'National Enquirer' and 'Star' reduce rate bases

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American Media's National Enquirer and Star both plan major reductions in the rate base they guarantee advertisers in 1997, marking the second year in a row that the titles have made cuts. The National Enquirer will drop its rate base 7.4% to 2.5 million. Star will chop its rate base 8% to 2.3 million. The magazines will also eliminate the 2% cash discount for ads effective January 1.

Unlike most magazines which have huge subscription bases and a reliance on ad revenues as its chief revenue stream, both of the supermarket tabloids sell most of their copies on newsstands, where publishers traditionally get a higher price for their magazines. Because of that revenue stream, the magazines have had relatively little pressure in the past to expand their ads beyond the direct response category. Since the arrival of Hearst veteran Tony Hoyt as a senior VP, group publisher, two years ago American Media has been trying to change that by pursuing a bigger advertiser base. In the past year, it attracted its first ever business from Kraft Foods, which ran ads for Cool Whip and Shake 'n Bake products. It's also pulled in ads from Warner Wellcome for Zantac 75, and media advertisers such as USA Network, and ABC Television/Primetime.

The latest move to slash rate bases comes against a backdrop of continuing difficulty for newsstand-delivered titles across the magazine industry for all magazines. The supermarket tabloids have been particularly hard hit in recent years and in the six-month period ending June 30, 1996, the Audit Bureau of Circulations shows that neither title met its rate base as paid circulation skidded to new lows. The Star's circulation was off 9.4% to 2.27 million--at a time when it was guaranteeing a rate base of 2.5 million. The National Enquirer's circulation fell 2.3% to 2.61 million, at a time when it was promising to deliver 2.7 million rate base.

Copyright December 1996, Crain Communications Inc.

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