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JACK WELCH: HOW MAGAZINES CAN BENEFIT IN HARD TIMES

Tells AMC Publishers to Watch for Cheap Assets of Defunct Competitors

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NEW YORK (AdAge.com) -- Periods of dramatic change are the times for the strong to get stronger and the brave to get braver, outgoing GE
Photo: Doug Goodman
Welch: Surviving magazines will be able to 'pick up assets for pennies.'

Chairman-CEO Jack Welch told the American Magazine Conference today.

Author of a new autobiography, Jack Straight From the Gut, he appeared at the Sheraton New York Hotel & Towers with Fortune editor John Huey to speak on the essential truths of leadership. What evolved was a wide-ranging discussion about the impact of last month's terrorist attacks on global business, New York mayoral politics and where the magazine business is going.

'Sand in the gears'
Mr. Welch acknowledged that the ongoing impact of Sept. 11 has significantly interrupted commerce. "We all have global supply chains now -- that makes the cost of business higher," he said. "But the work of globalization that has gone on the last decade now has sand in the gears."

The economy before Sept. 11 was forecast to be flat

for this year, he said, but now "it will definitely be negative. We'll see unemployment over 6% in the next six months."

Mr. Welch went on to say the economy will be "significantly negative in the fourth quarter." He lamented that "with all the tools we have in place -- the interest cuts and tax rebates -- normal recovery would have come nicely by the middle of next year." But that all changed on Sept. 11.

Favors businessman for NYC mayor
When asked what kind of leader businessman Mike Bloomberg would make if elected New York mayor, Mr. Welch replied that businessmen have had a mixed record in politics.

But he suggested that in a post-Sept. 11 world, New York voters should think about taking a risk on a businessman because the city would be better off run by someone with managerial experience rather than a politician, especially during a time of rebuilding.

He told the audience of editors that he hoped whoever was elected kept Mayor Rudy Giuliani on "to keep things on track," and noted that Mr. Guiliani "is not a two-week hero. He was a hero before Sept. 11. We need someone with guts, courage, someone who will tell the facts as he knows them."

Homeland Security Director
When asked what Mr. Giuliani should do after he leaves office, Mr. Welch said that He would "make a hell of a Homeland Security Director."

When asked how he would go about fixing the magazine industry, which is under tremendous pressure this year, Mr. Welch said that "the magazine industry is going to consolidate."

"It has plenty of magazines. Consolidation is inevitable. It will be most cost efficient when some fall out but the strong have an opportunity to capitalize and do more."

He suggested that alert magazine managers would have the opportunity to pick up assets for pennies.

In many ways, he said, magazine publishing is much the same as other business enterprises in a world that has suddenly gone off balance.

"Those of who believe in the future of the industry can forge ahead strongly," Mr. Welch said. "Those who are paralyzed by Sept. 11 will do nothing and nothing will happen. And those of you who think its over should sell out now, because it will be over for you."

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