Portfolio’s Flameout, or How to Burn Money Fast

After less than two years — albeit two very splashy, highly commented upon years — Portfolio magazine is closing. Since its revenues for the first quarter of this year were almost 61% lower than they were for the same period last year, the news is not that surprising. But it’s still a spectacular flameout for a title that started with such fanfare — and a reported $100 million slush fund — a mere 21 issues ago. Where did all the money go?

Portfolio was supposed to bring the flair of Condé Nast (whose premier titles include Vogue, Vanity Fair and Glamour) to the drab, buttoned-up world of business journalism. So big-name writers and editors were lured away from prominent publications, including editor in chief Joanne Lipman, who came over from the Wall Street Journal. She got the usual Condé Nast perks: a car and driver, an office decorated in the style of her choice, business- or first-class plane tickets everywhere. (See the best magazine covers of the past year.)

She was also given sufficient moola to hire top-tier talent, who were put on handsome retainers. Tom Wolfe was rumored to be paid $12 a word; Michael Lewis $50K an article. David Margolick was poached from Vanity Fair, where the contributing editor’s retainer was well into six figures. Less renowned staff writers were said to make over $150,000 a year. Deputy editor Amy Stevens was making north of $400,000, several colleagues said. Even some of the bloggers were hitting the $120,000 mark.

But many of the killer bylines only popped up occasionally. “They were willing to throw tons of money at writers, but they couldn’t figure out how to use them,” says a former staffer. “They all got about two stories in the magazine. They killed one of David Margolick’s.”

The photography budget was also deep. In true Condé Nast fashion, the photographers were always top notch and well paid. Photo spreads for small stories in the front of book could easily run to $50,000 each. For one story, the magazine flew a photographer to eight locations across the country. Lavish amounts were spent on cover stories that became inside stories.

Money was thrown at market research too, especially in the long months before the launch. (Lipman was hired in the summer of 2005 for a magazine that didn’t come out until May 2007.) “When I asked to attend a focus group, they suggested not New York — in the same building — but Chicago,” says another former staffer. “Joanne stayed at the Four Seasons. And two people from the art department turned their San Francisco focus-group trip into a multiday minivacation at company expense.”

The website, designed by über-hip Web-marketing firm Razorfish, was also a costly affair. Until recently, the site had its own staff and a special, social-networky Insider section, which not only allowed for comments but provided a forum for touting members’ business expertise. Unlike with many other media closings, the website will not outlive the magazine. (Read “How to Save Your Newspaper.”)

None of the extravagance, it should be noted, is extraordinary at Condé Nast or other glossies. While ex-staffers say Lipman’s background in newspapers afforded her little understanding of how much high-end magazine journalism costs, Condé Nast chairman S.I. Newhouse Jr. stuck by her a month past the April issue, which at 106 pages was reputed to be the thinnest his company had ever published. The magazine relied on advertisers from the finance, corporate-branding, car, travel and luxury-goods industries, all hard hit in this recession, and it never became a must-buy.

Moreover, Portfolio never seemed to find an editorial voice that distinguished it from other business publications or to draw in crucial new readers or advertisers to the category. “Every time I saw another unfortunate portrait on the cover of someone ‘venerable’ — Sumner Redstone? Barry Diller? Really? — I thought about what could have been,” says Jeff Chu, a writer who left TIME to work on the Portfolio launch and jumped ship after the first eight months. But more daring editorial choices, like December’s cover subject of Dov Charney, the controversial CEO of American Apparel, came across as ill-timed and wrong-footed. “[Newhouse’s] best editors in chief all have one thing in common,” wrote former staffer Paul Smalera, on the Portfolio-obsessed website Gawker.com, “which is they know how to channel and predict the predilections of their readers and turn at least a couple issues a year into can’t-miss propositions. Lipman did not have this particular talent.”

Is the high-profile failure bringing relieved smiles to execs at other business magazines? Not so much. More like there-but-for-the-grace-of-God head-shaking. Andrew Serwer, managing editor of Portfolio competitor Fortune, declined to gloat at the news: “I feel bad anytime any magazine closes and people lose their jobs,” he said.

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