It was a poor year for the industry even before Sept. 11, and before anthrax threats looked likely to further damage already-ailing means of distribution and acquiring new subscribers. (Ad pages fell 9.2% through the end of September, according to Publishers Information Bureau-even before the events of Sept. 11 and their effect on financial, insurance and travel advertising are fully factored in.) Still, it was surprising how few of the executives in attendance bothered trying to convince listeners otherwise.
How's the year treating Mike Klingensmith, president of Sports Illustrated and exec VP of Time Inc.? "Crappy!"
Steve Shepard, editor in chief of McGraw-Hill Cos.' Business Week, opened the CEO panel he moderated-"Managing the New Realities"-with the question, "Does business suck, and, if so, what are you going to do about it?"
"It does indeed suck," conceded Steven T. Florio, president-CEO of Conde Nast Publications. The only upside of such trying times, he said, was finally being able to challenge Conde Nast's lavish culture by putting together "a real profit-and-loss budget, which will come as a shock to everyone in this room."
And there was the table of attendees at one meal hooting over the prospects for '02: "We'd love flat! Flat would be beautiful!"
So it went. Bad news was seasoned with gallows humor.
"I was feeling good until we got anthrax in our delivery system," said Tom Ryder, CEO of Reader's Digest Association, which mails about 12 million monthly copies of its flagship and does significant direct-mail business. "You have to announce to people you're not going to kill them before you sell. It's really rough right now."
Some optimists foresaw a second-half '02 turnaround from what Dan Brewster, president-CEO of Gruner & Jahr USA Publishing and new Magazine Publishers of America chairman, called a "perfect storm" of bad economic news. The glummest view suggested a U-shaped recession-one without a rapid recovery-which could drag on somewhere till 2005.
Don Logan, chairman-CEO of Time Inc., said he didn't do forecasts, but that his unit of AOL Time Warner-wracked this year by layoffs and buyouts-would show double-digit profit growth for '01 and '02.
Focus on costs
But Jack Kliger, CEO of Hachette Filipacchi Magazines, said the "fairly low revenue growth" anticipated over the next few years forced him to focus on costs as well as a revamp of the overall business model. He suggested merchandising, syndicating content a la network TV, and relying less on advertisers for overall revenue. These notions are as cyclical as the economy itself, and were all aired-to little effect-during the last recession.
Advertiser pullback since Sept. 11 was clearly a tough pill to swallow. Business Week's Mr. Shepard, in a panel of top editors, expressed frustration that record levels of newsstand sales and intensified reader interest post-Sept. 11 did nothing to persuade advertisers to spend.
Perhaps most telling of how hard hit was New York City's economy was how hard guest speakers Mayor Rudolph Giuliani and Gov. George Pataki tried, like supplicants, to sell attendees on the city-the de facto home of the magazine industry and about 75% of attendees, according to the MPA, which co-hosts the annual conference with the American Society of Magazine Editors. Mayor Giuliani-speaking in soot-covered shoes-jokingly advised attendees to "spend a lot of money." Gov. Pataki urged publishers to "tell the truth"-about how many tourists can be seen nightly in Times Square.
Some good news for the industry's biggest company came when Gerald Levin, CEO of AOL Time Warner, said his company's properties would get "whatever they need" to cover the current crisis. But his comments were termed "somewhat disingenuous" by a former Time Inc.-er, who did not doubt the promise of resources now, but noted "they cut the editorial budget substantially in the past year."