AMERICAN EXPRESS PUBLISHING
Three stars: * * *
Since its management agreement with Time Inc. this group of titles has proven to be a strong performer with consistent growth under President-CEO Dan Brewster. Despite fiercely competitive markets, both Food and Wine and Travel & Leisure remain solid ad-page performers. Travel & Leisure this year produced spin off Travel & Leisure Golf and is incubating Travel & Leisure Family, proving the brand has the power to expand. Controlled-circulation title Departures continues to add revenue. A new venture with Barbara Smith to produce B. Smith Style will add a fifth title, and a foray into the world of multimedia platforms. Its continuous circulation model is now the envy of the industry because it has allowed the publisher to side-step the costly woes brought on by sweepstakes subscriptions. Online activity, mostly tied to Time Inc.'s defunct Pathfinder model, could be stepped up, but adding B. Smith to the line up gives AmEx a TV tie-in. Rather than wait for Time Inc. to devise a new Web strategy, American Express should take control of its own brands to ensure future growth.
CONDE NAST PUBLICATIONS
Two-and-a-half Stars: * * 1/2
The house that Chairman S.I. Newhouse Jr. built remains a force to be reckoned with, particularly as parent Advance Publications' purchase of Fairchild Publishing gives the company a lock on the fashion marketplace. But Conde Nast over the last few years has been beset by a string of controversies big and small that have taken their toll. From a scathing Fortune profile of President-CEO Steven T. Florio two years ago to a recent multimillion-dollar settlement agreement with a former employee whose nose was broken by Vogue Publisher Richard "Mad Dog" Beckman, the scandals have distracted attention from the core business, damaged morale and stirred rumor mills.
Mr. Florio deserves credit for sharply growing profits since he took control, for increasing the number of titles to 17 and for building a strong management team topped by Exec VPs Catherine Viscardi Johnston and Chuck Townsend. But Mr. Newhouse is 70, and questions about when his cousin Jonathan will return to the U.S. to take over are yet more fodder for the gossip pages.
Editorially, most Conde Nast titles still lead their category, and books such as Vanity Fair and Glamour remain powerhouses. Stragglers Details, Mademoiselle and Self are all in the process of a remake. The New Yorker, under Editor David Remnick, has been well received by readers, but continues to lose money. Wired would have been a savvy play if the Internet unit had been part of the deal, but it remains to be seen how much it adds as stand alone lifestyle title.
The evaporation of announced plans to start a women's network/online company with Time Warner left the rest of the industry wondering what Conde Nast's online strategy will be and how its CondeNet unit fits in.
Conde Nast continues its policy of refusing to negotiate rates, but has been criticized for its reliance on less-profitable special ad sections to build page volume at some titles. Mr. Newhouse now appears to be cracking down and putting the focus back on the core products.
Two-and-a-half Stars * * 1/2
A collection of targeted niche titles, mostly male-oriented, give this company its strength. Under Chairman and CEO James D. Dunning, Petersen sold to U.K. publisher Emap in January of this year for $1.5 million. Emap wanted to enter the U.S. market for quite some time, and now plans to use Petersen as a launching pad for the U.S. introductions of its successful U.K. men's title, FHM, in 2000 and is aggressively pursuing expansion plans. On that note, the company still lacks a strong brand identity in the U.S., a problem which may solved once FHM is established here.
Emap Petersen, as left by Mr. Dunning, is a more profitable company than it was before, having doubled the number of titles from 72 to 160 during his tenure. Mr. Dunning also concentrated on moving the better-known titles, such as Motor Trend and Hot Rod, into TV and cable deals. The apex of that activity was the "Gravity Games" deal with NBC, which drew on extreme sports titles Powder, Bike, and Skateboarder. The multimedia strategy is sound given the niche books have built in audiences of enthusiasts eager for more product.
Despite impressive circulation growth at Teen and Sport neither of these are category leaders, and both are outflanked by stronger rivals in highly contested fields. Hopes are high for a new venture out of the Sports Group, NFL Insider.
The industry waits to see how Emap Petersen's new CEO Tom Maloney emerges and what his priorities will be. He'll be under scrutiny to justify the high price paid for the company.
FAST COMPANY/US NEWS/ZUCKERMAN GROUP
One star: *
The industry wonders if Mortimer Zuckerman has soured on the magazine publishing business. A recent announcement of the sale of The Atlantic Monthly, and lackluster performance of U.S. News & World Report, plus labor woes at the Daily News lead observers to think it is only a matter of time before this group is broken up. Rumors persist that Fast Company could be sold, if the right price came along. The defection of President Eric Gertler and U.S. News Publisher Patrick Hagerty to an online venture along with a failure to create an umbrella name for his media empire reinforce the idea that he's disenchanted. Mr. Zuckerman fiercely denies that any of the titles are for sale, and recently reasserted his own control over U.S. News, now preparing a consumer campaign to boost readership. Plans also call for more aggressive promotion of franchise features "Best Colleges" "Best Graduate Schools" and "Best Hospitals." The newsweekly reduced its rate base to 2 million, and plans no decrease in ad rates, effectively a 6.9% ad rate hike.
6. GRUNER & JAHR USA PUBLISHING
Two Stars * *
This division of Bertelsmann AG is part of an international group of magazines, which collectively account for nearly 20% of the media giant's revenues. Out of the seven U.S. consumer titles, however, there aren't too many leaders. Parents tops its field, with back up from Child and a group of ancillary prenatal and postnatal titles. YM is a strong teen market player, but that category has become more competitive with the entry of Time Inc's Teen People. Family Circle and McCall's are a strong block together, both produce but neither tops the women's service category. Bright spots include circulation growth at both Fitness and American Homestyle. But its large circulation titles are vulnerable to depressed response rates that have plagued the industry. Ties to Bertelsmann promise multimedia opportunities could be there for the asking. A custom publishing division has also been successful adding clients such as Nordstrom and Dayton-Hudson Corp.'s Target Stores.
HACHETTE FILIPACCHI MAGAZINES
Two Stars * *
Under new President-CEO Jack Kliger, who arrived in June, Hachette has a new executive structure that spreads group publishing responsibilities to two other executives, Nick Mattarazo and John Miller. Mr. Kliger has said he wants Hachette to stand for more than just the cheapest game in town, so new marketing initiatives will soon be forthcoming, including a possible corporate branding campaign. He also changed the focus of the new media unit to integrate those efforts more closely to the individual magazine brands.
Bright spots for Hachette include the Home Group and flagship Elle. However, next year will prove challenging on the fashion front with the entry of the Conde Nast/Fairchild juggernaut.
Car books and special interest titles steady. Woman's Day consistent performer and strong cash generator, but stands alone within Hachette, and so other companies can sell their two women's service together. Two weak points are Mirabella and George, a particular challenge given the wrenching change with the death of John F. Kennedy Jr. Crucial to the future of George which Hachette is committed to, is who is named editor. Acting Editor Richard Blow has been too low profile until now for the industry to recognize his strengths. Sweepstakes subscription declines and circulation will continue to challenge the company into next year.
Multimedia efforts in the past have had mixed success. A foray into TV with Woman's Day was abandoned. However, with Hachette Filipacchi Media as parent, and Elle as a strong international brand, the company is well positioned for global growth. Much depends on how early decisions by Mr. Kliger pan out.
Three-and-a-half stars * * * 1/2
This is Cathleen Black's year: she's sealed deals to do Tina Brown's Talk, the Oprah Winfrey magazine and nabbing Kate Betts from Vogue to head up Harper's Bazaar. But the deal-making may prove to be the easy part. Harper's Bazaar will face a real challenge against the Conde Nast/Fairchild teaming, despite the much needed buzz Ms. Betts brings. Little sister fashion title Marie Claire continues to grow and capture a nice share of the market. Cosmopolitan also continues to post strong newsstand gains, but steamy content leaves it open to criticism. Selling off smaller men's titles such as Motorboating and Sailing and Sports Afield will strengthen Hearst's portfolio and free some cash for start ups, including the promising Rebecca's Garden and Mr. Food's Easy Cooking, as well as Country Living spin off Healthy Living. Two joint ventures are bubbling, with a strong Smart Money franchise in online and Offspring, and interest in ESPN The Magazine paying off. Still unclear how Talk Media will pan out, especially given the cool reception the issues following the much hyped inaugural got from ad community. Good Housekeeping still jewel in the crown, but Redbook struggling a bit still as smallest women's service book. Another smart move was to merge Home Arts with Women.com. This combination gets Hearst out of all that spending to grow its own division. Hearst has a strong international division and very few weak spots. Its cable holdings, print, and online are well positioned to help Hearst become a multimedia company.
Three stars * * *
Meredith Publishing Group's strategy has positioned it as a magazine company that relies on advertising for less than 50% of its income, thanks to direct marketing book sales and circulation strategies made possible by a top-notch consumer database. The growing custom publishing unit has added a nice chunk of revenue. Thanks to new titles like Golf for Women and Family Money, Meredith is expanding ad categories such as travel, luxury goods, financial services and technology. Better Homes and Gardens tops the women's service category in both circulation and advertising. Ladies Home Journal faltered with its circulation this year, reducing rate base from 4.5 to 4.1 million. But spin-off More captured some upscale cosmetic advertisers, and turned 40-plus women into a demographic advertisers are willing to pay for. It recently raised its rate base to 500,000. The company also just announced an extension of its Shop Online 1-2-3 Web site and magazine supplement, which gives a wide group of consumers an introduction to the Internet. It also was a savvy move to nab Jackie Leo as editorial director of new media initiatives. Meredith is basically a strong well-run company with well-known brands.
Two stars * *
New CEO Tom Rogers is intent on turning Primedia into an online powerhouse, using the Internet to unite disparate brands. Primedia always suffered from not having a flagship title to unite and define its culture, making it hard to define its core business and strength. But given multiple niche titles, its a natural to extend those individual titles as the expert in their given fields across many media platforms. As a strategy, it could be most successful at moving Primedia stock price out of doldrums, which is still hovering at about $12 a share. Primedia heavily leveraged, meaning all properties much produce lots of cash, and Internet investment is costly. Mr. Rogers expressed reluctance to continue an acquisition spree, and is looking to grow organically, which means more investment. This may be the time for Primedia to hunker down to a few years of investment before it sees a big payoff, but the industry wonders whether KKR is out of patience. Though Mr. Rogers appointment seems to have quelled sale rumors that have persisted since last year, observers wait to see what pieces could be sold off.
READERS DIGEST ASSOCIATION
One-and-half-stars: 1 1/2
CEO and President Thomas Ryder took on publishing's least wanted job, that of reinventing RDA for the next century. The flagship title is perceived as stodgy and mature, and special interest publications don't generate much buzz. The direct mail division and its low response rates, however, was seen as the real cause for the company's woes. RDA needed to find a way to refresh its much touted database to infuse the company with new younger names. The company's largest business unit is its global books and home entertainment operations. Ryder's strategy has been to cut costs, reorganize divisions and pursue new lines of business in online and catalogs. Recently, the company unveiled gifts.com, which shows promise. Still remains to be seen how successful new ventures will be. Ryder has talked about reworking the Digest into a product that cuts through the information clutter, but hasn't been much promotion of that strategy.
Two stars: * *
This Pennsylvania-based family-controlled company renamed itself from Rodale Press to just Rodale, and recently announced the establishment of a major Internet division. The name change reflects the reality that publishers are not just focused on print publications, but have expanded their businesses to include other media. Rodale also is intent on branding itself as the expert in health and fitness information. It has sold some smaller woodworking titles to pare its list down to titles that reflect its focus on health. That will help guide future investment decisions, and gives the company a firm footing as it branches into other media. Upper management is bracing for a transition, as President and CEO Bob Teufel announced he would be stepping down and a successor is being sought. Maria Rodale, heir to her mother Chairman Ardath Rodale, is beginning to assert her influence. How Rodale manages transition to new management is critical to future. It wants a leader who will move it toward the multimedia future. Rodale has had strong success marketing subscriptions online, which puts them ahead of most of the industry. Like the rest of the industry, it is still grappling with the affects of sweeps and a decline in direct mail response rate. Soft ad pages across many key titles, such as Prevention, Organic Gardening, and Men's Health is worrisome.
TV GUIDE INC.
Four stars: ****
Multimedia juggernaut, well-positioned to take advantage of convergence. From a whithering publication to a brand stretching over any media outlet they can think of, TV Guide is no longer a publishing company. Its a media company. The Gemstar acquisition pushes it beyond the multimedia realm into licensing agreements with consumer electronics manufacturers. As more consumers join the 12 million already on board with digital TV, and interactivity goes mainstream, TV Guide is the brand poised to be one of the most ubiquitous, integrally tied to TV viewing, and perhaps a mass media all unto itself. Not bad for a magazine with a shrinking rate base. From a publishing perspective, one drawback is the magazine becomes the least important component in the digital age.
Three and a half: * * * 1/2
As the largest consumer magazine publisher, Time Inc. has the resources to invest in its titles, and thus has weathered the circulation storm by pursuing sources of circulation other than sweepstakes. After two years of investment, its continuous service model is beginning to pay off. However, American Family Publisher remains a sore spot. The disassembling of Pathfinder also was seen as a strike against the house that Luce built, and the industry is watching to see how parent Time Warner finesses its new e-commerce effort. Sending control back to the individual brands for Internet ventures seems the right move in 1999, since the strength of multimedia platforms comes from brand-building. As part of Time Warner, however, Time Inc. is well poised to take advantage of the new multimedia world, as long as the separate divisions don't remain too territorial to work together. It hasn't been the smoothest ride for Time Inc., with CNN/Time Newsstand compromised by Tailwind in June 1998. Once the finger pointing died down, it appears that the company has figured out a better set of controls for how stories are reported across divisions. Time Inc. continues to be a major revenue producer for Time Warner, and is seen as a key component within Time Warner. The women's group is poised to explode under People Group President Ann Moore with new products in the pipeline.
TIMES MIRROR MAGAZINES
Two and a half: * * 1/2
This group of special interest titles has had pretty stringent growth demands placed on it by corporate parent Times Mirror and CEO Mark Willes. That is reflected in the recent decision to sell The Sporting News -- the only weekly among monthlies. It also reflects the company's acknowledgement that within the general interest sports category, Times Mirror doesn't have the multimedia resources of rivals ESPN the Magazine and Sports Illustrated. That's not to say they've sat out when it comes to the Internet. Enthusiast niche publications such as Golf and Ski make Web sites a natural, and Times Mirror has solidly integrated its purchase of Interzine web business a few years back into the publishing company, and maintains an interest in the Golf Channel. The relaunch of Home Mechanix as Today's Homeowner was well received, and new title Outdoor Explorer on an upward trend. With Hearst's decision to sell Sports Afield, and Miller Publishing Group's decision to shutter Snow Country, Times Mirror has effectively driven out the No. 3 for them: skiing and hunting and fishing books. It now owns the top two titles in both those fields (Field & Stream and Outdoor Life, and Ski and Skiing). It also has smartly packaged a cross property buy of young men 18-34 that has brought in additional ad revenue.
Two stars: * *
The massive undertaking of changing Us from a monthly to a weekly will test Wenner Media mightily next year. The company is in a strong place at the moment, but Us Weekly will eat up much energy and resources and could tax the other titles. An idea for an Internet lifestyle title was already put on hold in favor of developing the weekly. Its a bold move, but some observers wonder if Us will end up sinking the mother ship. While Rolling Stone continues as the jewel in the crown, it has faced competition from urban music and hip hop books such as Vibe and The Source. The timing of the Us transformation means Wenner might not have the cash to chase after Vibe/Spin Ventures, now up for sale. That might be an opportunity Wenner will be sorry it missed. The year 2000 could prove Wenner's make or break year.
Two stars: * *
Much depends on who steps up to buy this techie publishing house, and whether it gets sold off piece meal or as a whole entity. The tech book category has been losing ad pages as the industry switches its ad dollars to mainstream consumer media.
The push to turn lead books like PC Computing into a business solutions magazine to compete with Fast Company and others, and the switch in Family PC to a general parenting book, make Ziff a more attractive catch for a mainstream consumer publisher. As personal computers show up in every home, there's an opportunity to rebrand Ziff's computer lab testing arena to the realm of consumer reports of the computer world. Right now, however, until buyer emerges,