Angeleno Publisher's Expansion Plans Bank on Affluence

By PAT MAIO
Staff Reporter

Modern Luxury Publishing Inc., publisher of glossy luxury lifestyle magazines, is planning an expansion that could solidify its West Coast operations and also involve a risky eastern push.

Owned by brothers Michael and Stephen Kong, Modern Luxury publishes Angeleno, Front Desk L.A., Hotel Bel-Air magazines in Los Angeles and Riviera magazine in Newport Beach.

With Michael, the firm's president and chief executive, based in Los Angeles, and Stephen, its principal and group publisher relocating to New York from his base in Chicago, the group intends to launch new magazines later this year in Dallas, Palm Springs and San Diego. Two more city regionals are planned next year, including one that will go head-to-head with New York magazine.

Though Michael Kong would not talk about financing of the new ventures, the company is targeting an affluent demographic that tends to be recession-proof and has shown a willingness to spend on senior management.

Modern Luxury recently shook up the city regional magazine world when it lured Chicago magazine Publisher John Carroll to serve as group publisher and head up its expansion into Texas.

Carroll is a longtime friend of the Kongs, and his departure in the wake of Chicago's nomination for a National Magazine Award's general excellence category prompted its owner, Tribune Co., to file suit.

Tribune, owner of the Los Angeles Times, and Carroll, who received an equity stake in Modern Luxury as part of his deal, settled their suit last week. Terms were not disclosed.

Michael Kong said the new publications would not diverge from Modern Luxury's program of magazines with controlled-circulation of between 55,000 to 85,000 targeting high net worth individuals.

"That is our sweet spot," said Kong of the group's holdings, stuffed with an assortment of luxury category advertisers that include Tiffany & Co. and the Dallas-based upscale retailer Neiman-Marcus Group Inc.

Kong keeps overhead low enough to offer steeply discounted advertising rates lower than other magazines targeting the same upscale reader. The strategy also involves keeping the city regional magazines on a simple advertising schedule so that media buyers can place national ads in all of Modern Luxury's publications at the same time, and not try to chase after its individual properties.

Though it has worked on the Kong's limited scale, some think the formula faces an uphill climb.

Tom Weston, president and chief executive of the Santa Monica-based Weston Group advertising, public relations and marketing firm, said the challenge for Modern Luxury will be to replicate its Angeleno model in major markets already saturated with city publications.

"If you look at Angeleno, and compare it with the look of other city magazines, it is way above the pack," Weston said.

But all of the cities where Modern Luxury plans to launch new magazines this year already have established titles. D Magazine and Texas Monthly circulate in Dallas, San Diego magazine dominates San Diego, and Palm Springs Life chronicles the "finest lifestyle" of Palm Springs.

"What I'd question, especially with Angeleno so plugged in to the hipper crowd, is whether a similar hook can be used to tap into these markets," Weston said.

Still, narrower target audiences offer substantial opportunities, said Rebecca McPheters of New York media consultancy McPheters and Co. Inc. "In general, I think going after a highly localized affluent market can provide a foundation for a very sound business," she said.

The Kongs and Carroll can expect a fight in Texas.

Michael R. Levy, founder and publisher of Texas Monthly, didn't offer them much hope.

"If they are thinking they can get out of it breakeven at less than $5 million, they are nuts," said Levy, who launched Texas Monthly in 1973 and turned it into a 300,000 circulation magazine.

Levy said he is familiar with the company's formula, particularly its glossy Angeleno.

"These are party picture magazines that are very expensive," he said. "They aren't compelling. They all look like advanced editions of someone's high school annual. How many times do you want to look at boring?"

In New York, the company faces an equally entrenched competitor in New York magazine, a slick 420,000-circulation weekly that Wall Street financier Bruce Wasserstein acquired last December from Primedia Inc.

Stephen Kong's relocation to New York in August will be to open a national sales office.

"It gives us a toe in the water, and we'll build the infrastructure later," said Michael Kong. "New York is obviously one of the markets where we will open another magazine."
Modern Luxury Publishing Inc.

Angeleno

Audience: Luxury lifestyle magazine distributed at hotels, private clubs, salons and mailed to targeted ZIP codes



Front Desk Los Angeles

Audience: Guide for affluent visitors to entertainment, hotels and restaurants, distributed in hotels



Riviera

Audience: Clubs and hotels in Orange County



CS

Audience: Hand-delivered to residential buildings in affluent Chicago neighborhoods and shopping districts



Front Desk Chicago

Audience: Guide to entertainment, hotels and restaurants in Chicago



Hotel Bel-Air

Audience: Guests of Hotel Bel-Air, Bel-Air homeowners

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