Merger of the Magazines

The nation’s oldest regional business magazine joins forces with the nation’s oldest city publication.

October, 2001

Two dauntless men, Duane Kurisu and Dave Pellegrin, met to talk about magazines for the first time in 1997. Kurisu, a real estate millionaire several times over but a novice in publishing, had just purchased Hawaii Business. He had a communications vision; this was the first step.

“I had learned over the years to appreciate the power of words, the power of thought, and in many ways it seemed more powerful than anything else,” he says. Pellegrin, older by 12 years, the sole owner of Honolulu Publishing Co. since 1980, had published Honolulu magazine since 1977. He also owned Island Business, an obvious competitor with Hawaii Business. Today, as both men reminisce, neither recalls much about the particulars of that first meeting, except that it was cordial, and there was the more-or-less unspoken acknowledgement that two monthly business magazines were one too many in advertising-strapped Hawaii.

Early in 2001, Pellegrin and Kurisu arranged to meet again. This was another cordial lunch, but the equation had changed. Now Pellegrin was approaching 60; he was doing more and more work in the non-profit sector, working with a group called The Compassionate Friends, with which he got involved after the death of his son in a motorcycle accident in 1991. If he was not thinking exactly of full-fledged retirement, Pellegrin was contemplating cutting back his publishing activities. This time the subject of Honolulu magazine came up as part of the package, except now Pellegrin wasn’t buying, he was selling. And Kurisu was interested.

Honolulu magazine, the last reincarnation of the oldest continuously published magazine west of the Mississippi, had been in the Pellegrin family since 1977. King Kalakaua had commissioned the magazine, then called Paradise of the Pacific, under a royal charter in 1888 to be Hawaii’s ambassador to the world. For a hundred years, the magazine reassured citizens of the U.S. that the Islands were indeed civilized and worthy of statehood. It promoted local business and tourism. Its holiday annual was a classic, coveted by magazine collectors, full of fine writing, art and printing from Hawaii. Even today, back issues are prized, and now and again they show up as decorative items on Honolulu coffee tables.

But in the late ’60s, the magazine had fallen on hard times. Now it was owned by the Crown Corp., a holding company. Crown also owned Tongg Publishing, a Honolulu printing company. Tongg had inherited Paradise of the Pacific in the early ’60s from another publisher in lieu of an unpaid printing bill. Normally, printers view the ownership of a magazine in the manner of a man dangling a smelly sweat sock. They see it as a non-paying print job, with endless hassles. They would rather be printing menus and making money. Good writing and King Kalakaua aside, Tongg seemed eager to unload Hawaii’s biggest and oldest magazine.

In a small town in Wisconsin, George Pellegrin, Dave’s father, had started a publishing company called Johnson Hill Press in the late ’50s. George Pellegrin was a farmer who thought publishing could be used as a way to help other farmers earn credit and borrow money. His son Dave, who had gone to Harvard and then on to the East-West Center in Honolulu, and was now working for UNESCO with the Caribbean News Agency after a stint in Hong Kong with the Associated Press, loved Hawaii and was eager to return. When word leaked that the parent company of what was to become Honolulu magazine was going into bankruptcy, he prevailed on his father to help him make the acquisition. In 1977, in exchange for a small purchase price and a five-year printing contract, the Pellegrins acquired the magazine under the ownership of Johnson Hill Press.

Johnson Hill added the in-flight magazine for Aloha Airlines in 1978, which, according to Dave Pellegrin, “gave us more leverage with our printer, since we were now able to negotiate what had been an inflated printing price, which was in effect the price of Honolulu magazine.”

In 1980, Dave reached an agreement with his father to split the company. That was the year Dave started Honolulu Publishing Co. which, up until Sept. 30, 2001, was the publisher of Honolulu.

“The news of the sale was a bombshell,” says John Heckathorn, editor of Honolulu since 1993. “And yet there was an inevitability about it. A single owner who gets older wants to do other things.”

The deal under which PacificBasin Communications LLC (Kurisu’s media company and the publishers of Hawaii Business) acquired Honolulu and Island Business was quickly made and announced on July 30. Under the terms of the agreement, Island Business will be incorporated into Hawaii Business, the oldest regional business magazine in the U.S. (Surprisingly, for two men deeply involved in business journalism, Kurisu and Pellegrin agreed not to divulge the price of the sale, or the current profitability of Honolulu).

Honolulu’s staff will, move to PacificBasin Communications offices this month, on Bishop Street, joining what will then be the largest magazine team in the state.

Pellegrin will continue as chairman of Honolulu Publishing Co., keeping less than half of his current staff to publish travel-oriented publications such as the Aloha Airlines magazine Spirit of Aloha, as well as the rent-a-car Drive Guides for the five major islands, and aiming to create a “more simplified, more focused company.” (Contrary to earlier rumors, he has no plans to sell his travel media to other publishing interests).

How this realignment of magazine forces and influence will alter the Hawaii media industry in which news and information already has become a marketable commodity is a topic of considerable speculation, compounded by the uncertainty of what changes may be in store for Honolulu magazine.

“The acquisition gives us a very solid hold on the upper end of the market in Hawaii,” says Floyd Takeuchi, president of PacificBasin Communications, who will direct the integration of the disparate publishing teams. Already he sees clear synergies between Honolulu, Hawaii Business, and especially with another recent PacificBasin magazine acquisition, Hawaii Remodeling, which in January will change its name to Hawaii Home & Remodeling. In his eyes, the group of magazines gives PacificBasin a solid lock on the high-income, high-education reader in Hawaii and thus “the great potential to cross-promote, cross-sell and do very innovative editorial programs that cover all the publications.”

Kurisu proclaims another, broader view. He wants to integrate the sister companies of PacificBasin Communications — Hawaii Sports Network, Hawaii Winter Baseball and Watermark Publishing — with the magazines and the company’s presence on the Internet, radio and television. Says Kurisu: “With the addition of Honolulu, the magazine group gives us a business-to-business and business-to-consumer base to develop. It gives us a complete content base. And the next step is to accelerate integration of all of these pieces. Honolulu adds a lot of pizzazz to our program.”

It is a mantra of the trade that city magazines must be intensely local to be successful. In an era of rampant media consolidation, this is certainly why most of them still have local owners. One driving force behind Kurisu’s deal with Pellegrin was to keep Honolulu in local hands.

“City magazines help their readers get the most out of living where they do, and hopefully they’re a force for positive change,” Pellegrin says. To this Kurisu adds, “I’m involved in the media business primarily because it’s an effective way to improve other people’s lives and to help Hawaii grow as a state. My reason for buying each of these magazines was to have responsible voices, and to keep the voices local.”

Editor Heckathorn, cited by Pellegrin as a major reason why he is passing to Kurisu a magazine with solid financial and editorial strengths, agrees it’s critically important for a city magazine to stay in local hands. “Our stories deal with the issues of the people who live here,” he says. The persistent myth about Honolulu that you have to live in certain desirable zip codes to get it is one that always rankles Heckathorn.

He doesn’t know how the rumor started. “After we once did a critical story, even Frank Fasi bitched in print that we were only given away to Kahala addresses. Nonsense,” Heckathorn says. Just how well local issues are being interpreted is a source of modest argument among some faithful readers and Hawaii media observers and will certainly affect how the new management proceeds to redirect its editorial focus. Takeuchi asks: “Should it be a city magazine? A regional magazine? A combination of the two? I think there’ll be good discussions about how the magazine intersects with our perceptions of what the community is about.”

Former Honolulu Advertiser editorial page editor John Griffin sees Honolulu’s sale as a good thing because, in his opinion, the magazine’s been cruising for the past few years. “When Pellegrin bought it, the magazine had a spirit and vitality that seems now to be missing,” says Griffin. “While it was never a competitor with the newspapers, it was certainly something that you looked at. They once had a good media column and we all felt the sting of that most of the time. But there’s certainly room for a good city magazine in Honolulu.”

A more acerbic view was voiced by Warren Iwasa, editor of the Hawaii Herald and the former editor of Honolulu’s first alternative weekly, the Hawaii Observer. “Honolulu magazine reached a nice, respectable plateau in the ’80s. In recent years, however, it has sounded like a two-note ditty. Its complaining tone and reverential restaurant pieces offer little more than bitch-bitch, slurp-slurp. What’s needed is a strong, clear chorus of voices, tones, ‘tudes, and accents. There is music in the city, but to hear it you have to keep your ear fairly close to the ground.”

Heckathorn’s attitude toward his critics is pragmatic. “I don’t think our readers are monks. They’re deeply engaged in the community, and they want it to succeed. They’re interested in a broad range of topics, and we deal consistently with serious issues,” he says. “Hawaii has become a more sophisticated place. People are better traveled. They’re more discriminating in terms of food and entertainment. And 80 percent of our readers are college-educated.”

In the meantime, as the words fly and desks get moved and editors and executives who’ve never worked together get to know one another, Kurisu and Pellegrin prepare for entirely new publishing lives. Kurisu has visions of Honolulu taking on some of the style and taste of The New Yorker, a magazine he admires, although, he says, “we have to remake the magazine according to the thoughts, values and lifestyles of Hawaii.”

For the moment, Pellegrin looks forward to playing a dominant role in the local visitor publication market and is even contemplating a new magazine for that sector. “The sale came at a good time for me personally, and it’s logical,” he insists, “You have to remember, if I were in my mid-40s and Duane was in his late 50s, instead of the other way around, I would have prevailed.”


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