Backlash, Competition Are Hurting Sales of Scandal Sheets

TIMES STAFF WRITER

It doesn't take a tabloid basher like actor George Clooney or Hollywood icon Elizabeth Taylor to shake things up at the nation's scandal sheets.

Something simpler will do: the recognition that a lot fewer people are buying them to read about Jacko's shenanigans, JFK Jr.'s alleged marital problems or an ice cream-eating chimpanzee than did just a few years ago.

Tabloid backlash has been building to a peak this week after Princess Diana's fatal car accident in Paris, after an apparent race to elude the paparazzi. Celebrities and politicians are scolding tabloids, calling for boycotts or revisions in privacy laws to rein in their scandal-chasing antics. Supermarkets such as the Stater Bros. chain have pulled copies from their checkout stands out of respect for the dead princess, adding that they will more closely monitor future issues.

The latest pummeling has bruised the tabloids, though executives confidently predict it will soon pass.

"We see this as being a short-term concern," said Richard W. Pickert, senior vice president and chief financial officer of American Media Inc., the Lantana, Fla.-based owner of the National Enquirer, the Star, the Weekly World News and other publications.

Even less concerned is Dan Schwartz, editorial director of Globe Communications International, publisher of supermarket tabloids the Globe, the Examiner and the Sun.

"It's just a few flakes," Schwartz says.

But the long-term ills are another matter. Celebrity sleaze at the checkout counter has been taking a beating for years, although it isn't that widely known because Wall Street and the financial press pay so little attention to the tabloid world. Whereas tabloids once enjoyed a reputation as plump cash cows at the forefront of what was often described half-seriously as a "growth industry," sales have been on a steep, slippery slope for more than a decade.

The 2.7 million copies of the National Enquirer sold each week represent a 40% decline from a decade ago and are nowhere near the record 6.6 million copies sold in 1977 after Elvis Presley's funeral, when it put on its cover a clandestine photo of the King's bloated body lying in his casket. At sister scandal sheet the Star, the 2.2 million weekly circulation is off by one-third from the mid-1980s, while the other major tabloid, the Globe, is off by 40%, to 1 million.

The reason isn't due so much to any increase in the sophistication of the American public but to the simple reality that supermarket tabloids no longer enjoy a franchise on celebrity dirt.

People who want to know the latest on the homicide investigation of child beauty queen JonBenet Ramsey, actor Christian Slater's legal troubles or which stars are in drug rehab don't have to wait a week for the next tabloid to hit the stands. There are tabloid TV shows, cable talk shows, mainstream newspapers, entertainment magazines, the 11 o'clock news, the Internet and scores of other outlets to satisfy celebrity news appetites. The Washington Post tallied 12,000 stories in the press marking the 20th anniversary of Elvis Presley's death last month. The World Wide Web is full of sites devoted exclusively to celebrities, such as CelebSite, an indexed site that lists extensive details on stars' lives.

"There's a glut of this kind of coverage," says USC journalism professor and former broadcast journalist Joe Saltzman.

Observers say the tabloids are as aggressive as ever, and maybe even more so, due to the competition from other media. Despite the waning circulation, they still pay hundreds of thousands of dollars for photos and are capable of wrecking a reputation, humbling a celebrity or turning a legal case upside-down with the precision of a laser-guided missile.

Presidential strategist Dick Morris was forced to resign after the Star printed photos of him cavorting with a prostitute. Kathie Lee and Frank Gifford were humiliated by secret photos of him with another woman in the Globe, and it was the National Enquirer that printed the first photos of O.J. Simpson in his Bruno Magli shoes. Most tabloids have all but convicted the parents of JonBenet Ramsey of her murder even though authorities have not filed any charges against them.

But whereas they once were the dominant publications dishing dirt, tabloids today are among the many.

"The tabloid has gone from being the mass market to a niche in the mass market," the Globe's Schwartz says, adding that the tabloids have become a victim of the celebrity-prying style they pioneered. "Our success has been copied by every form of national media, from television news to women's magazines," he says.

The circulation drop has had an impact on the bottom line, even though tabloids continue to raise prices to make up the revenue--to $1.39 each today for the Star and Enquirer. Tabloid bellwether American Media Co. posted an unprecedented loss for its fiscal year ended in March of last year when it was $1 million in the red, due to softer circulation and other factors such as a high debt load and high newsprint prices, something all publishers suffered from then.

In its most recent fiscal year, the company recovered somewhat, posting a relatively thin profit of $12 million on sales of $315.9 million. But that amount is less than half of its profit in 1994. Last December, the Standard & Poor's rating agency downgraded the company's debt, citing "ongoing newsstand circulation erosion" of the Enquirer and the Star.

American Media's Pickert says the company has turned the slide around and expects strong profits and cash flow from the company. Furthermore, he says the company is more than a tabloid publisher, with new publications on such topics as country music.

Others aren't so bullish on the tabloid business.

"It's not a growth industry anymore. It's become a mature industry," says Phelps B. Hoyt, an analyst with KDP Investor Advisors in Montpellier, Vt., which tracks junk bonds issued by American Media.

The Globe's Schwartz, former editor and longtime veteran of the Enquirer, says competitor American Media "barely makes money" for a company of its size and influence in the tabloid market.

The Globe is a privately held Canadian company that closely guards its own financial results. Schwartz won't talk numbers but says the company is successful.

American Media's stock has suffered as well. Although it has climbed in recent weeks to around $8 a share from a low of less than $4 in early 1996, it still trades at about half of what it did in late 1994, despite the raging bull stock market.

As for supermarkets, executives are proceeding with caution, but few expect that the tabloid will disappear any time soon. Stater Bros., for example, is pulling the current issues only because they feature Princess Diana stories, says Tom Reingrover, senior vice president of marketing.

"There are a lot of things we sell I don't personally like. I don't like either mayonnaise or mustard, but we carry them. We try to offer consumers products that they visit the market to purchase. This is strictly to serve the consumer."

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Paper Chase

The supermarket tabloids have lost market shae since tabloid television, mainstream media and the Internet have gotten into the dirt-dishing biz. Circulation has been declining for years. Average paid circulation for the country's three top candal sheets, in millions:

* National Enquirer

1996: 2.72

* Star

1996: 2.22

* Globe

1996: 1.04

Sources: Bloomberg News, Audit Bureau of Circulation, Benn's Media, Editor & Publisher Yearbook Researched by JENNIFER OLDHAM / Los Angeles Times

For the Record Los Angeles Times Thursday September 11, 1997 Home Edition Business Part D Page 3 Financial Desk 2 inches; 67 words Type of Material: Correction American Media--Executives with American Media Inc., parent company of the National Enquirer, the Star and other publications, said that references to the company's falling stock price over the last few years in a story and chart in Saturday's Times should have taken into account a special $7-a-share dividend paid to shareholders in early 1995. American Media executives said they believe the dividend is a major reason why the stock now trades at a lower price than in the past.
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