy is to make the readers pay a much larger share of the cost of the magazine. If the magazine strikes a chord with readers, the company believes, the advertising will follow.

Us Weekly differs from a launch in several significant ways, including its base of 515,167 subscribers. But while the monthly averaged slightly fewer than 500,000 copies sold at the newsstand, the weekly is throwing about 1.5 million into the increasingly competitive single-copy wars.

The circulation gamble is unprecedented for a magazine launch: Wenner invested $10.3 million to rent a total of 130,000 check-out racks at supermarkets, drug stores and other mass-market retailers, putting it in direct competition with the various tabloids, TV Guide and, of course, the ubiquitous People, which sells more than 1.4 million at the newsstand.

If Us Weekly can average a sell-through of 40 percent, the strategy works. Advertisers no doubt will flock to the new publication, giving Wenner Media a bite out of People’s $1 billion-apple.

But that’s a big if.

That’s the ballgame.

In an age of declining newsstand sales— when the average sell-through is less than 40 percent—hitting such a target is by no means a slam-dunk.

“It’s a huge gamble,” says circulation consultant John Harrington, publisher of The Single Copy newsletter. “Efficiency levels are continuing to decline, and even with the checkout space, it’s going to be a very risky proposition.”

And if the efficiency falls to, say, 30 percent? “That would not be good,” Brownridge concedes. “I’m counting on doing better than that.”

As a monthly, Us struggled to compete with the weeklies for advertising in various, more time-sensitive categories. But now it expects to generate more from motion pictures, television and other entertainment categories. “Having a product every week changes the whole dynamic,” says publisher Larry Burstein.

“The lowest estimate I’ve seen for starting a magazine from scratch like this is $250 million,” Brownridge says. “So, if we can build on what we have and do it for $50 million, we don’t look so dumb.”

For more than a year, Brownridge and his colleagues have been immersed in the art of crafting celebrity covers that will entice young women. This is where the magazine will rise or fall. Jobs will be won or lost. The empire will expand or contract. All based on whether large numbers of young women decide to add Us Weekly to their shopping carts. Each week, the various editors, designers, art directors and circulation types gather to discuss the upcoming cover subject. Damon or Paltrow? Judd or Affleck?

“In that meeting, no one has veto power except Jann,” Brownridge notes.

At the newsstand, of course, all those young women have the real power. To make Jann Wenner a visionary or a fool.

When they first started tossing around the idea of taking Us Weekly more than a year ago, Wenner and his aides discussed several financing options, including obtaining venture capital. But Wenner decided that it was a risk he was willing to take on his own. He didn’t have to kick it upstairs or poll the shareholders. Like all those years ago, when he was a college dropout with much less to lose, he just listened to his gut.

“I’m highly confident that this is going to work,” he says. “I don’t think we’re being reckless with our money.”