• by Frank Saxe , March 10, 2003

American Media, Inc., the publisher of such supermarket tabloids as the National Enquirer has its eyes set on expansion. It’s already snapped up Weider Publications and it recently filled its bank account with $1.5 billion in new funding; money it intends to use to expand its media holdings. It’s apparently interested in buying Primedia’s Seventeen, among other titles. In the meantime, its tabloid business is growing, as Americans’ appetite for celebrity and gossip remains strong.

“The tabloids have been very successful in the mainstream advertising arena over the last two years,” says Bette Rockmore, AMI’s direct marketing and publications director. The proof: Over the past two years, ad pages in the National Enquirer have jumped 39.3% and the Star has increased 55.6%. That was possible, says Rockmore, because of major changes made to the titles.

Since buying the tabloids in 1999, AMI chairman David Pecker has repositioned the editorial, replacing Elvis and aliens with celebrity news and scandal, stories that turned out to be true. At the same time every issue became four-color. “The concept of the company being sued all the time is not reality,” says Rockmore, who has spent a great deal of time convincing buyers that their concept of Enquirer or Star was probably incorrect. “One of the advantages that the tabloids have had is getting the story first and getting it right, and beating out a lot of our competitors like People and Us, where the story may show up two weeks later. We’ve been able to show that to the ad community, so their trust and understanding of these publications is no different than anything they’re seeing in any other magazine.”

With a pitch “we’re bought to be read,” AMI plays hard the number 82. That is the percentage of copies that the Enquirer sells on the newsstand. “That’s a particular advantage for advertisers. 82% are paying full cover price,” says Rockmore, who plays up its limited inventory, with two-thirds of each issue strictly editorial. “To be 60 pages and only have 20 pages of advertising, the advertisers’ message has more visibility in the tabloids. All those things have added up to our success.” It has also allowed AMI to increase the $2.09 cover price to $2.19 starting April 1, the second price hike in two years. The previous April 2002 increase followed its increase from 48 to 60 pages.

Positioning itself against books like People, TV Guide, and Better Homes & Gardens, depending on the account, AMI has landed new ad dollars from Campbell’s Soup, Unilever, Coty, and Paramount Home Entertainment in the past year. “We have broken a lot of what the industry would consider blue chip advertisers who are very successful running in the tabloids,” says Rockmore.

“They have been undervalued by advertisers for a long time,” observes Rebecca McPheters, president of New York magazine consultancy McPheters & Co. “I have thought they were viable for a long time and haven’t understood why they fared so poorly with traditional advertisers, because they provide solid reach among people that don’t necessarily read other publications.”

The National Enquirer’s rate base is 1.75 million, with an open rate of $55,000 a page. The Star’s base is 1.35 million, with an approximate open rate of $48,000. The duplication rate between the two is 20%, explained largely by their different editorial take. While The Enquirer works to break news, while the Star is softer, focusing on celebrities’ lives. AMI also publishes Mira, a Spanish-language tabloid focusing on Hispanic personalities, including a heavy dose of soap opera news.

In January, AMI closed on its $350 million purchase of Weider, adding seven titles to its portfolio, including Men’s Fitness, Shape, Muscle & Fitness, Flex, Muscle & Fitness Hers, Fit Pregnancy, and Natural Health. Pecker says the deal helped “better balance” AMI’s dependence on circulation, by adding titles that rely more on advertising that newsstand sales for profitability.

It also gives the company a platform to do some cross-platform deals. “As a powerhouse of newsstand properties and subscription-driven Weider titles, we will be able to bring together some packages to the ad community that make sense,” says Rockmore. It could also open new advertisers to both divisions. “If you have more things to talk about and more opportunities, doors will open. The success in the tabloid’s advertising in the last couple of years has opened more doors for us, so it just makes sense that the Weider acquisition will open more doors. We might be able to open some doors for them as well.” They have already begun to pitch some packages that include both the tabloids and the monthly fitness titles, says Rockmore, particularly for packaged goods accounts.

As a reward program of sorts, AMI allows advertisers that spend significant dollars with its titles to opportunity to buy space on the tabloid’s racks at the front of the supermarket. It is possible because AMI owns its own distribution company, DSI. A number of advertisers have already bought the rack card space to reach consumers trapped in the supermarket checkout, including Clorox and Kraft, who were pushing new products, as well as some of the TV networks aiming to drive Fall sweeps viewing. Another growing source of income for AMI is its book publishing division, which markets paperbacks at the checkout under the “From the Files of the National Enquirer” brand. It’s currently selling Freak, a book about Michael Jackson.

The growth of tabloids like the National Enquirer and Star come at a time when three glossy weeklies are also in a heated battle. People, Us Weekly, and upstart In Touch, are increasingly sharing advertisers with the tabloids. Rockmore says it does make for a “tighter” marketplace, but says it also validates what they’re doing. “This is what the American consumer is saying this is what they want, this is what they like to read. It’s a very viable category.”