A Search for Glitz

By WILLIAM A. HENRY III

Samuel I. Newhouse, builder of America's biggest privately held media empire, operated by a few simple rules. First, he exerted no influence on the politics or ideology of his 31 newspapers and seven magazines. Second, he expected the papers' coverage and management outlook to remain resolutely local, so he never superimposed a high-powered team of overseers. Instead, he relied on his own bulging briefcase and the loyalty of his clan: several dozen relatives held jobs on the payroll. Third, Newhouse ardently avoided publicity and, above all, controversy. He kept so low a profile that he could walk unrecognized through his own newsrooms. Maybe the only thing he touted was his height: although biographer Richard Meeker says he was 5 ft. 2 in., Newhouse claimed a full inch more.

In the decade since S.I.'s death, the empire has grown to a value of around $11 billion -- a family fortune that may be second only to the Mars candy clan in the U.S. At the newspapers and cable-TV holdings run by Newhouse's son and co-heir Donald, the same unobtrusive style still prevails. And while Hearsts, Knights, Ridders, Chandlers and other media dynasts have mostly dropped out of day-to-day management of their inheritances, about two dozen Newhouses work at properties ranging from the Newark Star-Ledger (circ. 470,000) and the Cleveland Plain Dealer (circ. 437,000) to Video Jukebox, a pay-per-view cable- TV channel featuring music videos.

But at the prestigious and influential, if less lucrative, magazine and book divisions run by Donald's older brother S.I. Jr., known as Si, the shadowy Newhouse style has been supplanted by a blaze of glitz and color and, increasingly, by tumult and frenzy. In recent years scarcely a month has gone by without an uproar at one or another of what has grown to 20 U.S. and 41 non-U.S. magazines, including Vogue, Vanity Fair, the New Yorker, Details, HG and Self, every one of which has had one or more top editors ousted and design face-lifts imposed. At the Random House book-publishing conglomerate, the longtime chief executive, a key division head and five other senior editors departed between November and March amid charges that Newhouse wanted to censor the politics of books and undervalued their social and cultural significance. He replied, "I do not like charity cases. I believe my operations should have the sense of security that comes from knowing their work leads to a profit."

Tales circulate of Si Newhouse playing supereditor, objecting to the blaze of colors on a proposed magazine cover or grumbling about a choice of stories. Meetings with him can take on the character of interrogation, and they often occur at disquietingly early hours: Newhouse generally starts his office day at 4 a.m. Even the supporters among his employees -- and they are far fewer off the record than on -- describe him as exacting and occasionally fierce. One new editor was sternly rebuked after having lunch at the Four Seasons, not for going to that expensive Manhattan eating gallery but for allowing himself to be seated in a less fashionable part of the restaurant and thereby impugning the prestige of the whole company. Newhouse is considered so temperamental and publicity-shy that some editors stipulate they cannot be quoted by name even to compliment him. The company's most successful editor, Tina Brown, who transformed Vanity Fair from an undirected, pretentious sprawl to the hottest, hippest monthly of the moment, concedes that Si rates editors by their circulation sales. Says Brown: "I'm very much aware of the numbers. I don't take my job for granted. I watch the figures very carefully." But Brown says Newhouse backs up editors who meet his marketplace standards. When she sought to respond to breaking news, she recalls, "He said, 'I'm going to give you a satellite.' That allows us to close 20 pages just four days before they go to the printer. It put us way ahead of the competition. That decision would have taken any other company a year."

What most sets people on edge about Si Newhouse is not his demand for profit or his wielding of authority but the coarse and sometimes brutal fashion in which he imposes his will. In 1987 he dumped William Shawn, editor of the New Yorker since 1952, barely a year after describing Shawn as one of the three most influential men in his life. Having been widely lambasted for letting Grace Mirabella learn of her 1988 ouster from Vogue through a TV report by gossip columnist Liz Smith, Si diligently informed Anthea Disney in person last year that she was through at Self -- by making a clumsy unannounced visit to her Connecticut home, where she was vacationing. Soon after Robert Bernstein resigned in November after 23 years as president of Random House, a seemingly orchestrated campaign portrayed him as having shown insufficient regard for profit margins during the previous five fast-growing years, in which company revenues doubled. And after Andre Schiffrin left in February as head of Random House's esteemed Pantheon division, where profit had always been secondary to literary eclat, company officials hastened to portray him as fiscally incompetent. In April, as if to underscore the insult, Pantheon named a new executive editor, Erroll McDonald, 36, who in an op-ed column for the New York Times had scorned a pro-Schiffrin protest rally organized by writers and editors.

Opinions differ on whether Si's tense style of management is necessary. While it is true that the divisions run by his brother have prospered under a low-key leadership, newspapers and cable franchises tend to be de facto monopolies, while magazines and books must battle for attention in an increasingly crowded market and thus must be aggressive to survive. In any case, it is hard to quarrel with the results. As the family fortune has soared, the magazine and book divisions have contributed their share. Random House, bought for $70 million in 1980, went on a spree of acquisition and expansion into the global market and is deemed by financial analysts to be worth perhaps $1.5 billion today. The magazines have generally prospered, even in a declining ad market, despite the fact that several of them compete for the same young and fashionable female readers. Newhouse plainly believes there is room for more: next year the company will launch Allure, a beauty magazine aimed, says editor Linda Wells, at "women who don't have hours to spend lounging around in the tub." Newhouse is equally willing to have competing titles for men. After paying a reported $2 million for Details, a modish magazine centered on Manhattan's avant-garde downtown club life, he visited the magazine's offices in February to explain that he was repositioning it as a fashion-oriented monthly for younger males, possibly a good description of GQ, which Conde Nast already publishes.

In addition to business triumphs, the Newhouses won a singular victory in March against the Internal Revenue Service, which was suing for $609.5 million in taxes on S.I.'s estate. Although S.I. had held the only voting stock, his heirs argued that voting and nonvoting shares should be treated equally because any stockholder dispute could result in protracted litigation and block a potential sale. The U.S. Tax Court agreed and thus effectively ensured that the family would not have to sell off properties, as other media clans have had to do, to pay the tax bill. Wrote Washington Post economic columnist Robert Samuelson: "The scheme's beauty, of course, is that the Newhouses can apparently have it both ways. For estate tax purposes, the value of the company is artificially lowered. But should the family ever want to sell, it can easily realize the company's full market value by offering all the firm's securities as a package."

Will S.I.'s less tangible legacies survive equally intact? Says Si's son Wynn, 35, a computer programmer in Boston who quit the family business: "The force of my grandfather's personality is imprinted on the entire family. It's a general drive that has come down to succeed and to be a family. The original unity still holds almost completely. But we're only up to the third generation. We have seen many other families that have fractured."

In his own case, although he and his father are now close, a rocky parent- teenager relationship worsened when Wynn, working as a young photographer for the family-owned Staten Island Advance, was fired by one of his uncles for refusing to cut his long hair. Si did not intervene. Says Wynn: "I don't think my father is that cold. He does have a well-developed poker face. He doesn't always let on what he's thinking."

Neither do other members of the family. TIME sought interviews from six of the family members -- all male -- who work for the company. All declined, including Si, his brother and some descendants who are said to be heirs apparent. Says Si's friend, magazine entrepreneur Peter Diamandis: "The only certainty about what will happen to the company is that, whoever runs it, the boss's family name will be the same."

With reporting by Leslie Whitaker/New York