The company's two "ace" titles, Ladies' Home Journal and Better Homes & Gardens are pursuing different strategies to offset skyrocketing paper and postage costs with new circulation/ad policies.
Ladies' Home Journal revealed last week that it will slice 10% off the circulation that it guarantees advertisers, dropping the rate base to 4.5 million, effective with the February issue. The magazine-without a publisher since Aug. 22 when Donna Kalajian Galotti jumped ship-will keep the $117,000 price for a color page.
"In essence, the cost per thousand is up 10% which is a reasonable figure in this market," said Meredith Group Publisher Jerry Kaplan. But he and Journal Publication Director Myrna Blyth still have to sell it to the ad community.
Better Homes & Gardens is keeping its rate base at 7.6 million, but boosting its page rate by 9.8%. For advertisers, the out of pocket price of a color page will be $183,300 come January. The company also will boost the basic subscription price 5.9%, hiking it $1 to $18 per year and is testing newsstand price hikes of 25% to 33% above the current $1.99.
The moves mean that three of the Seven Sisters will have lowered their rate bases. The Journal cut matches the 500,000 circulation reduction that Hearst Magazines' Good Housekeeping put in place effective with the November issue, leaving the two magazines with the same circulation. A key difference: The Hearst move was accompanied by a 5% ad rate increase and was part of across the board rate base reductions at a dozen other Hearst titles. Also at Hearst, Redbook cut 12.7% from its rate base, to 2.8 million.
Hearst also raised newsstand prices 18% to 33% and subscription prices were hiked 7% to 13%. The strategy, explained by top Hearst executives to ad agencies in late summer, was to shed marginal readers and to get core readers to pay more for the magazines.
Conde Nast Publications, while trashing the Hearst policy to the ad community as a sign of circulation weakness, itself has opted to hike ad rates for all titles 9.5% effective with January '96 issues. No rate base changes are planned.
Most ad agencies seem to support the idea of better quality circulation-but there is plenty of resistance to higher ad prices.
Typical was Ammirati & Puris/Lintas Exec VP-Chief Media Officer Mike Lotito in New York, who said: "I'm not going to pay double-digit increases." The agency's clients include Sara Lee Corp.
"I think Hearst is going to take a hit in the short term. In the long term, they'll probably weather the storm," said Chris Bowler, associate media director, Campbell Mithum Esty, Minneapolis, whose clients include Frigidare Co.
Kraft Foods was one of the loudest complainers when Hearst unveiled its plan; the marketer ordered Young & Rubicam to prepare for sharp ad spending cuts in Hearst titles next year. But negotiations have apparently continued behind the scenes.
Although Hearst initiated discussions with Kraft, the talks have apparently so far been unfruitful. For Kraft, the Meredith increases are palatable, while the higher Hearst CPM hikes aren't.
"We have a deal established with Meredith for 1996 but we haven't been able to get there with Hearst," said Michael Mudd, Kraft VP-communications. "There are no active discussions at this time" with Hearst.
Elsewhere in the women's service field, attention now shifts to Gruner & Jahr USA Publishing. Gruner Senior VP-General Manager Andreas Wiele said Family Circle won't alter its 5 million circulation rate base, but a final decision on McCall's 4.6 million circulation level awaits the results of media studies to be released today by Mediamark Research, New York.
Hachette Filipacchi said in an open letter in The New York Times three weeks ago that it won't cut rate bases or raise newsstand/subscription prices in '96. Woman's Day is hiking ad rates 8.8% in January, using a two-tier rate base that averages about 4.6 million.