RICHARD Desmond, the head of OK! publisher Northern + Shell, is slashing costs dramatically at the US portion of his celebrity magazine operation, which is now believed to be bleeding money at the rate of about $1 million a week.
In fiscal year 2007, the US operations lost nearly $35 million, and estimates are that this year the losses are running at least one-third higher than that. It’s hard to know for sure because Northern + Shell is late in releasing results for the 2008 fiscal year.
Sarah Ivens, the launch editor who last fall quit to get married and move to Kentucky, was back in the saddle this year, commuting to New York from the Bluegrass State and making cover selections at deadline on Mondays while living out of a suitcase.
Now Ivens’ head is expected to be the next one on the chopping block as the magazine undergoes another massive makeover. Desmond on Monday axed six staffers including Katie Caperton, who had just been named editor-in-chief two months ago.
One source said this week’s job cuts were handled particularly callously given the mag’s issue last week reached 600,000 in newsstand sales — surpassing 2008’s average of 510,000, and well past the mid-340,000 average this year.
According to the source, the staff was called into a meeting after deadline Monday and “everyone thought it was going to be a celebration.” Instead, mere minutes after the issue that will hit later this week went to press, Caperton and the others were given their walking papers.
Those cuts come as none of the changes that Desmond made last year — including the hirings and then oustings of Kent Brownridge as general manager and Susan Toepfer as editor-in-chief — have helped improve the bottom line.
And while the turmoil and hemorrhaging of cash continues in the US, Desmond has the added aggravation of seeing his own personal fortune plummet as well over the past year. According to a report this week in The Times of London, Desmond’s personal net worth dropped by $1.4 billion in the past year.
“Desmond is furious with the losses,” said one source.
Sources say that the company, once derided for revving up “checkbook journalism” and “pay-for-play,” hasn’t made a significant celebrity photo purchase since the start of the year.
But while Desmond may not be pleased, he continues to tweak the US magazine in search of a winning strategy. Two weeks ago, he visited the West Coast with Publisher Lori Burgess to meet with publicists and agents to explain how the magazine will take a softer approach in its coverage, eschewing controversy in favor of fashion and lifestyle stories.
But the move is baffling to many in the industry, who point to the struggles of Bauer Publications’ Life & Style and the folding two years ago of American Media’s Celebrity Living as signs that the strategy has not worked in the past.
Floppy ears
Hugh Hefner’s Playboy Enterprises is still in turmoil.
Jerome Kern, the recently named CEO who replaced Christie Hefner, told analysts in his conference call earlier this week that “radical change” was going to come to the print edition of Playboy, which at one time was at the center of Hef’s far-flung media empire.
“It is clear that the company can’t continue to sustain significant losses in a business that now comprises less than one-quarter of the company’s revenue base,” Kern said.
As a result, the company said it will combine the July and August issues of the magazine, and is looking at other measures, including cutting the circulation it promises to deliver to advertisers, known as the rate base, from its current level of 2.6 million, increasing the newsstand price and cutting back further on publishing frequency.
The company has already abandoned its swanky Fifth Avenue offices, which included access to a big balcony overlooking Central Park. The New York editorial office was shuttered and consolidated in Chicago, its original home.
Kern said that since October the company has cut people-related expenses by $18 million.
In the first quarter, the company posted a loss of $13.7 million, although it said that $8.7 million was due to impairment and restructuring charges. Revenue in the quarter plunged 20 percent to $61.8 million.
Early jump
Wall Street Journal reporter Kate Kelly’s book “Street Fighters,” which chronicles the 72-hour collapse of Bear Stearns, surged to No. 30 on Amazon.com’s bestseller list, eclipsing for one day her rival William Cohan’s “House of Cards,” which was at a still respectable No. 109 on the list.
But even if Kelly sells all of the approximately 55,000 copies that are now in print, she won’t topple Cohan, who beat her to the market with his book on the Bear Stearns meltdown and takeover.
Last week, his book remained on the New York Times’ bestseller list, though it had slipped a notch to No. 7 on the non-fiction list a week earlier.
Nielsen BookSpan reported that 62,000 copies of “House of Cards” have been sold at retail — and it is estimated that Nielsen tracks sales for approximately 75 percent of the retail market nationally. That suggests he’s al ready sold over 80,000 hardcopies of the book.
Money books
Meanwhile, more financial meltdown stories are in the pipeline.
Vicky Ward — a Vanity Fair contributing editor who is married to Matthew Doull, step-nephew of jailed media tycoon Conrad Black — has agreed to a deal with John Wiley & Sons to publish “The Great Mistake: The Fall of Lehman and The Weekend That Changed the World.”
“I hope it will be the sequel to Ken Auletta’s 1986 book [“Greed and Glory on Wall Street: The Fall of the House of Lehman”], ” she said.
“[Former Lehman CEO] Dick Fuld took Lehman back from American Express, re built it, overcame enor mous hurdles such as the Russian crisis in ’98 and 9/11 only to fail very dramatically in mid-September last year,” she said. “The whole financial world went haywire after that.”
Andy McNichol at the William Morris Agency brokered the deal, which is estimated to be in the mid- to low-six-figure range. It’s tentatively set to hit bookstores in April 2010. keith.kelly@nypost.com