HEARST PLOY EARNS KNOCK BY HACHETTE

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A bare-knuckle brawl has erupted in magazine land over the great rate-base debate of 1995.

The battle, which has simmered behind the scenes for months, broke into the open last week when Hachette Filipacchi President-CEO David Pecker took out a page ad in The New York Times, Chicago Tribune and Los Angeles Times to blast the advertising/circulation strategy of Hearst Magazines.

The ad, created in-house, was in the form of a letter from Mr. Pecker addressed to "our readers and advertisers," and it referred only to an unnamed rival "major magazine publishing company." But there was no doubt that Hearst was the target.

In an interview with Advertising Age last week, Mr. Pecker said: "I am trying to grab market share from Hearst because I think they made a terrible mistake" in cutting their rate bases and raising subscription and newsstand prices.

"We will not be cutting back our circulation," Mr. Pecker said in the ad. "Our feeling is that Hachette readerships have always been based on quality rather than quantity."

In July, Hearst said that it was going to cut rate bases on all its magazines, raise ad prices by 5% and push through aggressive newsstand and subscription price hikes to offset increases in paper costs and postage. The result, Hearst said at the time, would be magazines that delivered more committed "core readers."

"I'm going to go for ad volume," Mr. Pecker said. "That's the strategy I have."

Mr. Pecker has done rate base reductions selectively in the recent past, dropping the rate base of Mirabella at its relaunch last month and chopping Popular Photography's rate base in January.

But for 1996, he said he expects ad prices to rise by an across-the-board average of about 6%-which on a cost-per-thousand basis is lower than Conde Nast Publications, Hearst or K-III Communications Corp.

Though the Hearst move was applauded by many publishers who are reeling from paper price increases of nearly 60% in the past year, the company has been running into resistance from advertisers who don't want to pay steep CPM increases, which can actually be in the range of 15% or higher (AA, Sept. 11).

Hearst President D. Claeys Bahrenburg has said there is a strict "no negotiation" stance, but last week declined to be drawn into the latest firestorm, saying, "What David Pecker chooses to do is his business."

Reaction in the media-buying community seems mixed. "I think it was a hit below the belt," Steve Greenberger, VP-media director at Grey Advertising, New York, said of the Hachette ad.

Alan Jurmain, executive director of media services at Lowe & Partners/SMS, applauded the Hachette move, saying, "I think they were capitalizing on some wide open territory."

Regarding the Hearst stance, he said: "We won't look to punish Hearst, but we'll continue to evaluate what is a fair CPM to pay."

Somewhere in between the two publishing combatants stands Conde Nast, which announced a 9.5% ad price increase with no rate base change.

While avoiding the public fray, Conde Nast executives have quietly visited dozens of agency research departments trying to counter the new Hearst policy. In their travels, which may have carried them to as many as 50 media research departments in recent weeks, they're claiming that the Hearst move is an admission that it has been charging advertisers for marginal readers in the past.

The new battle lines form even as the magazine publishers brace for the latest paper price increase, slated for Oct. 1.

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