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Brewster Led Pilgrimage to Bentonville

MAGAZINE CHIEFS DETAIL WAL-MART CONTACTS

Retailer's Influence Underscores Newsstand Distribution Problems

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RANCHO MIRAGE, Calif. (AdAge.com) -- The big boom during the American Magazine Conference panel of industry CEOs came not with a bombshell revelation, but rather
Photo: Doug Goodman
Gruner & Jahr's Dan Brewster led a pilgrimage of publishers to Bentonville.
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when the audio systems went out as, the conspiracy theorists in the audience noted, the panelists discussed the industry's contentious relationship with retail giant Wal-Mart.

Before and after sound was restored, though, Gruner & Jahr USA Publishing's CEO, Dan Brewster, spoke of his trip this summer, with other executives involved with the Magazine Publishers of America, to the retailer's Bentonville, Ark., headquarters. There, the executives spoke to a key merchandise buyer in the company's enormous complex, which Mr. Brewster said had all the charm "of a Marines barracks."

Magazine removal
Mr. Brewster was told Wal-Mart did not drop key, although racy, titles such as Emap's FHM and Dennis Publishing's Maxim in response to specific regional and customer concerns but because, as a senior Wal-Mart manager said, the company made "commonsense" moves appropriate to all its stores.

The power Wal-Mart wields over what the panelists freely described as a broken retail sales landscape was illustrated by America Media's chairman-CEO, David Pecker, who said the retailer contacted him after Nascar racing star Dale Earnhardt died in a crash to request massive amounts of a special issue American Media planned to publish about the driver -- so long as none of the controversial autopsy photos were included. (Mr. Pecker said the publication did not plan to include any of those photos in the first place.)

Mr. Brewster said Wal-Mart desired more in-store events -- to allow its consumers "to have an experience it wouldn't have with another retailer" -- to pump up magazine sales. But panelist Cathleen Black, president of Hearst Magazines, said in a subsequent interview that the sheer number of Wal-Mart stores made such efforts challenging for magazine publishers.

Plummeting sell-through
The problems of single-copy sales for the magazine world were summed up neatly by a bit of data from Mr. Pecker, whose company remains heavily reliant on single-copy sales from its tabloids such as The National Enquirer. Sell-through, or the percentage of copies provided to newsstand that are sold, for his tabloids have fallen to 32%. When he acquired them in the late '90s, their sell-through was 61%. And each percentage drop from that figure, Mr. Pecker said, cost American Media $2 million.

No matter how single-copy distribution efforts are revamped in the current environment, Mr. Pecker said, sell-through "still drops." This, he said, reflects how "broken" the system is.

At times during the discussion, the New York-centric consumer magazine world, typified by Ms. Black and Mr. Brewster, stood in contrast to Mr. Pecker's South Florida tabloid empire.

'If Oprah were hit by a bus'
At one point Ms. Black, speaking about relying on a celebrity to brand her company's co-venture O, The Oprah Magazine, said all indicators were great but "if Oprah was hit by a bus tomorrow, we would be in a very different situation." Mr. Pecker quickly added that such an event "would be a big story for me."

At another point, Mr. Pecker outlined the moves his company had made to reduce lawsuits against the tabloids, which include what he said was having three sources on every story and an in-house lawyer of sorts. To which moderator Steve Shepard, editor in chief of McGraw-Hill Cos.' Business Week, responded: "Welcome to journalism!"

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