NEW YORK — “Scandals are always the best things to sell newspapers.”
So says Arthur L. Carter, the multi-millionaire owner and publisher of the New York Observer, a weekly newspaper that’s become an absolute read in media circles.
With its peach complexion and broadsheet format, it resembles the Financial Times of London, but the comparison stops there. The Observer is no august and sober journal; irreverence about society, business and media is more its speed.
And as the weekly prepares to sign on its fourth editor since its launch in 1987, an uphill battle for profitability continues.
According to Carter, his losses to date have totaled between $15 million and $20 million, and he hopes to start making money in three to four years. But, he pointed out, business is on the upswing, with ad pages ahead by 25 percent in the first half.
This is despite a recent upheaval in the editorial staff. Current editor Susan Morrison has abruptly been replaced by Peter Kaplan, executive producer of the Charlie Rose TV show. Kaplan takes over June 1.
The reasons for Morrison’s departure are muddy, to say the least. Carter insists she wanted “an extended maternity leave of one year,” which he declined to grant.
Morrison, however, said that isn’t so.
“Arthur seems to have a selective memory about this issue,” she charged. “On the contrary, I planned to take a normal maternity leave of a couple of months, then get right back to work.”
Morrison had been editor for two years. She succeeded Graydon Carter, current editor of Vanity Fair, who held the Observer post for one year. The weekly’s first editor was John Sicher.
While Carter admitted that Morrison “did some wonderful things for the paper,” he said he expects that, under Kaplan, there will be significant improvements.
“A few areas need tightening up — business, economic and financial coverage. We need to do more of that,” said Carter during an interview at the newspaper’s townhouse headquarters on East 64th Street.
“You just can’t be a staid publication. We have to have some provocative irreverence to our publication and be a counterpoint to the other publications in town,” added Carter, who is notorious for getting involved in every aspect of his publication.
The eclectic weekly, which covers the arts, politics, media and real estate, is highly opinionated and often beats the competition in breaking news stories, ranging from Sen. Alfonse D’Amato’s business dealings to Woody Allen’s child abuse case.
On the fashion circuit, the newspaper has given page one treatment to Carolyne Roehm and why she exited the fashion business, and needled Ralph Lauren — also on the front page — about the designer’s on-again, off-again magazine project at Hearst. It has also launched a fashion column, “Style Diary,” by Vogue editor William Norwich.
According to Carter, the Norwich column has already pulled in an ad from Bergdorf Goodman that he expects to turn into a regular schedule.
But the paper is still fighting an uphill battle for linage.
The Observer just hired Elaine Alimonti, former ad director of Spy, as associate publisher. Alimonti, who started this week, succeeds Pamela Geller Oshry who, eight months pregnant, recently left the newspaper. Oshry was unavailable for comment.
As for the general ad climate, Carter said, “It’s rough, but getting better.”
Current fashion advertisers include Cartier, Tourneau, Paragon Sporting Goods, Davide Fur and Peter Fox.
On the ad agency front, Rick Albert, a partner in Balet & Albert, said, “I happen to find the paper quite interesting. Clearly it’s been here a while, and I think it’s here to stay. It’s tough. Normally with a New York operation — a retailer or a restaurant — there are venues I think that deliver more quickly and efficiently. “I think the editorial content is very good, but there are those publications such as New York magazine, which is clearly a powerful retail vehicle, and the New York Times, which is proven. These two publications have proven they move merchandise.”
Steve Klein, partner and media director at Kirshenbaum & Bond, another agency here, said that he’s placed some of his clients, such as Paul Stuart, in the Observer.
“It’s nice because it’s a different read. It’s an Upper East Side contingency and an inside group,” said Klein.
“The economics of the media business are against it,” he added, however. “It’s already a three-paper town. Then there are all these freebies. They’ve got a lot of competition. There are a lot of places to go to reach these people.”
A full-page ad in the Observer costs $10,000, about half that for a 52-week schedule.
New York magazine charges $17,000 for a page, $2,000 less for a 50-week schedule. A full page in the Times costs approximately $50,000.
Of course, the Times’ 1.2 million daily circulation is more than 20 times that of the Observer, whose circulation — at 45,000 and 50,000 — is concentrated in Manhattan. Of that, 40 percent is delivered free.
“We’re in the process of converting to a fully paid circulation,” said Carter, who noted that should occur by the end of the year. The newspaper claims that 65 percent of its readership has a household income of more than $125,000.
Carter, who made his fortune as an investment banker on Wall Street and in various business ventures, also owns the Litchfield County Times, a weekly newspaper in New Milford, Conn., and is an owner of the Nation and the East Hampton Star.