Mr. Magazine

Bauer Media Group USA publishes the top 2 selling magazines at retail, Woman’s World #1 and First for Women #2. And with newsstands declining and single copy sales fading, that is no small feat. Steven Kotok is CEO of Bauer Media Group and believes that the secret to those titles’ success is really no secret: they connect with their readers on every level.

I spoke with Steven recently and we talked about his two years and counting at Bauer. In 2016 when Steven first took over the reins I spoke with him about his then new position and goals for the company. So this time around we discussed whether he felt the company was stronger today than it was a year ago. His answer was an emphatic yes. After whittling things down a bit at Bauer by American Media acquiring Bauer’s celebrity and teen brands, Steven said the company could now put all of their energies behind their successful and reliable women’s service group and continue with their highly popular SIPs, especially in the food category. They also retained their two soap opera titles, which he attributed to the loyalty of the audience that keeps them healthy and strong.

It was a very interesting conversation as Steven gave us a status report on how things have moved forward since his coming onboard and a few changes he has implemented, such as a digest-sized First for Women SIP that was added. But the one thing that hasn’t changed in those two years is his dedication to the reader and his continued belief that above all else Bauer and its very loyal audience maintain a great connection. And that they continue to do what Bauer does best, provide the reader with the content they want. And now the Mr. Magazine™ interview with Steven Kotok, CEO, Bauer Media Group USA.

But first the sound-bites:

On what’s going on at Bauer today: I started at Bauer two years ago, October 3, 2016. In that time we’ve been, I don’t want to say transforming the company, because it was a very healthy company, but definitely shifting the way we do things. The primary metric of the company previously had really been newsstand copy sales. We’re looking a lot more now at margins. So one thing we did is raise prices across the portfolio in January 2017, three or four months after I started. We have a very loyal audience, especially these days. You know I think we benefit from the fact that we’re one of the last publishers really focusing on the newsstand and that kind of engagement with the reader. And so in a sense we have some of those markets to ourselves.

On whether he has any worries about newsstands since Bauer has the number one and number two magazines when it comes to single copy sales: We have fears as much as independent publications, all have fears for their own reasons. It’s a tough time of rapid transitions, so anyone who is sleeping well at night probably isn’t doing their job. But this is where we’re dominant and this is where we make our money, so we do want to diversify, but we can’t really change our stock either. We can’t suddenly become a luxury, ad-driven company. We do things our way with a reader-engaged product. It’s definitely scary and we’re definitely pushing further into subscriptions as a way for us to leverage the reader connection that we have, but still be able to not live and die on any one channel.

On Bauer’s secret recipe that gives Woman’s World and First for Women the number one and number two spots when it comes to sales on newsstands: I don’t know if it’s a secret recipe so much as it’s that we’re really playing a different game than a lot of other publications. If you look at some recent redesigns of other titles in the space you really see a redesign focused on persuading advertisers that this is a product read by millennials or being a nice ad environment. And that stuck. There’s nothing wrong with that, those magazines run great businesses and they work at what they do and they’re smart, but we are doing something else. We’re wholly focused on the reader and we won’t make the compromises for other channels of revenue.

On what’s cooking on the backburner for Bauer: A lot more food titles. We find that in addition to selling well, they’re very reliable. If we do what we know how to do, with all of our years – I tried to calculate once how many recipes we’ve run in Woman’s World, 52 issues a year for 40 years. And we’ve produced a lot of recipes on any given thing, which isn’t just a great source of content, but we just know what people care about. So, the food SIPs have really been successful for us and again, not just because they sell nicely, but because the SIP market is kind of a hit and miss business. Some things sell great, some not so great, but food, and maybe it’s just for us because we know about markets so well, but food is very reliable.

On why he decided to keep the soap opera titles at Bauer: It’s a very healthy and dedicated audience. There’s one competitor that it beats every single week. It’s a nice business. The celebrity titles we felt weren’t that differentiated and didn’t have the same loyalty. These products really have loyalty and they’re really reliable. And we’re really good at it; we know how to do it. It’s a very stable and dedicated business. The scary thing is, again you’re dependent on the networks to broadcast soap operas. It’s not the type of audience who is going to transition to reality shows or nighttime soap operas, it’s really this is where they are. But that kind of risk aside, we hate things being out of our control, but that risk aside, it’s exactly what Bauer should be doing and what Bauer is good at, producing products that exactly connect with the right audience and do so consistently.

On what role he feels print will play in today’s multimedia market and beyond: For the reader and for advertisers it’s a different question. For advertisers I think the pendulum can swing back and forth, from what’s going to hit on the digital side and what is most effective on the print side. But on the reader’s side, it’s part of the reason that we focus on this women’s service space; we feel we have to be providing a significant service value. In a way, celebrity news does compete with digital and it doesn’t always win. The teen titles that were beloved internally, that’s a market that’s shifted to digital. I think print is going to have a very important place for certain groups of readers that we can provide value for.

On what he would consider his most pleasant moment in the two years he has been CEO of Bauer: All my pleasant moments at all of my jobs come from things that go on with the team. It’s not as interesting to an outside audience, but at Bauer, having the first all-company holiday party in seven or eight years; having the company’s first all-hands meeting. A lot of the time two different people who have been at the company for 10 years will meet each other for the first time and watching them have these animated conversations is so great to see. Doing new things, where people at the company are stretching themselves and doing things for the first time—it’s really rewarding.

On if there has been a moment when he asked himself why he took the job at Bauer: (Laughs) There’s definitely a challenge in the supply chain. In one sense, you have really strong relationships with supply chain partners and very good personal relationships, but then there are times when you’re really adversarial. And some of those times you’re dealing with a partner that controls a significant amount of the market, and as a publisher we control a significant amount of the market, so you both have a lot of power and there’s Murphy’s Law. Some of those moments can be pretty fraught, but the individuals who run those organizations seem to be as dedicated as I am to building a good personal relationship to keep things from getting scarier than they need to be and to running good businesses. Most of those operations are privately-owned as well, they’re in it for the long term too. Those would be some of the scarier moments; anything out of your control.

On whether he feels Bauer USA is stronger today than it was a year ago: Oh yes, yes. The sustainability and strength of the company is stronger now than before we did the transaction with the other titles and before we made some of the changes to focus more on margin. So, yes, that’s kind of unquestioned. That doesn’t mean that things aren’t hard, part of the appeal of the job is that it’s a tough job. It’s strangely rewarding to take on something tough. So, it’s still tough, but as a company compared to a year ago or a year and a half ago, that part is, as I said, unquestioned.

On what he feels is the biggest misconception about himself: I don’t know that people have a lot of conceptions about me. I feel like I make a better impression as time goes on, for whatever reason. I remember when I was executive producer of Dennis Interactive, when Dennis had this digital thing and we would have these meetings with Mercedes and all of these people. The first meeting would be about how cool the programmers were and others, so I was kind of forgotten. By the fifth meeting any question anyone asked, all of the heads would swivel toward me because they knew I had the answer, so I think there’s some sense of being more of a third impression guy than a first impression guy, for whatever reason. Maybe it’s the business of being an extrovert and I’m more of an introvert, but I have noted that, the sense of being initially underestimated and that kind of recalibrating as people get to know me better.

On any big announcements he’d like to share: No big announcements. We’re working on developing big and exciting announcements. We’re starting to look more earnestly at opportunities for acquisitions. I don’t think we’ll have any big announcements until next year, but that’s a big focus here. We feel confident in our ability to operate reader-driven businesses effectively, so we’re looking for opportunities to acquire things. That’s our next big focus.

On what he would have tattooed upon his brain that would be there forever and no one could ever forget about him: From a business perspective it would be that I focused on and understood the reader. My whole career has been based on that; it’s just something I know how to do and that I love and the thing that’s meaningful to me. As a person, that’s kind of a tougher one. I need more self-knowledge than I have, but certainly I think as a person I would hope that people would say he cared in general about whatever was important to care about. As a business person, understanding and being focused on the reader, so maybe it is tattooed on my brain and I didn’t know.

On what someone would find him doing if they showed up unexpectedly at his home one evening: Since joining Bauer, my wife and I moved to the country so I can be closer to the NJ office, so sitting on our deck and just enjoying being together is our main after work activity. For dinner many nights we have a smorgasbord of dips and vegetables and snacks and cheeses and stuff—that’s our favorite thing.

On what keeps him up at night: Things outside my control. Along with the supply chain, another aspect you see now is retailers reducing the space allocated to magazines, and all those things. We know that we connect with our readers and anything that comes between us and our readers and is not in our control is going to be what keeps us up at night. The supply chain and retailers, just all of these things. It’s an appeal of the digital ecosphere, that there’s less coming between you and your readers.

And now the lightly edited transcript of the Mr. Magazine™ interview with Steven Kotok, CEO, Bauer Media Group.

Samir Husni: You’re the CEO of a major magazine company that’s still very heavy on single copy sales. And although you’ve downsized, you now have a trimmer, slimmer, yet more vibrant Bauer Media Group. Give me a status report; what is going on these days at Bauer?

Steven Kotok: I started at Bauer two years ago, October 3, 2016. In that time we’ve been, I don’t want to say transforming the company, because it was a very healthy company, but definitely shifting the way we do things. The primary metric of the company previously had really been newsstand copy sales. We’re looking a lot more now at margins. So one thing we did is raise prices across the portfolio in January 2017, three or four months after I started. We have a very loyal audience, especially these days. You know I think we benefit from the fact that we’re one of the last publishers really focusing on the newsstand and that kind of engagement with the reader. And so in a sense we have some of those markets to ourselves.

We repriced across the portfolio on the newsstand and that really helped the margins. Also, in terms of keeping margin and making the company healthier, we have really been pushing subscriptions, which wasn’t something that was really done in the past. And even though at the time we sold the most magazine copies on the newsstand, we actually didn’t put insert cards in a lot of those magazines, at any price. So, we really started pushing subscriptions and we grew our subscription revenue significantly. A lot of publishers will sometimes grow their subscriptions, but they might do it by actually reducing subscription revenue and reducing prices. We actually promote subscriptions at very high prices. By being more aggressive, we’re able to bring a significant increase in subscription revenue.

So, we did a lot of things like that and other less exciting stuff. And as we’ve been looking at the company and at not what just made it a bigger company, but what made it a healthier company, the notion of focusing on our women’s group where we see, not just the highest margins, but the most stable margins where we publish a product that’s utterly unique in its approach to readers. There were other products, those celebrity magazines were great magazines and had a loyal audience, but they weren’t incredibly differentiated from the competition. That entire market has seen a lot of decline and in 2017 we actually grew our ad market share and in 2018 we also grew our ad market share in celebrities and we grew our newsstand revenue market share.

And even though we were outpacing the competition, we just weren’t seeing those products get financially healthier, even though they had many years of productive life left in them; as a private company, we are really focused on the long term. It seemed the celebrity titles really needed to have one owner to get the most out of them, and we thought for the long term it was better that the owner wasn’t us. So, we made that transaction and have been focusing on the women’s group.

At the same time, we consolidated the two women’s magazines. We used to run them very much as competitive titles, but now that we have that market a little more to ourselves, in terms of the newsstand, instead of having two groups, two health groups or two beauty groups, we can kind of center all of our expertise on one group and also focus on differentiating them a little more. They still obviously compete as number one and number two, but we can balance what’s on the cover and other things. So, we put those under one editorial director and that’s really been successful.

We also put in a significant price increase toward the end of last year on First for Women, a 20 percent price increase on that, and we’ve seen First for Women generate more income than the year before. And since Carol (Brooks) took over Woman’s World, it has seen its newsstand sales up 10-15 percent. So, we’re very happy with this category. Phase one was getting margin out of our existing products and phase two was consolidating what we did in the women’s group, where we see the most likely sustainability, and phase three is really looking for acquisitions around this women’s space, where we can kind of consolidate our leadership position and grow for the long term.

Samir Husni: With that diversification of revenue from the newsstand, you’re still the number one and number two on the newsstand. Do you have any feel for all the talk about what’s going on with single copy sales? When you have the two largest selling magazines on the nation’s newsstands; are you sleeping okay at night?

Steven Kotok: (Laughs) We have fears as much as independent publications, all have fears for their own reasons. It’s a tough time of rapid transitions, so anyone who is sleeping well at night probably isn’t doing their job. But this is where we’re dominant and this is where we make our money, so we do want to diversify, but we can’t really change our stock either. We can’t suddenly become a luxury, ad-driven company. We do things our way with a reader-engaged product. It’s definitely scary and we’re definitely pushing further into subscriptions as a way for us to leverage the reader connection that we have, but still be able to not live and die on any one channel.

And that’s always been the case. The last company I ran we were wholly dependent on Google and Amazon. And at the previous company, The Week, we also wanted to get the company to a place where we could survive just on subscriptions, just on advertising, just on digital, where if any one leg of the stool went away we would still be viable because we want to live beyond any one channel or any one dependent partner. So, that’s where we’re trying to get the company and clearly right now we’re very dependent on the newsstand, But if we’re going to be dependent on something, I’d rather be number one in that space and really have a voice in the channel and know that we’re thriving as we work to make ourselves stronger over the long term.

Samir Husni: What is Bauer’s secret recipe, if you can reveal it? Or the magic that actually gives those two magazines the number one and the number two spots when it comes to sales on newsstands.

Steven Kotok: I don’t know if it’s a secret recipe so much as it’s that we’re really playing a different game than a lot of other publications. If you look at some recent redesigns of other titles in the space you really see a redesign focused on persuading advertisers that this is a product read by millennials or being a nice ad environment. And that stuck. There’s nothing wrong with that, those magazines run great businesses and they work at what they do and they’re smart, but we are doing something else. We’re wholly focused on the reader and we won’t make the compromises for other channels of revenue.

If you look at any one of our covers for Woman’s World, a lot of natural remedies, all very medically tested and our editor in chief has a health background and is rigorous about what goes in the magazine, but a lot of other titles just won’t cover that because it’s something that pharmaceutical advertisers don’t like. We still get pharmaceutical advertising because we have a very large audience and we have very, very little overlap with other publications. We have an audience that if you want to reach them you have to come through us, but that’s just an area of emphasis. What choices you make as a brand; we’re always going to put what helps the reader and what the reader wants first. So, there’s no secret sauce, it’s really just what game you’re playing.

Samir Husni: I noticed that you’ve continued with your line of SIPs, such as the food magazines. And you’ve introduced the digest size of First for Women, a special SIP. What else are you planning; what’s cooking on the backburner?

Steve Kotok: (Laughs) A lot more food titles; we find that those are very – they don’t just sell well, but they’re reliable. If we do what we know how to do, with all of our years – I tried to calculate once how many recipes we’ve ran in Woman’s World, 52 issues a year for going on 40 years. And we’ve done a lot of recipes on any given thing, which isn’t just a great source of content, but we just know what people care about. So, the food SIPs have really been successful for us and again, not just because they sell nicely, but because many times the SIP market is kind of a hit and miss business. Some things sell great, some not so great, but food, and maybe it’s just for us because we know about markets so well, but food is very reliable.

We know if we do something on Mediterranean food or gluten-free or something, we’re going to get it right and we’re going to find our audience. So, we see ourselves doing a lot more of that. Other areas have been more hit and miss, and maybe that’s the nature of the business. But it’s also a very saturated market, so we’re trying to find areas where we can really be the best and rely on our expertise and know that we’re going to put out our best product. In some areas, you’ll see five or ten products on the exact same thing and a lot of copycat products. But we’ll be doing more of that, but it can be a tough market because of the saturation.

Samir Husni: And you kept the soap opera magazines, the CBS and ABC soap opera titles. Why did you decide to keep those?

Steven Kotok: It’s just a very healthy and dedicated audience. There’s one competitor that it beats every single week. It’s just such a nice business. The celebrity titles we felt weren’t that differentiated and didn’t have the same loyalty. These products really have loyalty and they’re really reliable. And we’re really good at it; we know how to do it. It’s just a very stable and dedicated business. The scary thing is, again you’re dependent on the networks to broadcast soap operas. It’s not the type of audience who is going to transition to reality shows or nighttime soap operas, it’s really this is where they’re at. But that kind of risk aside, we hate things being out of our control, but that risk aside, it’s exactly what Bauer should be doing and what Bauer is good at, producing products that exactly connect with the right audience and do so reliably.

Samir Husni: With your background, you’ve been in print, in digital; what role do you feel print will play in 2018 and beyond with the multimedia mix that’s out there today?

Steve Kotok: For the reader and for advertisers it’s a different question. For advertisers I think the pendulum can swing back and forth, from what’s going to hit on the digital side and what is most effective on the print side, and now you have an issue with not everyone that’s buying print is even that familiar with it, so the effectiveness doesn’t even interest them as much as we feel it should.

But on the reader’s side, it’s part of the reason that we focus on this women’s service space; we feel we have to be providing a significant service value. In a way, celebrity news does compete with digital and it doesn’t always win. The teen titles that were beloved internally, that’s a market that’s shifted to digital. I think print is going to have a very important place for certain groups of readers that we can provide value for. As a company and as a person, I’m not pro-print, anti-print; you see what’s going on in other companies and they’re trying to be digital-first and we’re just reader-first. We’re going to be the last guy trying to push a print magazine if that’s not what readers want; it’s reader-first.

The women’s service readers definitely like the experience of buying something in print. As much as they love the product and as proud of the product as we are, the buying experience is a big part of it as well. We’re growing our subscriptions, but the physical act of making the purchase from the supermarket and giving yourself a treat after a long day, that is part of the pleasure of these products. Even if some of the information is available online, it’s that retail experience that ultimately excites our consumers.

People talk about retail becoming an event, an entertainment, and a retail-tainment, I’m sure that may be possible, but I think on a very micro level, just buying something that’s for you, that you feel like understands who you are and is a treat, that in itself is a kind of micro retail entertainment. Print will have a role, a very significant role.

Samir Husni: In the two years that you’ve been heading up Bauer, what would you consider the most pleasant moment you have experienced?

Steven Kotok: All my pleasant moments at all of my jobs come from things that go on with the team. It’s not as interesting to an outside audience, but at Bauer, having the first all-company holiday party in seven or eight years; having the company’s first all-hands meeting. A lot of the time two different people who have been at the company for 10 years will meet each other for the first time and watching them have these animated conversations is so great to see. Doing new things, where people at the company are stretching themselves and doing things for the first time—it’s really rewarding.

When I think back on previous jobs, that’s the stuff I remember much more than the “wins,” which when looking back in time, the world changes so much the “wins” aren’t necessarily as relevant, but the people who you see move into leadership positions is what lasts. So, all of my pleasant moments have been that.

Bauer was a very well-run company before I got here, but I think kind of opening it up and making it less about the individual brands and more about the company as a whole, doing things like the one holiday party instead of a bunch, and all-hands meeting, that’s personally rewarding.

Samir Husni: And has there been a moment where you asked yourself why you took this job?

Steven Kotok: (Laughs) There’s definitely a challenge in the supply chain. In one sense, you have really strong relationships with supply chain partners and very good personal relationships, but then there are times when you’re really adversarial. And some of those times you’re dealing with a partner that controls a significant amount of the market, and as a publisher we control a significant amount of the market, so you both have a lot of power and there’s Murphy’s Law. Some of those moments can be pretty fraught, but the individuals who run those organizations seem to be as dedicated as I am to building a good personal relationship to keep things from getting scarier than they need to be and to running good businesses. Most of those operations are privately-owned as well, they’re in it for the long term too. Those would be some of the scarier moments; anything out of your control.

Samir Husni: Do you feel that Bauer USA is on stronger footing today than it was a year ago?

Steven Kotok: Oh yes, yes. The sustainability and strength of the company is stronger now than before we did the transaction with the other titles and before we made some of the changes to focus more on margin. So, yes, that’s kind of unquestioned. That doesn’t mean that things aren’t hard, part of the appeal of the job is that it’s a tough job. It’s strangely rewarding to take on something tough. So, it’s still tough, but as a company compared to a year ago or a year and a half ago, that part is, as I said, unquestioned.

What we do going forward and how we make ourselves even stronger, that’s the part tougher to say, whether we’ll be 100 percent stronger a year, two years, three years from now, but we feel that we’re making the same types of decisions for the same right reasons as the previous ones that worked out.

Samir Husni: This is a question that one of our former students,Sharyn Elizabeth Alfonsi, who works for 60 minutes now, asked Paul McCartney and I really love the question, so I figure I am going to use it in every interview I do since she was a former student: what’s the biggest misconception about you, Steven?

Steven Kotok: I don’t know that people have a lot of conceptions about me. I feel like I make a better impression as time goes on, for whatever reason. I remember when I was executive producer of Dennis Interactive, when Dennis had this digital thing and we would have these meetings with Mercedes and all of these people. The first meeting would be about how cool the programmers were and others, so I was kind of forgotten. By the fifth meeting any question anyone asked, all of the heads would swivel toward me because they knew I had the answer, so I think there’s some sense of being more of a third impression guy than a first impression guy, for whatever reason. Maybe it’s the business of being an extrovert and I’m more of an introvert, but I have noted that, the sense of being initially underestimated and that kind of recalibrating as people get to know me better.

Samir Husni: Is there anything you’d like to add? Any big announcements you’d like to share?

Steven Kotok: (Laughs) No big announcements. We’re working on developing big and exciting announcements. We’re starting to look more earnestly at opportunities for acquisitions. I don’t think we’ll have any announcements until next year, but that’s a big focus here. We feel confident in our ability to operate reader-driven businesses effectively, so we’re looking for opportunities to acquire things. That’s our next big focus.

Samir Husni: If you could have one thing tattooed upon your brain that no one would ever forget about you, what would it be?

Steven Kotok: From a business perspective it would be that I focused on and understood the reader. My whole career has been based on that; it’s just something I know how to do and that I love and the thing that’s meaningful to me. As a person, that’s kind of a tougher one. I need more self-knowledge than I have, but certainly I think as a person I would hope that people would say he cared in general about whatever was important to care about. As a business person, understanding and being focused on the reader, so maybe it is tattooed on my brain and I didn’t know.

Samir Husni: Last time we talked in 2016, I asked you if I showed up unexpectedly at your home one evening after work, what would I find you doing, reading a magazine, watching television, cooking, or something else, and you said winding down for you was cooking and having a glass of wine. Are you still doing that or your life is now busier than ever?

Steven Kotok: Since joining Bauer, my wife and I moved to the country so I can be closer to the NJ office, so sitting on our deck and just enjoying being together is our main after work activity. For dinner many nights we have a smorgasbord of dips and vegetables and snacks and cheeses and stuff—that’s our favorite thing

Samir Husni: What keeps you up at night these days?

Steven Kotok: Things outside my control. Along with the supply chain, another aspect you see now is retailers reducing the space allocated to magazines, and all those things. We know that we connect with our readers and anything that comes between us and our readers and is not in our control is going to be what keeps us up at night. The supply chain and retailers, just all of these things. It’s an appeal of the digital ecosphere, that there’s less coming between you and your readers.

So, anything that comes between us and our readers. I never worry about whether we’re connecting with our readers or serving our readers. We work like hell to make sure we are, so we worry about it in essence, but we don’t really worry. We don’t wonder because we have such instant feedback and look into it in such depth. Anything that comes between us and our readers and isn’t in our control is going to keep us up at night.

Samir Husni: Thank you.