SOFT SPOTS APPEAR, REVENUES UP 5.9% AFTER A STELLAR '97

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softness in critical magazine ad categories that hit computer magazines and consumer newsweeklies with a vengeance, plus continued decline in newsstand sales left the Ad Age 300 with a 5.9% gain in gross revenue in 1998. That was a full three points lower than in the prior year.

Total gross revenue for the top 300 magazines reached $27.08 billion; ad revenues accounted for $18.03 billion of the total, up 7.3% verses an 11.8% gain in 1997; circulation revenue measured $9.05 billion, up 3.2% vs. a 3.7% advance in 1997.

Consumer monthlies, the largest magazine subgroup (142 of the 300), grew 7.9% in total revenue. The 30 consumer weeklies grossed a collective 2.2% gain in revenue, the 27 business monthlies advanced 3.2% and 34 business weeklies grew 5.1%.

GOOD NEWS FOR CONSUMER MONTHLIES

Of the four subgroups, only consumer monthlies registered more ad pages in 1998 than the previous year. Their 4.2% growth elevated Ad Age 300 total pages to 445,108, a 1.8% uptick that measures poorly against last year's 4.9% growth.

Computer magazines reeled under the effects of ad reductions from computer and software marketers, and consumer magazines, weeklies in particular, found the lake of plentiful auto advertising dried up around the edges.

Autos and computers are two of magazines' three top categories. Auto pages fell 6%, and auto revenues slipped $102 million to $1.69 billion, down 5.7%, according to Publishers Information Bureau.

Autos in recent years account for about 10% of total ad pages in consumer magazines. Little wonder that when Detroit's Big 3 spent 13.1% less in magazines in 1998 the impact could be felt by most publishers.

Within that decline, General Motors Corp. hit the wall, down 26.1%, as it pared spending during its mid-year strike that shut down factories nationwide for two months.

Yet, strong spending from direct response companies, the second-largest magazine category, and financial and media & advertising, helped keep ad page growth in the plus column, according to PIB.

So far in '99, magazine ad pages are on the rebound, up 2.4% in the first four months of 1999. The auto category is up 0.4% vs. the same period in '98 (prior to the GM strike), computers & software is up 18.1% and pages from medicines and proprietary remedies are up 21.8% after being slightly down in all of '98.

NEWSSTAND PRICES RISE

Of total circulation revenue, subscription totals were $6.41 billion, up 3.8%, as total subscriptions grew by 2.2% to 311.9 million; newsstand sales were $2.64 billion, up 1.7%, growth determined by a 9-cent gain in the average single-copy price because total newsstand sales slipped 0.7% to 52.4 million.

WEEKLY COPIES SLIP

Consumer weeklies were the only magazine subcategory to decline in newsstand revenues, down 1.7% to $1.15 billion, as single-issue copies of weeklies sold were down 9.8% to 13.1 million. Subscriptions -- the primary target for most magazines -- increased 1.7% to 89 million for weeklies.

TV Guide, the nation's top magazine by gross revenue, dictates movement in the weeklies category, where it accounts for nearly 20% of newsstand copies sold. TV Guide's newsstand sales were down 23.5% to 2.5 million. The publication's sub count, reaching 11.3% of the subcategory's total, was up 2.4% to 10.1 million. It also sold 6.6% fewer ad pages for a 3.4% decline in gross ad revenue to $453.5 million.

TV Guide moved quickly into cable in '98, acquiring TVSM titles Cable Guide and Total TV. Cable Guide continues to be published, but Total TV became a large-size edition of TV Guide mailed to Total TV's subscribers.

News Corp.-owned TV Guide then merged with United Satellite Video, controlled by Tele-Communications Inc.'s Liberty Media, to form TV Guide Inc. Liberty and News Corp. each hold 49% voting rights in TV Guide Inc., which began trading under the TVGIA symbol early this March. Besides magazine publishing, the company has an entertainment group that includes TV Guide Channel (formerly Prevue Channel) and online and interactive units, and USV longstanding operations that include several cable networks and superstation distribution.

Monthlies were stimulated by growth in the AA 300 magazines in women's magazines (up 7.5% in ad pages), home service & home (up 9%), men's (up 11.1%), sports (up 12.4%) and travel (up 9%).

BIG GROWTH

Fast Company grew 97.1% in gross revenue in 1998, most impressive of any consumer publication among the AA 300. Credit is due to an ad page advance of 50.3% to 1,047, and two more issues in '98 than '97.

The hip publication is a movement unto itself, attracting a groupie-like following among readers who gather for Internet chats.

Kids rushing to get tips on playing "Final Phantasy VIII" or "Metal Gear Solid" video games have made a winner out of Official U.S. PlayStation Magazine, the top computer book by growth in both ad pages and ad revenue in the AA 300. Purchased from Sendai Media by Ziff-Davis in May '97, the magazine is an official licensee of Sony Corp., producer of the Sony PlayStation home video game platform that dominates the market.

LAUNCHES MAKE LIST

Two of the more successful launches were every-other-weekly ESPN Magazine from Walt Disney Co.'s ESPN Inc., and monthly Teen People from Time Inc.

ESPN Magazine, launched March 1998, reached $50.5 million in gross revenue its first year. Circulation -- heavy on the 18- to 34-year-old audience -- hit 533,879 in '98. So far this year, the magazine appears just ahead of its ad page volume of 1,245 in 1998, and with ad rates that have doubled.

Teen People was launched by Time Inc. in January 1998 to become the face of all teens -- 20% of circulation is male. The title generated circulation of 1.28 million in 1998, split almost half between newsstand and subscribers; it collected 707 ad pages. Despite ad page rate increases of 63% in 1999, the publication's ad pages have grown 56.5% in the first four months of this year, according to PIB.

Jane, launched by Fairchild Publications in September 1997, reached the AA 300 with $21.5 million gross revenue, up from about $4 million in partial-year 1997. Ad pages have grown 66.5% this year, according to PIB. The magazine, edited by Jane Pratt, former editor and chief at Sassy, is directed at the twentysomething woman.

Maxim entered the U.S. in April 1997 as a spin-off of the British title of the same name. Published by Dennis Publishing Co., the hip publication for men with a yeah-sure attitude, is pushing Conde Nast's Details and GQ, and Hearst Corp.'s Esquire to the limit. Esquire, under new leadership from publisher Valerie Salembier, ranked sixth this year in ad page growth among consumer magazines.

COOKING UP NEW VENTURES

Reiman Publications' issue mill turned out another winner with the launch of Quick Cooking last year. The recipe for Quick Cooking is not unlike that of other Reiman successes -- enduring theme publications (Taste of Home, Birds & Blooms) supported solely by revenues from circulation. QC got its 1.4 million circulation virtually overnight via notices in other Reiman books (collective circulation: 11 million-plus) and the lure of fast-paced columns like "10 Minutes to the Table."

Conde Nast Women's Sports & Fitness soared to $22.7 million gross revenue in its first full year in 1998. Launched as Conde Nast Sports For Women in September 1997, the lifestyle publication boosted its rate base about 36% in mid-1998 when it got its current name. Conde Nast invested about $40 million to bring the publication to market, one of the higher price tags for a launch.

MAGAZINE CHANGES

Aside from outright corporate buyouts of magazine parents, a host of magazines switched hands during the year.

Hachette Filipacchi Magazines sent Family Life to the Parenting Group at Time Inc. Primedia, owner of Seventeen, purchased Teen Beat, Tiger Beat, Sixteen, Superteen from Sterling MacFadden Teen Network and BOP and BB from Laufer Publishing, Studio City, Calif. Primedia then formed Primedia Youth Entertainment Group to house the new titles.

Century Publishing Co.'s Inside Sports went to Petersen Publishing in June 1998, and its circulation was folded into Petersen's Sport Magazine several months later. Circulation at Sport grew 8.7% with the merged list, but gross revenue showed little growth, up only 4.1% to $29.5 million. The acquisition's intent was to build Petersen's market share in the genre.

Primedia, already the publisher of Soap Opera Digest and Soap Opera Weekly, bought Soap Opera News and Soap Opera Magazine from American Media early this year.

Travel Agent was sold by Universal Media to Advanstar Communications, along with Universals other travel titles, including Travel Agent International. The acquisition was among 24 joint ventures or mergers by Advanstar since Robert Krakoff was hired as chief executive in 1996. Travel Agent will expand Advanstar's reach in the hospitality business, an industry it currently addresses through Hotel & Motel Management and Premier Hotels & Resorts. Advanstar is preparing to go public.

General Media sold its automotive group to Emap Petersen. The sale included Drag Racing Monthly, Stock Car Racing and Four Wheeler. Only the latter ranks among the AA300.

COMPANY BUYOUTS

Emap, an international publishing company based in the U.K., bought Petersen Cos. earlier this year for $1.2 billion, the largest magazine publishing buyout of the last two years. That sum is a good deal higher than the $465 million founder Robert Petersen got in 1996 from an investor group led by James D. Dunning Jr., Petersen chairman, president and CEO. But then, Mr. Dunning has since bought 60 more specialty magazines and engineered an IPO.

Emap pursued Petersen to increase its U.S. presence and to serve as a U.S. launch pad for several of its successful U.K. titles, particularly FHM and Bliss.

CMP Media this May fell to Miller Freeman, a unit of London-based United News & Media. MF dished out $920 million for the high-tech publishing company, which ranks second behind Ziff-Davis among technology publishers in ad revenue, according to Adscope.

Combined with Miller Freeman magazines, CMP solidified its hold on total ad pages in the category, a step ahead of Ziff-Davis. The combined company has over 300 publications. MF also acquired Verecom Group, a tech publisher, in early '99 amid a number of purchases of companies involved in trade shows and conferences.

American Media was purchased for $800 million by Evercore Capital Partners, and Chairman-CEO David Pecker was brought in from Hachette Filipacchi to increase brand awareness of American Media and combat the tarnished image of American Media's tabloid titles, Star and National Enquirer.

Penton Media went public in August 1998 and then purchased Mecklermedia for $247 million. Penton gained Internet World, the primary magazine at Mecklermedia, and Mecklermedia's huge trade show division that accounted for about 70% of its revenues in fiscal '98. The merger also gives Penton Mecklermedia's network of websites. To further its technology ventures, Penton also bought MFG Publishing, which produces Midrange ERP, in March '99.

MAGAZINE NECROLOGY

Joining the AA 300 magazine necrology was 87-year-old monthly Nation's Business, published by the U.S. Chamber of Commerce. Last issue for the magazine, circulated to the 850,000 chamber members, was June. The magazine's primary focus was the small businessman.

Meredith folded every-other-monthly Country America in late 1998 after a nine-year run. Country America had been launched in association with The Nashville Network and Group W Satellite Communications.

Struggling Financial World, published by Financial World Partners (Investment Properties), closed its doors after it was unable to attract sufficient capital.

Hachette Filipacchi ended the run for Video. And Eating Well, a joint property of Hachette and Telemedia, was folded in first quarter '99 after a buyer could not be found for the publication.

Computer magazines proved casualties of the soft ad market in that sector. CMP Media folded LAN Times this year. Byte, the McGraw-Hill publication once among the leaders in computer magazines, was sold to CMP Media. CMP then folded the U.S. edition because of poor ad revenue and relaunched the publication as an on-line magazine at www.byte.com.

In a cost-cutting move, Ziff-Davis in December 1998 ended the runs of Windows Pro, Internet Business, and Equip, the latter renamed from Computer Life over a year ago.

Miller Publishing Co.'s Snow Country was relaunched by Miller Sports Group in September as Mountain Sports & Living in an attempt to become less seasonal and expand readership beyond snow sports. But a drop of 19% in circulation in the second half of the year, coupled by a 28% decline in ad revenue, sent it

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