Enquirer/Star Group, Inc. History

Address:

600 S. East Coast Avenue
Lantana, Florida 33462
U.S.A.

Telephone: (407) 586-1111
Fax: (407) 547-1017

Public Company
Incorporated: 1991
Employees: 1,330
Operating Revenues: $275.38 million
Stock Exchanges: New York
SICs: 2721 Periodicals

Company History:

The Enquirer/Star Group, Inc. was incorporated in 1991 to serve as a holding company for the best-selling supermarket tabloids in the United States: the National Enquirer, Weekly World News, the Star, and Soap Opera Magazine, as well as Distribution Services, Inc., the group's marketing and merchandising operation. With investigative reporting on such sensational stories as alien spacecraft sightings in New Jersey and head-lines such as 'Cher: I haven't had sex for 10 months!,' the $1.25-a-copy National Enquirer and Star enjoy a combined weekly circulation of seven million. Only TV Guide sells more copies.

The National Enquirer, the Group's flagship publication, traces its history to 1926, when newspaper magnate William Randolph Hearst lent his protege William Griffin money to found the New York Evening Enquirer. This Sunday afternoon paper was distributed throughout New York City. As partial payment of his loan, Hearst asked to use the Enquirer as an experimenting ground for new ideas. Hearst used the good ideas in his successful publications; the less successful ideas stayed with the Enquirer, and as a result the Enquirer's sales never soared. They were further undercut during World War II, when Griffin wrote such fiery editorials against U.S. military involvement in the war that he was indicted for subverting the morale of U.S. troops. (Charges were later dropped.) By 1952, circulation had dropped to 17,000 copies.

In 1952, Generoso Pope, Jr., son of the founder of New York's Italian language daily newspaper Il Progresso, purchased the Enquirer for $75,000. Pope planned to gradually change the format of the paper to that of a national news-feature weekly. He dropped the paper's Democratic partisanship, increased its staff, and added a new, anonymously written 'world-wide intelligence column.' Although Pope initially said the newspaper would not convert to the tabloid format, the paper became a tabloid in 1953.

The greatest change Pope instituted, however, was in the paper's editorial content. Gory stories of murder and mutilation became regular features. Confessions such as 'I'm sorry I killed my mother, but I'm glad I killed my father,' appeared. Headlines declared: 'I say 'no' to passionate potentate and he has his half-men beat me into submission!' The Enquirer's content was so salacious that New York City Mayor Wagner frequently voiced his displeasure, which eventually led to Pope's resignation from the city's Board of Higher Education in 1954. At that time, Pope also announced that he was handing control of the publication over to former general manager Roy Moriarity, although he did not disclose whether he still owned all or part of the paper.

In 1957, the paper was renamed the National Enquirer. Pope broadened its focus to include national stories of sex and sadism and also expanded its distribution. Sales grew steadily, despite content so offensive that the Chicago Transit Authority temporarily banned its sale at station newsstands. By 1966, however, sales had reached a plateau at 1 million copies per week, prompting Pope (who had once again taken control of the publication) to clean up the paper's image. 'There are only so many libertines and neurotics,' he told Newsweek in 1969. In defense of his earlier editorial choices he declared, 'Every publication starts out by being sensational. I intended to make it a quality paper all along.'

Analysts cite the declining number of newsstands as the real reason for the paper's stagnation. As mom and pop grocery stores and corner newsstands were gradually replaced by supermarket chains, outlets for the National Enquirer diminished. Pope sought to clean up the paper's image in order to tap into the enormous market of women who frequented supermarket check-out lines. He hired seasoned journalists, paying them some of the best salaries in the business. In keeping with the publication's new pristine image, company headquarters were moved from New York to Lantana, Florida (population 8,000), where the Enquirer soon gained acceptance in the community by sponsoring Little League teams and purchasing a new ambulance for the local fire station.

Pope also hired a vice-president for corporate planning and a public relations firm to broadcast the paper's new content. Stories such as 'Poor Italian Immigrant's Son Starts Chinese Food Business in a Bathtub' were more zany than distasteful. The new Enquirer also began covering politics, albeit with its own special bent. Senator Edward Kennedy's much-publicized accident at Chappaquiddick, in which he survived a watery car crash that killed his female companion, received thorough coverage in the Enquirer. The paper even went so far as to hire clairvoyant Jeane Dixon to foretell the Senator's future.

Despite its improved image, supermarkets were initially reluctant to sell the Enquirer. Pope courted them by promising the supermarkets 22 percent of the cover price. Free subscriptions were given to wives of supermarket executives, and endorsements from Hubert Humphrey, Barry Goldwater, and Joan Crawford were made into a promotional film narrated by a well-known newscaster. When that didn't work, Pope claims that he enlisted the help of a friend, Melvin Laird, Secretary of Defense during the Nixon administration, who took supermarket executives on a private tour of the White House and allowed them to meet with the President for half an hour.

Within three years, the Enquirer was available in most supermarket chains across the United States. By 1969, circulation had climbed to 1.2 million copies per week, and the National Enquirer ousted Reader's Digest from the newsdealer's top-five bestseller's list. Sales continued growing to just below 4 million a week by 1974. Gross revenues in 1973 were $17 million; the next year they hit $41 million. Advertising sales were so good that the company allegedly turned down accounts, and analysts were calling the publication 'outrageously successful.'

In 1978 circulation peaked at 5.7 million copies, and slid to just under 4.6 million by 1981. The decline was attributed to the growing number of competing supermarket tabloids, including one created by Pope. In 1979, Pope launched Weekly World News, a black-and-white tabloid that published unusual stories similar to those found in the early days of the Enquirer, printed at the Enquirer's printing plant in Pompano Beach, Florida. Within two years of its debut, Weekly World News began making a profit, with a circulation of over 700,000. By 1984, Australian media mogul Rupert Murdoch introduced the Star, a four-color gossip sheet, to take advantage of consumer desire for naughty news.

In 1982, Pope raised the Enquirer's cover price by 20 cents, to 65 cents an issue. Circulation, fueled by an enormous advertising campaign, rose by 11 percent. Gross revenues climbed 54 percent to $140 million. Pope also sought to improve the bottom line by luring blue-chip companies such as General Motors, Procter & Gamble, and Sears to purchase advertising space in the paper. Until the early 1980s, approximately 12 percent of revenues came from advertising. Most were small, mail-order companies offering everything from biorhythm charts to seeds that grow six pound tomatoes. Calculating that revenues could increase by 25 percent if these small ads were replaced by full-page ads from major corporations, Pope began an all-out effort to woo advertisers, using the tag line, 'You may not like the Enquirer, but 14 million people do.'

Luring respectable advertisers prompted another change in editorial content, as Pope directed cutbacks in the gossip columns in an attempt to become 'a service and entertainment publication for middle America.' Pope used the same strategy he developed to get the Enquirer into supermarkets, giving free subscriptions to the wives of advertising executives, recording celebrity endorsements, and courting the approval of decision-makers. His strategy worked. By 1986, color ads for cigarettes, clothing, brand-name foods, and household products had replaced many of the smaller ads. Advertising revenues for 1985 were $31.1 million, up from $29.2 million in 1984.

Generoso Pope, Jr. passed away in October, 1988. Several of the world's leading publishing companies bid for the family-owned business, including Diamond Communications, Maxwell Communications Corp., and Hachette S.A. In June, 1989, GP Group Acquisition Limited Partnership (a partnership created by Boston Ventures Limited Partnerships III and IIIA and Macfadden Holdings, L.P.) purchased the operations for $413 million in cash.

GP Group Acquisitions instituted a number of reforms to boost revenues and cut costs. The Enquirer's outmoded printing plant in Pompano Beach, Florida, was closed, television advertising was discontinued, and editorial expenditures were reduced. In addition, mail order and classified advertising rates were increased substantially and the cover price of the National Enquirer was boosted to 85 cents in the United States, and 89 cents in Canada.

In early 1990, GP Group purchased the Star, National Enquirer's rival publication, from Rupert Murdoch's New America Publishing Inc. for $400 million in cash and stocks. At the time of purchase, the Star's 3.6 million weekly circulation was just below National Enquirer's weekly circulation of 4.1 million. That year, the company took the name Enquirer/Star Group, Inc. The Enquirer/Star Group went public in July 1991, with an initial offering of 13 million shares of Class A Stock. Also that year, the group launched Soap Opera Magazine, a weekly publication that provided in-depth coverage of daytime soap opera and was sold at supermarket checkout lines for $1.19 in the United States and $1.29 in Canada. Distribution of the National Enquirer and Weekly World News soon spread to the United Kingdom, Europe, and Asia.

Circulation declined across the publishing industry in the early 1990s, due to increased competition from television celebrity news programs. The Enquirer/Star Group responded by expanding its overseas market. The Group also entered into a number of other ventures in the early 1990s, including trademark licensing, story syndication, and the launch of What People Are Wearing, a monthly spin-off of the Star devoted to celebrity fashion and beauty. In 1993, the company entered into a joint venture with Brandon Tartikoff (former chairman of Paramount Studios) to begin production of a one-hour television program produced by the staff of the Weekly World News to be aired on network television. Stories on the one hour pilot include the usual Weekly World News fare, including a faith healer/mechanic who fixes cars by laying his hands on them and photos that 'prove beyond a doubt' that humans live on Mars.

Although the Enquirer/Star Group may churn out some highly questionable stories, the company's bottom line remains solid. Net income grew by 15 percent to $19.4 million in 1993. With a strong cash flow and bold expansion strategies, Enquirer/Star Group's future as the world's primary news source on alien sightings and celebrity romances remains strong.

Enquirer/Star Group, Inc. History

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