As recession lingers, shakeout fears grow

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For most of the current recession, the magazine industry has largely avoided massive shakeout. But back-to-back restructurings at Worth and Gear have revived fears that independents and marginal titles could still fall victim to a prolonged slump.

"I've been looking over my shoulder for so long it's part of the environment," said Larry Burke, owner and editor in chief of Outside, a rare single-title publisher cited by industry executives as a top player. "Has it been particularly difficult over the last several years? Yeah."

According to Magazine Publishers of America, there were 5,340 consumer magazines being published last year, down from 6,336 in 2001. Still, the thinning out at newsstands has come slower than expected despite an advertising downturn that reduced ad pages by 11.7% in 2001 and another 3.2% last year.

That comes as little comfort to former staffers of now-defunct titles such as Talk, Brill's Content and The Industry Standard, nor to those laid off at Gear and Worth. Gear, now down to a staff of eight, is on hiatus and seeking investors with an eye toward relaunching this fall, said Publisher Teresa Kendregan. Worth is cutting frequency from 10 times a year to eight, and laying off about half its staff. In February, tech title Red Herring shut down after failing to find a buyer.

fighting recession

But consolidation has helped magazines withstand the recession. Many titles are now part of deep-pocketed publishing houses such as Time Inc. or Conde Nast Publications, which can carry weaker properties on the profits of successful ones. Still, bigger players have not been immune to current pressures. Time Inc. closed Mutual Funds and SI for Women. Gruner & Jahr USA Publishing shuttered Homestyle, Hearst Magazines folded Classic American Home and its Miramax co-venture Talk, while Conde Nast closed Mademoiselle.

But the only survivors among magazines that once claimed the quaint "new economy" moniker, for example, are part of multi-title portfolios: Conde Nast Publication's Wired, Time Inc.'s Business 2.0, and G&J's Fast Company.

The winnowing down of personal-finance titles resulted in the closure of independent Individual Investor and titles published by smaller companies like Bloomberg Personal Finance. The strain of that category even affected the august Forbes Inc., which last year cut staff and salaries, stopped matching contributions to its 401(k) and sold chunks of the its art collection.

"I fight this battle every day," said Knight Kiplinger, editor in chief of Kiplinger's Personal Finance and president of its parent company. "A magazine group can carry a weak title. [A single title] has to survive on its own."

"I would agree" that consolidation has preserved titles, said Dan Rubin, G&J exec-VP. "In this consolidation, there's been an attempt by some of the larger companies to engage in the `roll-up' theory, where they feel they can develop mass and scale by buying more titles and better penetrate individual magazine segments."

There can be financial reasons to keep marginal titles going-competitive or investor-related desires to prop up revenue, for example. A more tangible, if obscure, argument for sustaining flagging titles is the issue of allocating overhead of a shuttered title, which can cost a company up to $4 million that other titles must then make up, said a top industry executive.

Newsstand pressures work against indies as well. "If your sales drop too far, you will be kicked off the approved list of a drugstore chain," Mr. Kiplinger said. A multi-title publisher can then threaten to withhold its star newsstand performer. Mr. Kiplinger can't.

Not all small publishers admit to a competitive disadvantage. "Everything is a function of the ad market," said Mort Zuckerman, who owns US News and World Report. "Anybody who wants to support [a flagging title] can support it."

And some ad executives see shakeout as healthy. "The marketplace is overpopulated with magazines," said Ruby Gottlieb, senior VP-planning and affiliated services, Horizon Media, New York. "Look at a newsstand. There can't be enough people to read all those magazines and be dedicated readers to the extent magazines need to keep them viable."

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