Thirty-two-year-old Steven Schragis already owns half of Spy. Now he’s bought the ‘National Enquirer’ of book publishing.
STEVE MICHAEL Schragis just can’t seem to stay out of trouble these days. Riding high from his serendipitous 50 percent investment in a sassy startup called Spy magazine, the thirty-two-year-old real estate lawyer turned boy-publisher is now moving on to greener pastures in the field of maverick publishing.
In January Schragis put up $10.5 million of his family’s real estate fortun to purchase Lyle Stuart, Inc.—in Spy lingo, a bottom-sucking-low-budget book label-and promptly announced that he intended to continue with all but one of the house’s high-schlock titles. So A Woman Named Jackie, the latest sleazy tell all about Mrs. Onassis, will be printed as planned. So will other potential Geraldo specials, such as Bimbo, an expose of celebrity biographer Kitty Kelly, and The Vampire: In Legend and Fact. For reasons having to do with his delicate sensibilities, Schragis is dropping the thirty-three-year-old publishing firm’s counterculture classic, The Anarchist Cookbook. Publishers like him, after all, are living in the perilous post-Rushdie era.
Schragis, who is CEO and president of his newly formed company, Carol Communications Co., is taking his role as a fledgling media mogul very seriously. A slightly pudgy five-foot-eleven, he look like an overgrown, disheveled schoolboy who has yet to master the cool, calculating air of his idols, publishing tycoons Rupert Murdoch and Robert Maxwell. More good-natured than imposing, he displays the nervous ebullience of a pupil eager to please but not quite sure what is expected of him. While energetically wheeling around his well-polished black marble desk in his new office at 600 fashison Avenue, he sets off a small avalanche of papers. Blithely unaware of the destruction in his wake, he enthusiastically expounds on his newfound power: “At Spy, if I have an idea and it doesn’t get picked up, there’s not much I can do. But here, if there’s something I want, it happens.”
But there are some—namely Donald Trump—who think Schragis is an irresponsible adventurer in the publishing trade who must be stopped (an opinion some of Schragis’s colleagues down at the Puck building share). Schragis’s reputation as an irksome meddler in the media world stems in part from his overly proud papa, who is as new to publishing as his son. When Alvin Schragis bumped into Trump on the shuttle back in December, the two had a friendly chat about his son’s magazine, Spy. The elder Schragis followed up with a note on embossed Doral Hotels stationery—he’s president of the company-that makes it clear where young Steve got his social graces:
Dear Donald,
You have a great sense of humor. I do appreciate your kind words and congratulations about my son. Steven says he will stop writing about you if you put Spy magazine on your new shuttle flights.
Sincerely, Al
On February 12 an outraged Trump wrote to Spy editor Graydon Carter protesting that “for Steven or anyone to say that he will stop writing about me if I put Spy magazines on my new shuttle flights is a liable [sic] and extortion case.”
Trump went on to refer to an “extremely inaccurate and dishonest story” on his wife, Ivana, he alleges Spy is preparing because he refused to place the magazine on his planes. “My lawyers are chomping at the bit on this one,” says Trump. “We’ll sue for a hell of a lot more than that magazine is worth.”
Sitting in his office beneath a huge Warhol original of Justice Brandeis, Schragis declares with unshakable lawyerly confidence chat Trump has no grounds for a suit. “It’s a big joke. Trump is just interested in publicity.” In face, everything about Schragi ‘s sleek offices, from the abundance of polished mahogany paneling to the frosted glass, betrays his roots in law. Schragis, who was being groomed to join the family real estate firm, is the first to admit that he stumbled into book publishing. Disappointed with his limited relationship with Spy-he holds the title publishing director but has little influence—he latched onto Lyle Stuart as a first step toward establishing a media empire he hopes will bring him editorial as well as financial glory.
A self-confessed “media junkie,” Schragis is publicity shy and worries about the impression his friends and family will glean from GQ‘s description of him at Spy as “a lone matzo ball in the Yankee-bean soup,” or as “frumpy,” in the words of The New York Observer. Surprisingly thin-skinned for one who funds a magazine considered the pit bull of New York periodicals, Schragis laments, “How am I supposed to explain this to my mother. It’s embarrassing.”
Family is important to Schragis. After all, it’s where the money comes from. As heir to Carol Management, a low-profile family real estate business whose worth is estimated by Forbes to be over $500 million, including the Doral Hotels, four thousand New York apartments, premier resorts throughout the Ease Coast, Colonial Insurance, and vase tracts of commercial real estate, Schragis believes he can follow in the footsteps of ocher real estate tycoons turned publishers, such as Mortimer Zuckerman and Peter Kalikow. “I’m lucky to have been born in the right crib,” he says, grinning broadly.
Schragis’s crib was in Scarsdale. The second of Alvin and Carole Schragis’s three children, he attended the Riverdale School and then Tufts University. From there he went to American University law school, specializing in real estate law. Until 1983 Schragis was an associate at the now-defunct firm of Finley Kumble, working primarily in the real estate division. Ac one point he switched to litigation, an area for which he had little love or talent. “I didn’t win a single case,” says Schragis, who lives with his wife, Donna, and their three-year-old daughter, Rachel, in a building constructed by his grandfather in Manhattan’s west sixties. “I hated all the conflict,” he recalls. “I’d walk into my office at 9:00, and by 9:05 ten people had yelled at me.”
Schragis received the family call in 1983, becoming an executive vice president in marketing, sales, and property development at Carol Management. Since the 1970s, the firm had been moving from high-risk, low-profit rental apartments to more lucrative investments. As a result, Carol Management found itself extraordinarily cash rich and began building luxury resorts and hotels, pouring money into the Miami Doral Saturia and Ryebrook’s Arrowwood resort. In order to complete it swim-stroke-and-ski triad, the company is currently shopping for a luxury ski resort in Colorado.
Other family members played with the excess cash in more inventive, risky ways; Schragis’s cousins launched a $75 million hostile takeover of the Kansas City Southern Railway just before the October crash, in which they nearly lose millions. Their holdings were eventually bought out, and they walked away with a small loss, leaving a tide of antitakeover legislation in their wake. Schragis began to think about leaving real estate when he realized he didn’t have the stomach for his cousins’ brand of venture capitalism. “I was never a great businessman and realized I was having a kind of a crisis,” he remembers.
“Steve was turned off by salesmen in an industry where somebody is always crying to sell you something,” says Michael Cohen, senior vice president at Williams Real Estate. “Although he was good at what he did, it was like he was wearing somebody else’s shoes.” Schragis began looking for a new way to distinguish himself.
In 1986 Schragis met Jay Kriegel, a media consultant to whom he confessed his publishing pa sion. Kriegel asked whether Schragis was interested in investing in a new magazine, Spy. Schragis was excited by Spy‘s potential: he became the last major partner, investing $200,000 and finally a total of $1.5 million in exchange for the fancy title of publishing director. As the Washington Post wrote, “If he played a similar role at another institution, Spy would call him a sugar daddy.”
Relatives at Carol Management simply assumed this was a new hobby for Schragis. But Schragis’s involvement was more than a tax write-off. Captivated by the synthesis of Waspy repartee and reportage that characterize Spy, Schragis enthusiastically describes its staff as “some of the smartest people I’ve ever met.” Spy seemed to have spoken to Schragis’ acute Ivy envy with its collection of Harvard-educated trust-fund kids who are paid coolie wages to make fun of Daddy’s exclusive club.
Despite Schragis’s lack of publishing experience, he wanted a substantial role in Spy, a desire that sometimes made for strained relations. “I tried too hard to be part of the staff at first,” he admits. “There is no way to compare someone who spends eighty hours a week at a magazine with one who spends four or five.”
Graydon Carter agrees. “There was a period of disenchantment when Steven realized he was never going to be part of the magazine as he had envisioned,” he says from his manuscript-strewn office at Spy. “It takes more than merely an interest in a magazine to be an editor.”
Ironically, Spy may have taken off too quickly for Schragis’s taste, surpassing its five-year plan in less than half that time, leaving little room for him to tinker. “There was no opportunity for Steve to ride in on his white horse and save the day,” says one insider. “Spy was just too damn popular.” Also, the magazine’s cocky, often mean-spirited tone contrasted so severely with Schragis’s cheerful demeanor that something had to give. “He likes the obviously humorous stuff,” says Carter. “His taste is more middle-of-the road, and he often thought we were a bit beyond the pale.”
“There are some parts of Spy I’m squeamish about,” Schragis says. For example, the profile detailing the the hobnobbing and former heroin-hoarding of New York Post columnist Eric Breindel, which he characterizes as “unnecessarily vicious.” Schragis’s own tastes run more to the absurd, such as a piece comparing George Bush, Leona Helmsley, and Al Sharpton. “now that is something I’m very proud of,” he says, beaming.
Spy also created conflicts between Schragis and his family. The magazine ran an early feature called “Colleges of the Rich and Dumb,” and Rollins, the college attended by two of Schragis’s cousins, was deemed especially worthy note. The Schragis clan was sensitive because, according to one source, it had recently housed the Rollins Club in the Doral Hotel to encourage the college to keep one of the children despite poor academic performance. The family was not amused.
But Spy only whetted Schragis’s appetite for more. “I needed to go further, to do something that would really be my own,” he explains. In February 1988 he hired Paul Wachter of Kidder Peabody, telling him only that he wanted to “be in media.” Together, they scouted film production companies, cable TV, magazines, and publishing houses.
Schragis was briefly the publishing director of Metro, a now-defunct New York monthly for “protoyuppies,” i.e., people who go downtown to visit but wouldn’t want to live there. (The author was a frequent contributor to the magazine.) Metro intrigued Schragis because of its extremely low operating costs, and he invested $100,000. Masterminded by its publisher,Jonathan Himoff, formerly executive editor of Spin and a distant cousin, Metro ultimately frustrated Schragis because it was unable to grow beyond its eighteen-to-twenty-eight-year-old target audience. He bailed out in December; it was the end of a disappointing and expensive experiment.
After month of searching, Schragis then decided to buy Lyle Stuart, Inc., whose warrenlike offices are located among a sea of redbrick remainder houses and clothing outlets in Secaucus, ew Jersey. At the time, Lyle Stuart was enjo ing a little notoriety for being the only house willing to print a scathing indictment of New York Times editor Abe Rosenthal called to Fit to Print: A.M. Rosenthal and His Times.
Described by one ew York editor as “the National Enquirer of book publishing,” Lyle Stuart had long cultivated a reputation for scandal, frequently publishing sensational titles originally contracted by larger publishing house but ultimately rejected by their legal departments. Schragis was also attracted by the house’s backlist of over two thousand books, including new-age, film, and adventure titles, from which 70 percent of its profit comes, as well as by its warehouse and distribution facilities. Lyle Stuart and its imprints, Citadel Press and University Books, bring out sixty titles a year with revenues of more than $8
million.
Much of the publishing firm’s character stems from its sixty-six-year-old founder, whose name it bears, a rotund, charismatic little man with slicked-back brown hair and a devious smile. Lyle Stuart’s resume includes a long haul as the editor of an iconoclastic monthly, The Independent, a stint as ghostwriter for Walter Winchell. A self-described “expert on libel,” Stuart drives a gray Mercedes sporting a license that reads CHE, after the Cuban rebel, beneath a sticker barking out, QUESTION AUTHORITY! “If I hadn’t gone into publishing, I probably would have been a revolutionary,” he explains. professional in urgent publisher, Stuart prides himself on acquiring books other houses are “too chicken to publish.” His credo is “A long as they are true, I don’t care who my books offend.”
Stuart capitalizes on his role as parasite-publisher, once allegedly affixing to a book a stamp that read, “Random House refused to publish this book.” Dick Snyder, CEO of Simon & Schuster, a house where a number of Stuart books originated, appraised Lyle Stuart’s character with elliptical terseness, saying, “You judge a house by the kind of work it produces, and if you look at Lyle Stuart’s work, you can draw your own conclusions.” Even tuart’s admirers, such as Howard Kaminsky, formerly pre ident of Random House and now head of Hearst trade books, characterize his “gutsy” style as a “cross between an iconoclast and a kamikaze.”
Schragis’s decision to buy such a rough-and-tumble operation took many by surprise—for example, Graydon Carter, who was “faintly shocked” upon hearing the news. “It’s just that real estate types usually buy upscale outfits when they go into publishing,” Carter observes dryly. “I mean, would you want your book published by Lyle Stuart?”
An unlikely duo by any stretch of the imagination, the street-smart Stuart and the inexperienced Schragis got along famously. Schragis wanted a full-service publisher, and Stuart sought a buyer who needed a complete operation. “Lyle didn’t want to be swallowed up by Random House or Macmillan, who would chew the company up and spit out the parts it didn’t need,” Bruce Bender, the president of Lyle Stuart and Carol Communications explained. “We wanted to make a change and needed more money. Steve was a godsend.”
The two were well on their way to an agreement when Stuart’s lawyers at Proskauer Lipton stepped in. “Suddenly everything became vastly more complicated, and it looked like the deal wouldn’t go through,” Schragis recalls. He was leaving for the Frankfurt book fair in two days and was anxious that his newly purchased credentials be taken seriously. The real estate refugee saw his new career being shot down before it got off the ground and called up the same doggedness he might summon for a difficult eviction. After a long dinner, Stuart and Schragis went to the law offices to settle things. “Steve announced that we weren’t leaving until we had a contract, and if we couldn’t do it that night, we might as well give up,” says Stuart. They stayed until 4:30 a.m. The deal gave the principal stockholder, Lyle Stuart, a $5 million profit; it gave Schragis an albatross of a publishing house.
Schragis immediately began revitalizing the house, hiring two seasoned editors: Hillel Black, former publisher of Macmillan, and Stewart Richardson, once editor in chief of Doubleday. The two are creating Birch Lane Press, a new, quality imprint, taking its name from a street in Schragis’s hometown. He has since hired Daniel Levy, a young editor who envisions himself as the “counterculture publisher of record,” combining his experience in financial consulting with a lifelong devotion to the Grateful Dead. On January 9 Carol Communications’ editorial and publicity offices cook up residence on the eleventh floor of 600 Madison Avenue, a prestigious midtown location that will mark its entry into the glitzy location-concious age of power publishing.
Already Schragis finds owning Lyle Stuart more to his liking than working at Spy. He boasts of the books he has already acquired: The George Bush Dilemma, one of the first books to examine the difficulties the Bush administration will face, and a humorous guide to the pitfalls of child rearing, The Mommy Book, written by Belinda Bralver, a friend from the Riverdale School.
As Schragis’s car speeds down the Jersey Turnpike to Lyle Stuart’s Secaucus office, he waxes unabashedly poetic, evoking a romantic vision of a business where “your word is your bond and editors correspond on fine parchment.” A card-carrying member of the Book of the Month Club, Schragis muses over the importance of keeping up with “the industry.” “If a book is a number-one selection, even if I don’t want to read it, I should have it on my shelf now that I am in publishing.” While Schragis acknowledges that publishing, like real estate, is ultimately about money, in his new career he wants to “add to the world,” acquiring books that “have an impact on society or are even,” he whispers, “ important.”
Apart from his more ethereal thoughts, Schragis has the packaging instincts gleaned from years in marketing. “Before I publish a book,” he explains, “I ask myself, Can I describe this quickly, can I excite someone immediately? To sell a book to a reader, you have to understand what he wants and anticipate future trends,” he repeats, as if these are jewels of wisdom rather than clichés if the trade. His tone becomes deadly earnest when he repeats a conversation with the head of a large house about the chances of a move like Nicholas Nicely being published today. “I saw I would tell Dickens to but the book by half and get rid of a third of its characters, and the executive agreed completely. But,” Schragis’s voice crace cracked slightly, and he leans forward, squinting on eye, “ I don’t think he saw the tragedy in this.”
Schragis clearly casts himself in the role of a publisher who cares. He desperately wants to be involved in the conception of good books and describes encounters with authors with the kind of wide-eyed enthusiasm usually reserved for baseball heroes. “I want to publish important people’s books, but even more,” he adds eagerly, “I just want to have coffee with writers and talk.”
Counting John Irving and Anne Tyler among his favorite authors, Schragis judges The Bonfire of the Vanities “probably the greatest book published during my lifetime,” comparing Wolfe’s gift for bending fact and fiction to Dicken’s. Schragis also knows what books he doesn’t like. “I hate stories I call ‘from the shtetl to the boardroom.’”
Schragis seems Mohave nary a doubt he can harness Lyle Stuart’s reputation for profitable sensationalism and bring it into the mainstream of commercial publishing. Many think hat, despite his inexperience, he has a good chance of succeeding, combining what Black calls Schragis’s “passion for the written work” with Richardson’s estimation of him as “one of the brightest guys I’ve met in all my years in publishing.”
Their philosophy is that, despite the poser of the Maxwells, Murdochs, and Newhouses, this is actually a good time for a small house to expand. “The pool of those buying books has struck through takeovers, and mergers, but the number of sellers has grown, creating an opportunity for independent houses,” explains Black. “We’re the new kids on the block,” adds Richardson, “so we can take more chances.”
But Schragis knows it is harder to make money with books than with building. He is eager to compete with larger houses for authors and will go the extra yard to prove his devotion to his trade. Before a recent trip to London, he met Warren Hinckle, coauthor of The George Bush Dilemma, signed the contract, and wrote a check for the advance at the same meeting, a record in an industry infamous for its Leviathan-like bureaucracy.
Sidney Zion, author of The Autobiography of Roy Cohn, a Lyle Stuart book, recent called Schragis and asked, “Are you guys going to continue to pay minuscule advances?” “No, Sidney,” Schragis replied with the supremely confident air of a child sitting in a too-large chair, “now our advances are going to be teeny-weeny!”