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MAGAZINE EXECS OPTIMISTIC BUT POSTAL, PAPER PRICES STILL WORRY MANY PUBLISHERS

By Published on .

LAGUNA NIGUEL, Calif.-Magazine publishers are optimistic that 1994's ad sales surge will carry through into 1995.

Many publishers attending the Magazine Publishers of America's American Magazine Conference here last week said they are posting their biggest profits since the go-go 1980s.

But the recovery is by no means universal. Several categories, including cosmetics and fashion, are still mired in an ad spending recession.

"Advertising is improving but I don't think it is across all categories," said Hearst Magazines President D. Claeys Bahrenburg. "Auto, computers, drugs and remedies are all up. Cosmetics is down and fashion is definitely down."

William Kerr, Meredith Corp. president-chief operating officer and the MPA's new chairman, said he expects advertising to be reasonably strong next year. At the conference, Meredith Corp. released its first-quarter earnings for the period ended Sept. 30, showing a 215% increase to $10.7 million. That includes $4.7 million from a favorable Internal Revenue Service ruling involving Ladies' Home Journal.

While Mr. Bahrenburg, the new MPA vice chairman, attended, two other officers didn't make the trip. They were Conde Nast President/MPA Secretary Steven T. Florio (called to Paris on company business) and Times Mirror Magazines President-CEO/MPA Treasurer Francis Pandolfi.

Other top honchos who opted out include McGraw-Hill's Harold W. "Terry" McGraw, K-III Communications Corp.'s Harry McQuillen and Capital Cities/ABC's Phillip Meek.

Those who did attend see paper and postage costs as a barometer for next year.

"Paper is a wild card," said Thomas Kenney, president of the Magazine Group of the Reader's Digest Association. For 1995 "we're hopeful. There is more volatility [in advertising] than we've seen in the past. We have a very strong second half in 1994, but it's still on a month-to-month basis."

Earlier this year, it was hoped the U.S. Postal Service would stick to its pledge and seek only a 10.3% increase across all classes. But now with its budget deficit higher than anticipated, many publishers expect a steeper increase.

Irving Hirschbein, a Conde Nast VP considered an industry guru on printing and paper, said paper price hikes are likely to come earlier and more often than in the past-and with demand up they are likely to hold this time. "The rumor that I'm now hearing is that the next big increase could come as early as January."

Expected to be in the range of 6%-8%, that hike would be followed by smaller increases in July and later in the second half.

That also creates something of a paradox for publishers: the only way paper prices are likely to stay low is if ad pages collapse and demand falls off.

Ernie Leopold, exec VP-communications papers, James River Corp., said, "A lot will be determined by what pulp prices do and what kind of demand there is in the first half."

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