Beverly Hills Flier a Vicious Shot in Magazine Wars.

L.A.'s city magazine wars have taken a nasty turn.

With the explosion of L.A.-oriented titles like Angeleno, Southland and Channel Los Angeles, perhaps it was inevitable that competitive pressures would bubble to the surface. Well, the bubbling has begun, and it's poisonous.

A couple of months ago, someone slipped an anonymous flier under the doors of retail establishments in the most posh shopping areas of Beverly Hills. The flier also was faxed to key media buyers in New York who handle fashion and high-end retail accounts.

"Angeleno magazine is a lie!" the flier declared. "...We urge you to avoid Angeleno magazine and their seedy, fast-talking publisher."

The letter stated that the total circulation of Angeleno, a new city magazine based in the Miracle Mile area that started publication last fall, was only 5 percent of what its advertisers were being told. Further, it said the publication was running free ads for 70 percent of its current Los Angeles advertisers.

"They charged us full rate card for both issues," the letter states. "If you run comps for some, why not for all? They ran our ad with mistakes and still insist we pay them full contract -- even though we have information that they are at 5 percent of their circulation."

$10,000 reward offered

Although the letter appears to be written by an advertiser that got burned, Angeleno Publisher Michael Blaise Kong says three sources who say they witnessed the flier being put under doors or spoke with its sender on the phone recognized the distributor as a rival publisher. And he insists the allegations aren't true.

"The day this thing went out, I got about 100 phone calls from clients," Kong said. "The thing gets distributed, and then everybody faxes it to everybody else. So within the hour, it's about 10 times bigger than it was originally."

Kong offered a $10,000 reward for information about the disseminator of the fliers, and after taking depositions from his three witnesses he was preparing a libel suit until last week. But after finding out how much he would have to pay in legal fees, he decided to drop it. He declined to reveal the identity of the publisher or magazine.

He also declined to reveal how much advertising revenue he has lost as a result. "We did lose some business, for sure," he said. But the March issue will be Angeleno's thickest yet, at 340 pages, Kong said.

Kong sent out 1,000 copies of a packet to his advertising clients that included signed statements from representatives of printers RR Donnelly & Sons Co. and Brown Printing Co., and distributor Freight Systems Inc., saying that around 60,000 copies of the September and November issues of Angeleno were printed and distributed. The magazine's guaranteed circulation is 50,000.

Everybody paid rate card

While it's a common practice for start-up magazines to offer free ads to national sponsors, Kong claims that every ad was paid in the initial issues of Angeleno -- and everybody paid rate card.

"You could pick any ad you want, and I'll show you the contract. I'll even show you some cashed checks (from the advertisers) if you want," Kong said.

Six years ago, Kong launched Chicago Social in the Windy City and built it into enough of a profit center that he could afford to start another city magazine in L.A. But he's entering a crowded field; following the demise of Buzz last year, at least two other city magazines have launched in an effort to compete with longtime survivor Los Angeles magazine.

Speaking of Los Angeles, the Wall Street Journal last week reported that Walt Disney Co. is once again shopping around for a buyer for Los Angeles magazine.

That's not terribly surprising considering that Disney has been trying to shed non-core, money-losing operations -- although the company has up until now stubbornly insisted on keeping Los Angeles. The studio's decision has long puzzled local magazine insiders, who see little synergy between the publication and Disney's other operations.

The surprising thing about the current effort to find a buyer is the price being bandied about. Although experts have previously valued the magazine at somewhere between $10 million and $15 million, the Journal cited sources close to the dealings as saying that discussions have placed the value at upwards of $30 million.

Price favors big publisher

That's a rich price for a magazine that has been bleeding money for years. According to testimony during a recent lawsuit filed by actor Dustin Hoffman, Los Angeles lost more than $5 million in 1996, more than $4 million in 1997 and more than $3 million in 1998. And Hoffman won a $3 million verdict against the magazine that's currently under appeal.

Seth Baker of Beverly Hills-based Baker Newspaper Group, who owned the magazine in the mid-1980s, has made several efforts in recent years to buy it back. But not at that price.

"I'm not so sure I'd be interested anymore," Baker said.

But inside sources say $30 million or more might not be out of reach for Los Angeles if it were bought by a large publisher of city magazines, like Primedia Inc. (owner of New York and Chicago magazines) and Emmis Communications Corp. (owner of Texas Monthly). These companies could make the magazine profitable by saving on printing and paper costs, and bundling ads together for sale in all their city publications.

"Los Angeles is a very important franchise," said an insider at one large magazine company. "The real measure is, will it make money under other management? That's what people are valuing it on."

Assistant Managing Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.