Hard-Pressed Magazines Push for New Image : Media: An advertising slump has led to the folding of several publications. Publishers are trying to change the perception that the industry is a ‘has-been.’
At Business Week magazine, consultants from Booz, Allen & Hamilton are so intent on scrutinizing costs that they are studying such once-sacrosanct questions as how long it takes writers to report stories.
At Victoria, the entire editorial staff consists of 11 people. They are equipped with Apple Macintoshes and produce a magazine that would have taken two or three times as many people to put out without automation.
And at the Magazine Publishers of America, officials boast about an ambitious new ad campaign to persuade marketers about the advantages of advertising in magazines. The tagline: “Magazines Make Things Happen.”
These are just some of the ways that magazines are fighting back against the worst advertising drought the industry has confronted since 1975. Behind these moves lies the recognition that the challenges facing magazine publishers go beyond the general advertising recession that is afflicting all media except cable television.
“We are fighting a generalized perception that print is a has-been,” said James R. Guthrie, the association’s executive vice president of marketing development. He said magazines are well positioned for the future because of their almost unique ability to allow advertisers to target specific groups of customers.
Still, the perception that magazines may have seen their best day was reinforced in recent months by a list of high-visibility failures--among them Egg, Savvy, Fame, Taxi, WigWag and Men’s Life--and speculation about more to come. “The large majority were ill-conceived, or poorly executed or capitalized, in the first place,” said D. Claeys Bahrenburg, president of Hearst Magazines. Observers say that’s especially true of the genre that attempted to appeal to hip urbanites.
Industrywide, the number of advertising pages in magazines fell 3.7% in 1990, but that was only the beginning. Ad sales in the first quarter of 1991 were disastrous, with total pages in monthly magazines off 8.7%--and with drops of 20% or more in such recently strong titles as Vanity Fair, Architectural Digest, Self and Metropolitan Home.
The industry has also been hit hard by a 22.6% increase in second-class mail rates, which has added hundreds of millions of dollars to its annual postal bill.
“The business, in general, is hurting big time,” said Ronald A. Galotti, publisher of Conde Nast’s Vanity Fair, one of the hottest books of the 1980s. “Advertisers who were running 10- or 20-page portfolios are running five or six pages this year.”
“The books that held up a little bit better last year are taking a hit this year,” said Paul DuCharme, vice president and director of print media at Grey Advertising.
Discounting by publishers is becoming pervasive, and “the wheeling and dealing that the desperate titles do is putting pressure on even the soundest books,” said Reginald K. Brack, president of Time Warner’s Time Inc. Magazine Co. subsidiary. Space buyers at major agencies say the panic among ad salespeople is palpable. “On the sales side, some people are getting hysterical,” said Roberta Garfinkle, vice president and director of print media at the McCann-Erickson ad agency.
“I’ve been telling publishers: Get your people calmed down,” Garfinkle added. “When things loosen up, we’re going to remember the guy who called 42 times and made a general pest of himself.”
In the meantime, “there is going to be a healthy shrinkage in the number of magazines,” predicted veteran magazine editor Clay Felker. “You had too many magazines started up in the ‘80s. Once the euphoria evaporated, the economic support for them dried up.”
“What we are seeing is a very natural contraction of the fringe or marginal businesses,” added John J. Veronis, chairman and co-chief executive of Veronis, Suhler & Associates, an investment banking firm that specializes in the communications industry.
Veronis has been retained to handle the sale of up to nine of the titles owned by Rupert Murdoch’s debt-laden News Corp. The magazines on the block include New York, Seventeen, Premiere, Mirabella, Automobile and European Travel & Life. Possible buyers include Hearst Corp. and Cahners Publishing Co., a unit of Reed International PLC of Britain. Murdoch has ruled out the sale of TV Guide, which he bought in 1988.
The prices at which magazines are trading hands are way down. Magazines that were selling a few years ago for 10 to 15 times cash flow command multiples today of between 6 and 8, according to industry observers.
“You’ve got a lot less capital out there,” Veronis explained. “The European players who came into the U.S. market (as buyers) in a big way are more or less gone. The same can be said of the financial players. They had lots of money and drove prices up.”
As bad as things are, nobody is comparing the current storm to the hurricane that hit the industry in the late ’60 and early ‘70s. That was when mass-circulation magazines such as Look, Colliers and the Saturday Evening Post “all bit the dust,” victims of network television, recalled Donald D. Kummerfeld, president of the MPA.
The current upheaval, said Felker, is part of the normal coming and going that has long characterized the magazine business. “Magazines are ephemeral,” he explained. “They are essentially temporary responses to momentary conditions, whether economic, demographic or psychographic.”
Thus, amid all the industry gloom, Time Inc. finds itself with a big hit in Parenting as baby boomers have children of their own. Conversely, magazines that celebrated the conspicuous consumption of the ‘80s, such as Hearst’s Connoisseur, are suffering.
But Hearst has also had some unlikely hits, including Victoria, a monthly devoted to Victorian homes and furnishings that posted a 43% increase in ad pages last year.
“We had a success in Country Living,” explained Bahrenburg. “And when we looked at the nation’s housing stock, we realized there are more Victorian homes than country homes. . . . There are also a lot of Anglophiles.”
Hearst’s new magazine development efforts eschew the painstaking research of industry leader Time Inc. or the heavy hype associated with start-ups at archrival Conde Nast. “They just quietly throw a book out on the newsstand and see how it sells,” said Keith J. Kelly, New York bureau chief of Magazine Week. “It’s very sink-or-swim.”
Besides seeking new titles, publishers are trying to boost their bottom lines by cutting costs, forming alliances to sell ads jointly and mining their subscriber lists for sales of related products.
“Reader’s Digest is the perfect example of a company that looks upon its reader as a profit center and not just a subscriber,” said Veronis. “The magazine is the engine that drives the company, with the subscriber list being used to sell books, records and videos. . . . That is being replicated today in company after company.”
Times Mirror Magazines’ Field & Stream, for example, already markets hunting and fishing videos and is about to start “Field & Stream Jr.” for children. “Other ideas in the incubator include a Field & Stream radio show and sponsored seminars on cable TV,” said Associate Publisher Michael Wade. (Times Mirror Magazines is a unit of Times Mirror Co., owner of the Los Angeles Times and other media properties.)
It’s a trend known in the industry as “building the franchise,” though it has its limits. “The trick,” said Hearst’s Bahrenburg, “is not to offend and alienate and fatigue those subscriber lists.”
Publishers are also busily scrutinizing costs, often slashing travel budgets and imposing hiring freezes. New technology is also providing huge savings; one publisher boasted that producing his publication on Apple Macintosh PCs allowed him to cut his editorial and production staff in half.
With advertising revenues slumping, publishers are also looking to maximize revenues from subscribers. A company called Subscriber Systems Inc. allows publishers to sell gift subscriptions through bookstores. A buyer can pick up a box that contains a gift card and a subscription activation form for such publications as Reader’s Digest and Sports Illustrated.
Another new strategy--but one that has traditionally encountered subscriber resistance--is “automatic renewal,” under which credit card accounts are debited for a new subscription every year. Publishers save the expense of sending multiple renewal notices.
The other big trend in the industry is offering “one-stop shopping” to advertisers. Time Warner recently grabbed a major deal, reportedly for $80 million, from General Motors under which the auto giant will market its autos in company magazines, cable TV outlets and home videos.
Such custom packages “are what lifts us out of the commodity business,” said Time’s Brack.
Other magazine companies have linked up to provide broader reach to advertisers. One such joint venture combines Newsweek with Times Mirror, whose magazines appeal primarily to men, and Meredith, whose publications are sold mostly to women.
Finally, taking a leaf from Conde Nast, publishers are re-emphasizing editorial excellence. Conde Nast’s Vanity Fair and Traveler rocketed to prominence on the basis of imaginative editing and lavish budgets.
“Everything begins and ends with editorial,” said Bahrenburg, who has replaced editors at four of his magazines since assuming the presidency of Hearst last year. “The way to succeed in this business is to find an editor with vision and to let him or her go.”
