Magazine Forecast

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When media monolith Time Inc. launched a new magazine title or changed its advertising sales strategy, the publishing industry would stand up and notice. Innovation was driven from within the walls that Henry Luce built.

No more. The much anticipated merger of America Online with Time Warner has created a seismic shift in magazine journalism.

In the 21st century, observers say, it is the promise of AOL's technology and the entrepreneurial talent coming from outside magazine publishing that will drive the engine of experimentation and innovation at Time Inc.

That is not to say that the company that produced crown jewels such as Time, People, Fortune and Sports Illustrated is not well positioned in the new economy. Although some media watchers say AOL's Steve Case was primarily interested in Time Warner's cable capabilities, clearly Mr. Case is also betting $165 billion that marrying the best brand in magazine journalism is critical to AOL's ultimate dominance.


Even for Time Inc.'s Editor in Chief Norman Pearlstine, an editor with 33 years of journalism experience, the merger with AOL offers the promise of discovery and possibility.

"The world of interactivity presents huge unknowns. It is expensive and different from what we've done before," he says. "But putting together a company that so clearly understands the online market with a traditional magazine division and CNN, the hope is that something new will be created that is different from anything that any of us have done individually."

The sobering experience of Time Inc.'s failure with its Pathfinder Web site service is that the merger presents an attractive and painless rescue. Time Inc. can now focus on what it does best -- content and the sale of its content.

One of the opportunities of the merger, says Mr. Pearlstine, is exploring new magazines that could be developed using database targeting.


But in a post-merger meeting with company executives, Time Inc. chief executive Donald Logan indicated the merger would necessitate tipping the editorial balance in favor of acquisitions rather than start-up publications. It would be a shift in the divisions' strategy. Over the past five years, 11 new magazines launched, including Teen People, FSB:Fortune Small Business, Real Simple and eCompany Now, whereas there were only three acquisitions of existing titles.

Mr. Pearlstine is not alarmed by that development. "We have plenty [of existing magazines] to work with," he says, "and the merger would still allow for exciting [acquisition] opportunities." He notes the 1997 purchase of Wallpaper. The acquisition of the hip shelter magazine added new spice to Time Inc.'s usually predictable menu of magazine offerings.

As for the division's approach to journalism, little will change as a result of the merger. According to Time's Managing Editor Walter Isaacson, "Writing for the Web gives our journalists another outlet for their information just as appearing on CNN did when they became a part of Time Warner."


The immediate impact of the merger from an editorial perspective will figure most in how the division covers the merger. It's not an unfamiliar challenge, but a repeat of the nagging reality that media behemoths face in the onslaught of corporate mergers.

Other than tackling one of the biggest business stories of the year, little is expected to change on the editorial side of the equation.

"My job in 2001 will be very much like 2000," says Mr. Pearlstine.

The more immediate changes will be in the business arena, say Time Inc. executives and media watchers (See story at right). The promise of the merger will allow magazines to extend the brand beyond the printed page.

"I would like to think that Time could be present on the Internet, on the Palm Pilot and on a CD-ROM," says David Verklin, CEO of Carat North America, New York. "The hope is that the brand extends onto a new platform."

Mr. Verklin points out that in terms of selling advertising, "AOL's got the best Rolodex in the business. They can get into any Fortune 500 executive suite in the country."

Meanwhile, agency media heads are quick to point out that one of the major appeals of the merger (other than the exciting delivery and technology applications that AOL brings) is Time's content.


"The credibility and the power of Time as a brand coupled with AOL's mass access is a great marriage," says MediaCom's senior VP-director of print services, Valerie Muller.

And so all eyes will continue to watch Time Inc. "The merger is not just a hedge against all bets," says Mr. Pearlstine. "But it does position us so that whatever comes along we've got the resources, the skills and the talent in place to be creative and to come out of the box with some pretty compelling products."

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