Helping Primedia Become King of Niche Content

Can the man who helped make CNBC a household name be happy running the likes of Dog World magazine?

That’s what people are asking about Tom Rogers, who as a top executive at NBC led its charge into cable and Internet programming.

Rogers took over last month as chief executive of Primedia Inc., which is as resolutely small-scale as NBC is mass-scale.

Rather than a centralized colossus, Primedia is an aggregation of about 250 specialized magazines ranging from such instantly recognizable titles as New York and Seventeen to Surfing, Lowrider, Shotgun News and Practical Horseman.

The magazine publisher is recasting itself as a player in the emerging world of multimedia. Rather than functioning through a handful of large-scale cable channels, it hosts 200 small Web sites and markets more than 230 business and consumer information products.

Unlike the network business, however, Primedia owns almost all the content it publishes, posts on the Web or distributes to clients.

“The biggest issue we always faced at NBC was that we had to pay license fees [for broadcast content] to the entertainment world or the NBA or NFL,” Rogers said in a recent interview. “At the end of the day, the stuff that we were charging advertisers the most for was stuff we had the least ability to hold on to. Here, we own our content outright.”

The trick, he said, is to find new ways to use it. “The point of this company is to be the king of niche content.”

To do that, Rogers must figure out how to parlay Primedia’s multitude of home-grown content into a consistently profitable presence on the Internet, in cable programming, and in interactive television.

It’s an experiment that is sure to be closely watched throughout the Internet and cable television worlds, where there are questions about whether the traditional network television business model--selling advertising to mass-marketers by offering them the largest possible audience--will work as well as it has in broadcasting. Many believe that what users are really looking for on the Internet, and to a lesser degree on the cable box, is information aimed narrowly at their personal interests--a level of targeting uniquely possible on the Web.

“I don’t think there’s any doubt that the center of gravity is moving toward niche appeal from broad appeal,” agreed Frank Biondi, former chairman and chief executive of Universal Studios, who now trawls the cable and Internet sectors as a private investor.

What is unclear is whether niche programming can succeed on its own, without widely known brands or content to attract viewers.

“In a world of infinite options,” Biondi asked, “how do you get people interested? You still need content people want to see. It’s like Comedy Central prior to ‘South Park.’ Moving from niche to broad is a hard transition from a business perspective.”

Rogers argues that specialized Web sites and narrow-interest cable programming can survive on their own terms, in part because their audiences are more inclined to make online purchases and respond to special-interest advertising than visitors to mass-content sites

“It’s not the easiest thing to do when you get people on a general news site to get them to buy something,” Rogers said. “But if you drive someone to our virtual fly shop . . . you’re hitting people where their hearts are, and their hearts are where their pocketbooks are.”

That is a familiar phenomenon in the magazine world, where special- interest monthlies are frankly designed as platforms for advertising.

“When people read Ski Magazine, they’re reading it for the ads as much as the text,” said Chris Charron, a media analyst for Forrester Research.

Primedia itself had begun to explore some of those opportunities even before Rogers’ arrival. Its site at https://www.modernbride.com offers material from its 16 regional wedding magazines (Southern California Wedding, Colorado Bride, et al). Its Virtual Fly Shop at https://www.flyshop.com features links to fly-fishing destinations as well as targeted classified ads and auctions of sportfishing gear.

There is little question that Primedia is in need of an integrated strategy for its fragmented stable, if only to gain respect on Wall Street, where it is regarded as a runt among major media firms.

Created in 1989 by leveraged buyout king Henry Kravis, Primedia is saddled with an enormous (and rising) debt load, as well as a portfolio of properties that is almost impossible to encompass in a single sentence.

The appointment of Rogers has been viewed by investors as perhaps the most promising development in Primedia’s recent history. (“Rogers on the Mound” was the heading of Merrill Lynch’s Oct. 27 research report on the company, issued on the new CEO’s first day at work.)

The company’s stock, which has rarely risen much higher than its $10-per-share price of its initial public offering in November 1995, registered a definite twitch after the appointment was announced Sept. 27, rising by almost 20% to $13.19. But it has since settled back down, closing Tuesday at $12.06, up 50 cents, on the New York Stock Exchange.

Rogers “has been a tested leader in another media format, but he’s not tested here yet,” said Steven N. Barlow, media analyst at investment firm CS First Boston. “Investors in Primedia have been burned for a long time, and they’re waiting. He’s got to create a reason for the guys to get interested.”

A former congressional counsel, Rogers was brought to NBC in 1987 by its chief executive, Bob Wright, and handed the chore of developing its cable presence.

The time was right. The network television business was facing an unprecedented loss of audience to competing claimants for viewers’ time and attention--ranging from new broadcast networks and proliferating cable channels to video games and, eventually, the Net.

Rogers recognized that the traditional networks had erred in failing to embrace cable. He helped develop CNBC into a leading financial news channel and invested NBC’s money in other cable channels.

When the Internet emerged as an information medium with clear audience appeal, Rogers resolved not to let NBC make the same mistake it had made with cable. Under his guidance, NBC joined with Internet company CNet in creating Snap as a broad-interest portal and then, in May, announced it would merge some of its Web assets with Xoom.com, an online direct-marketing company, to create a new company to be known as NBCi. (NBCi started trading publicly Tuesday on Nasdaq, where it closed at $76, down $12.50 from its initial offering price.)

Still, there was a limit to how far NBC could venture into new media, in part because of its ownership by General Electric Corp.

“One of the problems at NBC was our inability to create incentives for some of the people who were working the hardest,” he said. Paying people in a way that matched the potential gains from stock options of high-tech start-up companies, he said, “would have polluted the whole GE compensation system.”

Barlow said Rogers has some good assets to work with. Most of the Primedia properties are relatively successful within their markets, with 80% to 85% ranking first or second.

Primedia presents a raft of new challenges for Rogers, not merely because he is new to the magazine business. The company needs to be centralized and focused, he said, in order to extract operating efficiencies, give investors a better sense of its core business, and give employees a clearer sense of the company’s direction. That may mean selling off more properties (previous management held two sales of fringe assets since 1997).