American Health hits its stride in personal health market

New Woman 'supercharged' by Murdoch's resources. (Rupert Murdoch)

Publication:
Folio: the Magazine for Magazine Management
Publish date:
December 1, 1984
More results for:
Owen Lipstein

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The publisher of American Health munches M&Ms. A cactus with a crippled top perches in his window. The editor in chief has a bad back from a too strenuous weekend. Not exactly in keeping with the image of a magazine on health, but then, as editor in chief T George Harries says, "We're not body puritans. We want to make sure the level of sin remains high enough to be entertaining."

There is definitely a sense of the entertaining about the Greenwich Village offices of American Health. Maggie K. Nein, the publisher's four-year-old golden retriever (listed on the masthead under Security) wanders happily around. a string with a playtoy on the end bobs from the ceiling with a sign attached: Cat Today. "Someone brought a cat to the office today," publisher Owen Lipstein explains. "But it may have to go. Too many people are allergic." A pink stuffed elephant sits on his desk and plays the drums at the flick of a switch. "You should see the faces on some of these serious lawyer-types when they see that," he jokes.

The magazines reflects that sense of fun. Stories in recent issues include "Body Story: Bringing Back My Body to Me" and "In Search of Excellence ... In TV Dinners." The table of contents page uses lively drawings that are picked up in eye-catching graphics throughout the magazine.

But despite the fun in the air, Lipstein maintains that the business he is in is "deadly serious." "Despite our laid-back look, we're very serious about what we do ... We're at risk. We're spending somebody else's money. There's a responsibility in that and a deadly seriousness."

Lipstein is, of course, referring to the total of $10 million in venture capital raised for American Health by the investment firm Oppenheimer & Company. That is a sum only dreamed of by most publishers planning a startup of a magazine, and it came in two installments: five million dollars at the start-up of the magazine two years ago, and the rest last summer in second-round financing.

Lipstein was helped in his appeal for backing to Oppenheimer by a family connection. His father, Benjamin, was a friend of the then chairman of the board, Leon Levy, and also sat on one of Oppenheimer's mutual fund boards. "My father's knowing people there meant that I had an introduction," Lipstein concedes. "But after that, I was a real pain. It was clear I wouldn't go away."

What really happened, Lipstein recalls, is that the chairman of the board needed some help on a magazine project he was working on at the time. Lipstein gave him an "MBA-type memo" on the subject, and then Levy asked him, "So Owen, what do you want to do?" When he responded that he wanted to start a magazine, Levy said it wasn't the sort of thing Oppenheimer liked to get into, but asked, "Do you have a business plan?"

"I lied,c Lipstein confesses. "I said yes. That was Friday. I flew home to Washington, typed for two days straight, and came back with one on Monday."

From then on it was a back-and-forth process, but by the end of the year, an eight-million-piece mailing had gone out, on which Lipstein says about half of his financing was spent. "It was scary as hell," he says. "I had a girlfriend at the time who said my eyeballs were flecked with red all the time. I wasn't very good company."

The large mailing was scheduled to be done by year-end, explains Paul Biddleman, then a vice president at Oppenheimer working on American Health, and now a first vice president in the corporate finance department of Drexel, Burnham and Lambert, because of the tax structure of the investment units that were sold. The units were sold as tax shelters; therefore, the losses related to the circulation mailings had to come in by year-end, he says.

A lot rode on that mailing, and Lipstein remembers the words of chairman Levy: "If we get cut, you bleed." But the results were "staggering," and the magazine was launched the following spring with a claimed rate base of 300,000.

Since then, the picture has gotten rosier and rosier. The rate base has been increased several times, so that new rate cards are good only for a few months. Last March, the rate base guarantee was 650,000. With the July issue it was raised to 800,000. It will go up again next March, to 850,000. "This is a big magazine, at least a million," Lipstein says. "I can feel it."

Ad pages and revenues have followed suit. Pages rose 74.4 percent for the first six months of the year, while revenues shot up 160.3 percent to $2.2 million. Of all the magazines ranked by the Publishers Information Bureau, American Health was the leader for this period in percentage change in pages and revenues.

Does all this mean Owen Lipstein is content and sitting pretty? By no means. "There are things we could do better," he says. "I'm proud, but not satisfied. We haven't really reached out yet to organize and reflect this personal health movement we're representing. We haven't made inroads into the institutional market as I'd like to. And, for instance, the September cover--it doesn't work. None of us liked it."

What has made the magazine as successful as it is, according to Lipstein, is not that the magazine created a trend, but that it found one. "I'm just the champion of an idea whose time had come," he says.

American Health is best compared with Money, Lipstein says, as both magazines are the dominant ones in their fields. His direct competitors he dismisses as appealing to an older audience (prevention) or not having done much until recently "in response to our success" (Health).

"The personal health market" up to the introduction of American Health, "was covered in a number of places but no one publication covered it all," Lipstein explains. "Runner's World and World Tennis, the vertical sporting magazines, are limited by the size of their advertising base and the vertical nature of their editorial. The science magazines' basic problem is that there is no endemic advertising base for them--there are no science companies to advertise in them."

The science magazines are also too remote from their readers, he suggests: "They're not about where people live." Lipstein, who spent some formative years as general manager at Science '79-Science '81, says he has "borrowed the responsible, news-oriendted journalism" from these science magazines.

"We have the strengths of the older magazines--the science, women's service, health magazines--but we're tangibly different," he claims. "We went after an idea, not a market."

One industry source, however, says that Lipstein sold out his original idea of doing a "quality magazine of the Science '81 level" in order to appeal to a downscale market where the big numbers are. "You could see that he was torn in the first few issues he did--he saw where the market was, and he made the decision to go for it."

Making this decision, this source suggests, was "a smart publishing move--but it isn't a sophisticated magazine. He's writing for the not-very-well-educated female market. He understood right away how to get advertisers to see how important this market was for them. He's done excellent work at developing the major food manufacturers into advertisers--but these are mass advertisers, for a mass market. He's not dealing with college-educated professional women. He's getting ads for food and cosmetics, but not for cars or computers. That's a trade-off he's made."

And, because of his youth--Lipstein is 33 now and was only 29 when he made the proposal to Oppenheimer--he "is not perfectly skilled at dealing with people," one source says. "However, his enthusiasm is infectious and people tend to forgive him for his lack of polish."

One person who admits to having yelling matches with Lipstein is his editor in chief, T George Harris. Harris, a graying, denim-shirted editor with years of background as editor of Psychology Today, and at other positions with time, Fortune, Life and Sports Illustrated, is credited with helping Lipstein give the fledgling project credibility. "He knew he needed a name editor--and he got one in T George Harris," one editor says. "T George was a key element in making it happen," says Joel Novak, Lipstein's first boss at CBS Publishing.

"There's bound to be yelling," Harris explains, "when the two of you care so much about the same thing. But there's enough laughter here, too--Owen has a lovely sense of humor." Harris says that he was confident that the magazine was viable because of the growing number of physiologically based health developments, but that "Owen marketed it--made it work."

"The dog helps a lot," Lipstein quips. "Humor helps us keep a sense of perspective."

And a sense of perspective is crucial when a company is involved in as many side-projects as American Health is. It had a joint venture with Cable Health Network until that network was folded into LifeLine, now owned by Hearst. The company is doing radio spots and TV pilots with ABC, a cable pilot jointly sponsored by FMI and the American Dental Association, anutrition series with WGBH, Boston's public TV network, and an adult education package on nutrition with the University of California at San Diego to be marketed to universities around the country. A series of books and tapes is also being readied. And a special insert just for the 50,000 non-paid circulation to doctor's offices, called "The Waiting Room,c is starting next year.

All of these projects, though, emerge naturally from the subject matter of the magazine, according to Lipstein. "Everything's product-based," he says. "I feel strongly that things have to grow directly out of what we're doing and contribute to ur understanding of the subject," Harris says. The education course "gives us a deeper connection to the new frontiers in nutrition which is where we need to be."

A lot to ask of a staff of 50, but, according to Lipstein, it works because people are motivated by the "perfect compatibility between our subject and the organization of the business. The personal health movement is all about exerting control in your life, over one thing that you can--your body--while the world is whirling out of control, with budget deficits and atomic bombs. We're trying to make our business environment reflect that, rewarding people for the right things--talent, creativity and honesty--and not making them waste time" toeing the line in office politics.

All this effort has been paying off in a doubling of sales every year, Lipstein says. "We expect to be over $20 million in revenue next year, and will also be turning a profit by then as well."

But, cautions Biddleman, "the real test is yet to come. Does the magazine have legs? From a financial point of view, it has been success--he has created an asset worth more than the dollars at risk. And the magazine has gone through a critical period. But it's still too soon to tell. Will he continue to increase the value of the asset or not?

"But Owen has done a superb job in running this business. He is not so emotionally involved in it that he can't see when it makes sense to change his position--and that's the difference between someone who can come in and create a magazine and someone who can actually make it work. I think he'll make it work."

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