In a rather unusual move for the magazine business these days, Bloomberg Businessweek is increasing the paid circulation it promises advertisers to 980,000 early next year from 900,000 now, more than undoing the prior owner's rate base cut in 2006.
Magazines once pumped up paid circulation as far as they could -- even if customer acquisition, paper, printing and distribution costs overwhelmed any circulation revenue they got -- because advertisers seeking big audiences made it worthwhile. As costs rose and ad support faltered, magazines from Time to TV Guide to Playboy cut back on circulation. McGraw-Hill reduced Businessweek's rate base to 900,000 from 970,000 five years ago.
Since Bloomberg bought the magazine in December 2009, however, it has expanded and invigorated both the editorial product and its marketing support. It also increased the use of automatic renewals for subscribers.
Bloomberg Businessweek president Paul Bascobert attributes much of the circulation improvement to the enhanced editorial, including more editorial pages, more issues and a more global approach.
"This has been very much a product play for Businessweek," Mr. Basocbert said. "Building a great product for an audience that actually looks forward to reading it has good economic value in the long term."
One striking Bloomberg Businessweek direct mail pitch includes sending an entire issue to potential subscribers, but Mr. Bascobert said that only works because the magazine has changed so much. "The biggest opportunity is to introduce people to a magazine that they thought they knew," he said.
But Bloomberg Businessweek also has a relatively low proportion of subscribers who order their subscriptions directly and pay for it out of their own pockets, said Jack Hanrahan, the media-agency veteran who's now an industry consultant and publisher of the CircMatters newsletter.
In the second half of last year, for example, individually-paid subscriptions made up just 58.2% of the magazine's total paid and verified circulation, according to its report with the Audit Bureau of Circulations. Individually-paid subscriptions comprised 72.3% at Fortune, by comparison, and 74% at Forbes.
Advertisers typically most value the readers who sought out and paid for a magazine themselves, figuring they're more engaged than people who get them from frequent-flyer programs, courtesy of a sponsor or because subscriptions come with an association membership.
"Their sponsored and partnership and other types of sources that are worrisome are very high," said Mr. Hanrahan, who himself has a free Bloomberg Businessweek subscription that 's sponsored by Vista Finance. "I'm trying to think where this increase is going to come from."
Bloomberg Businessweek increased individually paid subscribers by 47,587 between the first half of last year and the second half. It will report a gain of 10,000 more when circulation figures for the first half of this year come out on Aug. 8, according to Alec Casey, the magazine's head of circulation. "What we have done deliberately in the past year is grow our individual paid," he said.
The magazine, which reportedly lost as much as $60 million in 2009, remains unprofitable but is on schedule to re-enter the black, Mr. Bascobert said. Bloomberg eliminated about a quarter of the magazine's 400 positions upon its acquisition and integrated existing editorial resources from elsewhere in its new parent company.
"When we bought it we put together a timeline," Mr. Bascobert said. "We're on track with that plan. We've cut the losses dramatically in the past year. We'll cut them again quite dramatically this year. And then next year, if you look at the entire brand across print, online, mobile and tablets, we're seeing a trajectory that looks quite attractive in the next year or two."
"We don't think of ourselves as a turnaround anymore," he added.