Defying slump by pursuing the rich

The rich are different, and so is what they're reading.

Which is why the quest for wealthy eyeballs is booming despite a soft print market.

That trend will be underscored today with the expected announcement that investor Roy E. Disney's Shamrock Capital Advisors has sold Los Angeles-based Modern Luxury Media for nearly $250 million.

Local private equity player Clarity Partners is buying a controlling interest, winning an auction involving about 30 parties.

Modern Luxury publishes such upscale city magazines as San Francisco, Angeleno and Riviera, which has Orange County and San Diego editions. The acquisition of the company comes as other print publications are struggling to attract advertisers and keep up circulation.

"Luxury magazines have been spreading like wildfire," said Peter Kreisky, president of Kreisky Media Consultancy.

The growth has been fueled by controlled circulation, in which companies send free magazines to people living in affluent ZIP Codes.

Luxury magazines appeal to advertisers and investors because they can reach a specific type of consumer in a way that general circulation publications can't. According to Modern Luxury, the median household income of Angeleno readers is $305,000.

"In today's world, advertisers are looking to target their advertising and be more efficient," said Steve Royer, managing director of Burbank-based Shamrock Capital Advisors.

Magazines published by the company are filled with ads from national luxury brands such as Neiman Marcus Group Inc., Cartier and Louis Vuitton, said Chief Executive Michael Kong.

"A great deal of what has propelled our growth is the explosion of luxury goods worldwide," Kong said.

But some believe that regional luxury magazines may be near saturation, said Seija Goldstein, a New York-based consultant to regional publications.

When Shamrock bought a controlling stake in Modern Luxury in November 2004, the company published three magazines, in Chicago, Los Angeles and Orange County, with total revenue of $18 million a year.

Since then, it has expanded into nine more markets and increased revenue to $70 million. The company now reaches 645,000 households and 3.5 million readers a month.

Shamrock is selling its stake for nearly five times what it paid in 2004, according to those familiar with the deal.