Some Tough Lessons From 'Near-Death'

THE MEDIA BUSINESS: ADVERTISING; Some Tough Lessons From 'Near-Death'
By Randall Rothenberg
Published: March 27, 1990

IT was only 8:30 A.M., but Owen J. Lipstein already looked tired. The knot of his wide orange necktie was pulled well below the collar button of his shirt, his brown hair looked as if it had not been combed since the night before. He offered a Pepsi - his favorite morning drink - and said, ''We're on the verge of a new company, which is exciting.''

And from the looks of him, a little bit scary, too. Mr. Lipstein was one of the magazine industry's wonder kids of the 1980's, a start-up artist who seemingly could do no wrong. In 1982, at 29 years old, he founded American Health on the belief that existing health magazines had little relevance for the fitness aficionados jamming the nation's jogging paths. He quickly built its circulation to a million, then, flush with success, acquired Mother Earth News in 1985.

Three years later, with the veteran editor T George Harris, he bought 90 percent of Psychology Today. An apparent baby-boom savant, Mr. Lipstein - who modestly claims ''a gift for seeing the obvious'' - seemed on his way to creating the perfect publishing company for his generation's mature years.

But last fall it began to unravel. After letting out word that he was negotiating to sell American Health to the Reader's Digest Association for more than $40 million, Mr. Lipstein found the sale delayed. Heavily in debt, his company was late publishing several issues of the magazine. When the sale finally went through last month, the price, $29.1 million, seemed barely enough to cover his debts.

Bloodied, Mr. Lipstein has not lost his sense of humor. ''Near-death is character improving,'' he said.

He called the American Health sale ''one of the bellwether events in the magazine business,'' because, he says, it signaled the end of the go-go 80's, when would-be publishers could find financing with a one-page proposal and build fabulous circulations through multimillion-dollar direct-mail drops. But the debt incurred to do so needs to be repaid, and as advertising and circulation growth have slowed, that has proved difficult.

Mr. Lipstein says that his attitude and his publishing strategy have changed. He says he will ''never put myself in a position where I'm in so much debt I have to sell'' and maintains he is in it for keeps with the three magazines his New American Magazine Company owns or partly owns - Mother Earth News, Psychology Today and Smart, a men's magazine he started in 1988 with Terry McDonnell.

''There are too many magazines and not enough advertising dollars out there,'' he said. ''The only defense is to put out good, original magazines.''

With Mother Earth News, Mr. Lipstein said timing had worked in his favor. When he acquired it in 1985, he saw it competing with the country life-style magazines that had been blossoming. Now, with environmentalism promising to traverse the gulf from fad to trend, Mr. Lipstein suggests his back-to-the-land book is perfectly positioned. Accordingly, with the March-April issue, he and his new editor, Alfred Meyer, have introduced a slick new look, filled with photographs and dreamy articles about the earth.

Mr. Lipstein says his other magazines are also attuned to contemporary tastes. Smart was the first of what looks to be an unending parade of new general-interest men's magazines. And Psychology Today will be reintroduced in May with a new design and a new subtitle - ''Mind, Myth and Spirit'' - that will betoken its shift to ''new age'' themes.

The three magazines are being published with a total of about 60 employees, less than a third the staff Mr. Lipstein's publications had at their peak.

''In the era of fax machines and Macintoshes, you don't need large magazine staffs,'' Mr. Lipstein said. ''With a network of freelancers, it's irrelevant. The money goes into paper, printing, distribution and talent.''

The jury remains out on that claim. And while the theme of the new corporate advertising campaign that Mr. Lipstein's company plans to introduce soon is ''We Happy Few,'' his baggy eyes and shaggy hair make it evident that the happiness and fewness have come at some cost.

Then again, the Everlast punching bag by his desk, the one with a good half-year's worth of scuffs, has no new marks on it. ''I haven't used it lately,'' Mr. Lipstein said, with some relief.

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