Conde Nast buys two Knapp titles - Conde Nast Publications Inc.; Knapp Communications Corp.'s Architectural Digest and Bon Appetit

Conde Nast Publications emerged as the winning bidder for Los Angeles-based Knapp Communications on March 2, paying $170 million--according to one source close to the negotiations--for Architectural Digest and Bon Appetit. As part of the deal, Conde Nast will assume the 10-year lease for the posh office space the Knapp titles recently moved into on Wilshire Boulevard, and will use the quarters to house its other West Coast titles.

Other bidders were the German giant, Bertelsmann, which sought the titles for its Gruner + Jahr USA Publishing holdings: Reed Elsevier, which sought them for its Cahners Publishing unit; Hearst Magazines, and K-III Magazines.

Speculation now turns to how the two titles will work into the current stable of Newhouse titles. Conde Nast president Bernard Leser says that Bon Appetit and Gournet "are complementary rather than in conflict. Bon Appetit is much more basic foods, while Gourmet is more exotic food and travel."

The larger question, however, is what will happen to HG (House & Garden) the title that has struggled as Conde Nast moved it upscale following a makeover in September 1983. Last year, Architectural Digest had 1, 155 ad pages and $33.2 million in ad revenues, according to Publishers Information Bureau. HG managed only 759.8 ad pages in 1992-a drop of 20 percent from the year before. Ad revenues wcre reportedly only $22.8 million.

Lou Gropp, former editor of HG and now editor of rival House Beautiful a Hearst, comments, "I would assume they would keep Architectural Digest at the top with HG maybe a rung below, a little more populist." Indeed, HG was already at the one-million-plus mark before going upscale and cutting back to its current rate base of 550,000. Leser declined comment.

The price--even before the inclusion of the real estate costs and the costs of covering individual contracts--was high, reportedly some 15 times the company's cashflow.

But at least one West Coast publishing observer thinks the deal is the exception, not the rule. "This acquisition does not set a new standard for deals in the nineties," says Peter Craig, president of Magazine Consulting Group in Los Angeles. "There are only a handful of properties like these still owned by small entrepreneurial companies."

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