Generating a Buzz

Sharon Chada reaches into her tote bag, pulling from it the March issue of Buzz magazine, with actress Julianna Margulies on the cover.

“Look at this,” Chada laments, rifling through articles about “ER” star Margulies, Oscar hype and teenage homophobia in Los Angeles high schools. “There are no ‘must reads’ here.”

Chada is more than a disappointed reader. She is the new majority owner of Buzz, the struggling 8-year-old magazine about Los Angeles.

The former chief executive of a technology company, Chada is a newcomer to publishing. But she has definite ideas about what readers of her magazine want.

Taking a cue from her own appetite for celebrity news and gossip--she daily combs the Internet for developments in the Monica Lewinsky affair--Chada envisions Buzz as a “tabloid for thinking people,” with intensive coverage of the rich and famous.

“After all, that is what Vanity Fair is,” said Chada, referring to the successful Conde Nast monthly known for splashy celebrity profiles. “I don’t think that is a bad thing to be.”

Chada’s vision for Buzz has unnerved some members of the staff she inherited when she assumed control of the magazine last fall. But Chada, in her first interview about Buzz, says she isn’t a dictator.

“I’m strictly a consensus person,” she said during lunch at a trendy Santa Monica restaurant. “I throw my ideas out based on my sensibilities as a reader, but they are the professionals. I’m not going to cram down . . . my ideas.”

Indeed, Buzz so far has changed little under Chada, who says she has spent the last several months poring over the magazine’s books and learning about the publishing business. Among her ideas to cut costs: reducing the size of the magazine and shifting to a lesser quality paper.

On the content side, Chada questions Buzz’s use of posed celebrity photos, such as the cover portrait of Margulies. She prefers cover photos that catch celebrities off-guard--such as the photo of John Kennedy Jr. shot from behind used recently by the French magazine Paris Match.

Placing the issues of Buzz and Paris Match side by side, Chada said of the Kennedy cover: “This is stylized. This is candid. Do you want only what the publicists want you to see?”

Chada, 43, comes to Buzz after a stint in high technology. For three years until the end of 1996, she was chief executive of Osicom Technologies, a Santa Monica-based company that markets data-networking equipment. Before that, she spent eight years as Osicom’s chief financial officer.

Chada said she left Osicom after completing her goal of acquiring companies that would allow Osicom to offer a full line of data networking products. As CEO, Chada engineered the acquisition of seven companies, many of them unprofitable divisions being divested by larger corporations. Osicom’s annual sales grew to $119 million in fiscal 1997 from $5.9 million in fiscal 1994.

But the strategy has yet to clearly pay off for Osicom, a public company that has lost a total of $22.9 million during its last three fiscal years.

Chada said she and her husband, Osicom CEO Parvinder S. Chada, are patient investors--an outlook she brings to Buzz, which is also unprofitable.

“Does it disturb me to be in a business that doesn’t make money? No, not if you’re building something,” said Chada, who with her husband controls about 15% of Osicom shares. “Some people only like companies with earnings. I think good companies need investment for a while.”

Osicom has initiated the sort of lawsuits that make small publishers cringe. It is pursuing a libel suit in London against Dow Jones Inc. over an article published in August in Barron’s alleging that Parvinder Chada is the subject of a criminal investigation. Dow Jones is fighting the suit and is preparing documents arguing that the case should not be heard in London, according to a Dow Jones representative.

In Los Angeles Superior Court, Osicom and Parvinder Chada are suing an Internet user identified in the suit by the Internet handle “Go 4 2” for allegedly spreading rumors about Osicom in cyberspace.

“You can’t allow things to be said that are untrue,” said Sharon Chada, commenting on the suits. “I believe in publishing the truth.” She said Osicom is a victim of short-sellers who make money when stock prices fall.

Chada became involved with Buzz partly through coincidence. Within months of quitting Osicom, she learned from a friend, Buzz Editor Marilyn Bethany, that the magazine needed fresh investment. Intrigued by the opportunity--”I’ve always dreamed about owning a magazine”--Chada made an investment in March 1997 and took control of it when former majority investor, Thai media mogul Sondhi Limthongkul, bowed out.

Chada wouldn’t disclose the amount she put into the magazine.

Chada said her experience at Osicom, a small company up against such better known firms as Cisco Systems, prepared her for Buzz, which is smaller than rival Los Angeles magazine, owned by Walt Disney Co.

“I’ve always been a little guy fighting big guys,” she said, adding she believes Buzz can find the right formula to succeed in Los Angeles.

Buzz has already been through big changes. In 1996, two of its three founders left the magazine after business disputes with its biggest shareholder.

New management ushered editorial changes. Once dominated by sassy, first-person commentaries, Buzz lately has favored service features on home furnishings, dining out and entertainment that appeal to advertisers. The magazine said the strategy is working--ad revenue increased 40% in 1997.

Where Buzz used to brag about its readership of affluent baby boomers, it now hopes to grow by attracting readers in their 20s and 30s. Its monthly paid circulation averaged 136,818 in June, about 15% less than Los Angeles magazine, according to its most recent publisher’s statement. About 17% of its circulation is sold at deep discount to hotels and airlines.

Chada’s brief tenure hasn’t been problem-free. Her deal with Limthongkul is being questioned by the two founders who left the magazine, says Alan Mayer, one of the objectors. He contends the deal needs approval from either himself or founder Susan Gates, but Chada disputes that. Mayer says he turned down an offer from Chada of $48 for his 7.33% stake in Buzz--a company that had a negative net worth of $11 million when Chada acquired control.

According to Mayer, lawyers representing both sides are attempting to reach a settlement. Gates declined comment through her attorney, Nancy A. Bertrando.

Chada’s comments about the March issue led to some fleeting tension with editor Bethany. When told Chada found no “must reads,” Bethany said, “It sounds like a catch phrase that doesn’t mean anything once you analyze it.”

Bethany said it’s difficult for monthly publications to be newsy. But, she said, the teenage homophobia article prompted “as much mail as we’ve ever gotten on a piece.”

Investing in Buzz poses not only financial but also a personal risk, Chada admits.

“I’ve worked with family members. Sometimes you get mad and it takes a while to make up, but you know, work is work,” said Chada. “I hope our friendship will survive all of this.”