4Asmedia06

Magazine publishing houses run in damage control mode

By Published on .

No publisher wants to dwell on 2001. Some companies took more of a hit, and some dealt with a losing hand with more grace. Advertising Age takes a look back with an eye on how companies managed through tough times and how their properties look positioned for the future. (Circulation figures are for second half of '01 unless otherwise noted.)

American Express Publishing Corp.

Rating: 2 stars

Best performer: T&L Golf

2001 circulation: 384,537 paid (up 25.3%); total paid and non-paid 566,871

2001 ad pages: 597.5 (up 12.5%)

Worst performer: Departures

2001 Circulation: 603,686 (BPA)* (up 13.7%) *Almost entirely controlled circulation.

2001 ad pages: 1,024.5 (down 8.8%)

Amex publishing's luxury-heavy stable of titles weathered 2001 better than most, and posted the smallest year-over-year ad page drop of the 10 biggest companies, with pages falling 2.3%, according to Publishers Information Bureau. But Sept. 11 after-effects hit unusually hard-its flagship, after all, is Travel & Leisure-and recent comments from CEO Ed Kelly have made it clear that it's not seeing much daylight yet. "The ripple effect is impacting more in 2002 than it did in the last quarter of '01," he told Ad Age early this year. AmEx, managed by Time Inc., hasn't been an aggressive dealer, and quietly shut down its most recent test-B. Smith Style-in late 2000. Its properties have been nothing but reliable in recent years, and Mr. Kelly says Food & Wine would have an up first quarter. But the luxury boom of the late '90s is just a memory, and AmEx's 2002 could resemble other companies' 2001.

American Media

Rating: 1.5 stars

Best performer: Star

Circulation: 1.5 million (down 8%)

Ad pages: 649.8 (up 22.5%)

Worst performer: The National Enquirer

Circulation: 1.9 million (down 9.9%)

Ad pages: 866.7 (up 20.2%)

If the magazine industry gave out Purple Hearts, American Media would have won one last year. The decidedly unflashy Florida-based publisher of The National Enquirer suffered through anthrax contamination and the related death of Photo Editor Bob Stevens. This overshadows any other news, which was a mixed bag of bad and good. On the upside: the Enquirer, Star and Country Weekly all picked up steam on the ad front, as each posted 20%-plus ad page gains for the year. (All three still run substantially fewer than 1,000 pages per year.) But the Enquirer and Star, which invert the industry's typical ratios by selling almost five times as many copies on newsstand as they do via subscription, were slammed by the post-Sept. 11 pullback, as chary consumers called supermarkets fearing they could catch anthrax from the publications . Circulation at the Enquirer and Star was down in the high single digits for the second half of '01, according to the Audit Bureau of Circulations. Elsewhere, news was tough as well, as AutoWorld Monthly shelved plans to go weekly and Style 24/7 put off launch plans. Were it not for the ad upticks, this would have been a relentlessly dreadful year for this company.

Conde Nast Publications

Rating: 2.5 stars

Best performer: Allure

Circulation: 945,631 (up 7.9%)

Ad pages: 1,156.6 (down 1.8%)

Worst performer: Wired

Circulation: 515,383 (up 1.5%)

Ad pages: 1,264.6 (down 45%)

The perception of Conde Nast is such that CEO Steve Florio can address an industry gathering, as he did last fall, and discuss "put[ting] together a real profit-and-loss budget, which will come as a real surprise to everyone in this room." (Wow! The recession is affecting everyone!) Jests aside, though, '01 looks like a signal transitional year for the biggest magazine property within Advance Publications (the others being Fairchild Publications and Golf Digest Cos.). Mademoiselle was shuttered after a 66-year run. A series of small-scale cutbacks and layoffs showed signs of increased cost-consciousness and willingness to share resources across company boundaries. Conde Nast is hardly looking like a penny-pincher-its parent company's purchase of Golf Digest Cos. clocked in at a whopping sale multiple of 21.1 times 2000 EBITDA-but the moves show a new sensitivity to the world. Industry chatter says the next generation of Newhouses is flexing muscle. A companywide ad page drop of 9.9% tends to concentrate the mind, as does the realization that the best ad page performer, Allure, last year was the one that formerly was the gossipers' choice for most likely to be closed.

Dennis Publishing

Rating: 3.5 stars

Best performer: Stuff

Circulation: 1.1 million (up 35.9%)

Ad pages: 657.9 (up 43.9%; more issues

published in 2001 than in 2000)

Worst performer: Maxim

Circulation: 2.6 million (up 3.9%)

Ad pages: 1,196.2 (down 1.5%)

In the grand tradition of magazines from an entrepreneur gingerly referred to as "colorful"-well, sometimes "certifiable" seems more apt-Felix Dennis' flamboyant bet on bringing Maxim, a trailing U.K. laddie book, to the U.S. in '97 paid off brilliantly. At the end of 2001, Maxim's circ stood at 2.6 million-more than the likes of The National Enquirer, Martha Stewart Living and Seventeen. Baby brother Stuff-once engagingly described by an insider as "Maxim minus the self-help stuff"-ended the year at 1.1 million, and, still in ramp-up mode, offset minor ad page losses at Maxim by posting a 43.9% ad page increase. Last year, Dennis turned up the heat on competitors in the young men niche, like Wenner Media's Rolling Stone, with Blender, a music magazine that's boosted its rate base to 350,000 from 250,000 at its May '01 launch, and The Week, a quick-read precis of the week in news. The last two remain unproven entities-though the edit concepts seem right-on at both-but Mr. Dennis' track record thus far, to say nothing of his ability to mine maximum profit from lean-staffed titles, hints at broad potential. Oh yeah-Dennis' ad pages rose 10.9% in '01.

Fairchild Publications

Rating: 2.5 stars

Best performer: Jane

Circulation: 619,166 (down 9.4%)

Ad pages: 901.1 (up 9.1%)

Worst performer: W

Circulation: 455,372 (up 0.8%)

Ad pages: 2,126.4 (down 2.6%)

As with american express Publishing Corp., Fairchild's luxe title W felt the brunt of the ad recession late but is assuredly feeling it now, posting a 20%-plus drop in December vs. a year earlier (though it eked out a modest uptick in January). Twentysomething title Jane posted a 9.1% ad page gain last year, and men's fashion magazine Details, despite kinks in the editorial product, finished with a December that was up 46.2% over 2000's. Still, arguably the company's biggest news of the year was shelving the ambitious and pricey plan for Women's Wear Daily's wwd.com, which would have charged its users $895 a year. Despite it all, Fairchild wrung out an 8.2% ad page gain last year, and, like its sibling companies at Advance, avoided widespread layoffs. Were it not for W's stumbles, Fairchild's consumer titles would have had good years all around-not a comment you hear much about '01.

Gruner & Jahr

USA Publishing

Rating: 2 stars

Best performer: YM

Circulation: 2.2 million (up 0.1%)

Ad pages: 764.3 (up 38.4%)

Worst performer: Fast Company

Circulation: 708,251 (up 20.7%)

Ad pages: 987.1 (down 53.6%)

CEO Dan Brewster came on board in June of 2000 with a mandate to double the size of the $420 million company within five years. Sadly, he did so by paying $540 million for Fast Company and Inc., which, while diversifying the female-reader-heavy tilt of its portfolio, positioned the company for a wallop when tech collapsed. Save for the relaunch of McCall's as Rosie, 2001 was marked by retrenchment and a notable stasis surrounding Mr. Brewster's bigger designs. Staffs at both Inc. and Fast Company were pared last year, and small-scale cutbacks took place across the portfolio. Rosie turned in better-than-expected results on the newsstand, but her talk show's exit from the airwaves could hurt. Rosie's ad pages-622.9 in 2001's eight issues-were on pace to hit a decent 934 for a full year, which works out slightly better than the '00 performance of McCall's' 864.7. HomeStyle was shut in January amid hints that further "streamlining" will come. (One task: reviving Parents, whose ad pages dropped 14.8% in '01.)

Hachette Filipacchi

Media U.S.

Rating: 2 stars

Best performer: Travel Holiday

Circulation: 659,505 (up 1%)

Ad pages: 822.5 (up 23%)

Worst performer: Home

Circulation: 1 million (down 1.4%)

Ad pages: 760.2 (down 26.7%)

Last year's biggest news from this American outpost of a French-run empire came in the first week of January, when Hachette pulled the plug on George, its political version of People. Hachette's other big initiatives, wisely, leverage its Elle brand, with last summer's launch of Elle Girl-editorially satisfying, but not enough to quell concerns it may have come too late to the teen party. There's also this year's upcoming extension, Elle Ultimate Weddings. (Could the next step be an import version of Elle Cuisine, already up in six countries?) The industry wisdom is that Hachette is now on the acquisition prowl, and those feeling out the company for Hachette titles to buy have been told, "Thanks but no thanks." Hachette remains heavily dependent on auto advertising, thanks to its Car & Driver and Road & Track, but auto hasn't been a happy sector to be playing in, as comments from CEO Jack Kliger have repeatedly borne out. Its ad page drop for '01 was 10.2%, the worst among the five largest players, and flagship Elle was down 15.7%-significantly worse than all other top fashion books. The company's overall strategy remains somewhat opaque.

Hearst Magazines

Rating: 3 stars

Best performer: O, the Oprah Magazine

Circulation: 2.5 million (up 17%)

Ad pages: 1,371.2 (up 51.5%; more issues published in 2001 than in 2000)

Worst performer: SmartMoney

Circulation: 809,685 (up 6.1%)

Ad pages: 865.2 (down 32.9%)

It may not have the glamor of rival biggie Conde Nast, but then again Hearst Magazines President Cathleen Black was the one wearing fur in the "I Love NY" commercial, not her Conde counterpart Steve Florio. The family-owned Hearst typically goes about its business quietly, and so it did in '01-quietly laying off staffers across the company and quietly shuttering Classic American Home. It also quietly leaked late last year that, after a series of joint venture hits-SmartMoney, at least until '01; ESPN the Magazine; and home run O, the Oprah Magazine-Hearst had finally had it with Talk, which ceased publication in January. Bright spots not named "Oprah": sustained strong showings at CosmoGirl and Marie Claire. But Esquire's editorial revival has yet to translate into substantially increased ad performance (last year the title failed to clear 1,000 ad pages). Challenges: turning up the heat for Harper's Bazaar under new editor Glenda Bailey, and reversing steep declines at SmartMoney, Victoria and Popular Mechanics. Still, Hearst's ad pages last year declined 6.6%-not a pretty showing but the best of the Big 3 magazine houses.

Meredith Corp.

Rating: 2 stars

Best performer: More

Circulation: 632,520 (up 7.5%)

Ad pages: 639.6 (up 44.3%; more issues published in 2001 than in 2000)

Worst performer: Traditional Home

Circulation: 823,999 (down 0.9%)

Ad pages: 650.7 (down 17.5%)

The business world's whispers about the fate of Meredith's ownership structure continue for the Des Moines-based publicly traded magazine and broadcast company. (They reached such a pitch in February 2001 a a memo from CEO William Kerr to staffers no-commented on such rumors.) That aside, by some measures the media recession had a much gentler impact on Meredith's magazines than it did elsewhere. Ad pages dropped a mere 3.1% in '01. But profits took a severe beating. For the first two quarters of its fiscal '02 (Meredith's fiscal year ends June 30), profits at the publishing division dropped 32.4% to $39.3 million and revenue fell 2.8% to $343.2 million. Meredith continues to toy with its Living Room prototype-a younger-skewing design title-with a third test issue planned for later this year. Meredith trimmed its portfolio last year, selling Golf for Women to Advance Publications' Golf Digest Cos. in May and shutting down Family Money and Mature Outlook. Meredith has one of the industry's undisputed blue-chip brands-the 7.6 million-circulation Better Homes & Gardens-but its Ladies' Home Journal struggled to make its rate base for the second half of '01, clearing its 4.1 million rate base by just 675 copies amid a newsstand sales drop of 12.4%. Its More, aimed at the 40-plus woman who's defied successful magazine targeting in the past (as shown by the defunct Lear's and Mirabella), looks like a hit. But this is a company heavily dependent on its biggest brands, and one of them, Ladies' Home Journal, looks like it's lost steam.

Primedia

Rating: 1 star

Best performer: Power & Motoryacht

Circulation: 34,317 paid; 122,418 non-paid (BPA)

AD pages: 2,609.5 (up 6.5%)

Worst performer: Automobile Magazine

Circulation: 634,006 (down 3%)

Ad pages: 733.5 (down 21%)

CEO Tom Rogers insists-correctly-that in ad recessions endemic advertising in enthusiast magazine fares substantially better than more broadly oriented magazines. Primedia's ad page performance for '01 bears that out, declining 4.1%. That said, the company has made two of its biggest bets on ventures that simply haven't panned out-its October 2000 acquisition of About.com, initially valued at $690 million, and its abortive association with Steven Brill's Brill's Content and Inside.com. (The acquisition of Emap USA last summer for $515 million made much more sense.) Primedia is selling assets off-slowly-to pay down debt associated with the Emap deal, pruning its consumer titles by selling Modern Bride and its related publications to Conde Nast earlier this year. Primedia's big consumer books-Seventeen and New York Magazine-remain coveted properties, though ones the company appears uninterested in moving. On the critical list: Teen, which saw its circulation fall 22.8% in the second half of '01 and which now has a rate base 40% smaller than where it stood just a year ago. Meanwhile, Primedia's stock price remains dire-hovering around $2 at press time. In a reflective moment onstage at last October's American Magazine Conference, Mr. Rogers said being "a complex financial being with $2 billion in debt does not make you a popular place to park money" in financially stressed times like these.

Reader's Digest Association

Rating: 1.5 stars

Best performer: Selecciones

Circulation: 253,487 (up 21.7%)

Ad pages: 301.4 (up 15.4%)

Worst performer: New Choices

Circulation: 606,496 (up 0.7%)

Ad pages: 354.4 (down 24.9%)

Most companies would like to forget 2001, but the parent company of one of America's classic magazine brands has much more to forget than others. Its shuttering of Walking was made to look like chump change by what followed. The direct mail giant was walloped by anthrax scares, but results had begun souring before then. As part of an agreement with state attorneys general, RDA had significantly reduced its mailings earlier in the year, meaning the company took a hit on both the volume of its mailings and overall response rates. (Chairman-CEO Tom Ryder's admirably forthright appearance before analysts at an investors conference in December was extraordinarily bleak, even by 2001 standards.) The company currently touts its hopes that the domestic Books & Entertainment unit-the revenue of which was off 14% in the most recent quarter-will break even later this year. Mr. Ryder has won plaudits for his leadership at RDA thus far, but the peculiar combination of factors the company faces gives him his sternest test yet. RDA's stock is hovering near the bottom of its 52-week range.

Rodale

Rating: 1.5 stars

Best performer: Men's Health

Circulation: 1.6 million (up 0.1%)

Ad pages: 714.1 (down 9.4%)

Worst performer: Bicycling

Circulation: 280,218 (down 0.9%)

Ad pages: 474.3 (down 20.4%)

A family-run company in flux. Last year, the initial launch plans for Men's Health teen spinoff MH-18 were scaled back and then abandoned entirely. Organic Style, the company's play for the O, the Oprah Magazine and Real Simple space and pet project of Vice Chairman Maria Rodale, launched with a September/October 2001 issue and is now on its third editor-Ms. Rodale herself. (The editorial director of the group overseeing Organic Style also left; in a published report he obliquely cited differences with Ms. Rodale.) The company slashed 13% of its work force. Rodale's vaunted direct-mail business took a serious hit in the immediate aftermath of Sept. 11, and its major magazine success story-Men's Health-saw its ad pages erode 9.4%. (Overall ad pages at the company declined 13.5%.) In January '02, when President-Chief Operating Officer Steve Murphy was promoted to CEO, he told Ad Age Rodale was "now ready to move back into a creative and product development mode." Perhaps, but in the summer of 2000, Mr. Murphy outlined an ambitious expansion plan to Ad Age-saying the company wants "established, major properties" for both men and women in the age brackets of teens, young adults and baby boomers-and that seems very far away today.

Time Inc.

Rating: 3 stars

Best performer: TransWorld Stance

Circulation: unaudited; rate base 50,000

Ad pages: 444.3 (up 57.4%)

Worst performer: Outdoor Life

Circulation: 1.4 million (up 0.4%)

Ad pages: 357 (down 36.1%)

In 2001, the industry's gold-standard brand was hit with a killer combination of a merger that left the company with ambitious growth goals to hit and a hideous ad recession. The results were manifold, from a double-digit decline in ad pages at its key weeklies to 30%-plus drops at Fortune. Gone for good: Asiaweek and On. One bet, which in hindsight may not have been the wisest, came when Time Inc. shelled out $68 million for Business 2.0, and folded its so-1999-titled eCompany Now into it. The big deal was international-reflecting AOL Time Warner's global dreams-with the $1.6 billion deal for Europe's IPC Group. It also spent the year absorbing division Time 4 Media. Time Inc.'s new affiliation with America Online paid some dividends on the subscription front, as parent company executives like Co-Chief Operating Officer Bob Pittman repeatedly stress, by garnering 100,000 "evergreen"-or automatically renewing-subscriptions a month online.

But while few companies would argue with an evergreen 1.2 million subs a year, it's just a drop in the bucket for a company with well over 30 million subscribers at yearend.

The merger is an emotional issue for the entire industry, and people who've never worked for Time Inc. express indignation and betrayal at the layoffs that ensued. What may be worse is that suddenly star publishers and their teams seemed poachable, as Conde Nast's Vanity Fair did with InStyle Publisher Lou Cona, who brought over his associate publisher for good measure.

Considering its overall exposure to the recession/post-Sept. 11 ad malaise-Time Inc. nabs almost one of every four ad dollars in U.S. magazines-a 9.3% drop in ad pages for '01 could have been worse. But it remains to be seen if 2001 saw the beginning of the end for the Time Inc. of yore-which delivered top-notch goods to rival anything in the business while satisfying shareholders, a balancing act no one else in the industry could approach.

Wenner Media

Rating: 1.5 stars

Best performer: Us Weekly

Circulation: 929,131 (up 12.3%)

Ad pages: 973.9 (down 1.4%)

Worst performer: Rolling Stone

Circulation: 1.3 million (up 1%)

Ad pages: 1,547.7 (down 19.4%)

Wenner has long enjoyed attention disproportionate to its size, thanks to Rolling Stone and the larger-than-life persona of Chairman Jann Wenner. But last year, all its titles posted ad page drops, and the flagship, stung by the loss of Philip Morris Cos.' cigarette advertising, saw its pages fall 19.4%. It all may leave staffers wishing they could dine out on Mr. Wenner's celebrity, since they no longer can expense stock-in-trade lunches or more mundane magazine purchases. (A long-term salary freeze also came down in '01.) Three of Wenner's five VPs left in '01 and early '02, including RS design dean Fred Woodward and Us Weekly Editor in Chief Terry McDonell. Former powerhouse Bonnie Fuller last week was named editor. Concerns over Us Weekly's health were quelled last March when Walt Disney Co. entered a 50/50 joint venture with Wenner for the title and paid a reported $35 million. Since then, its circulation story has brightened, with double-digit growth for the last half of '01 that brings Us Weekly closer to the 1 million circulation first promised to advertisers. But its ad pages didn't crack 1,000 for a full year-not a great sign for a glossy weekly. On the plus side: double-digit ad page gains at Us Weekly and Rolling Stone in January '02. But a recent report had Mr. Wenner saying in private he'd re-evaluate Us when Disney's money runs out; a more intriguing possibility is if there's an informal quid pro quo for Disney to increase its overall investment in the company. Queried about this last summer, Mr. Wenner issued an intriguing non-denial to Ad Age: "It's always possible. It's not imminent. It's not part of the [Us] deal. " But: "I like 'em plenty."

Ziff Davis Media

Rating: 1 star

Best performer: PC Magazine

Circulation: 1.2 million (up 0.1%)

Ad pages: 2,493.7 (down 24.8%)

Worst performer: Ziff Davis Smart Business

Circulation: 807,542 (down 19.4%)

Ad pages: 763.6 (down 48%)

Ziff Davis media, picked up in early '99 for $780 million by Jim Dunning and his backers Willis Stein & Partners, is the magazine world's most spectacular implosion since-well, since The Industry Standard went from setting a record for ad pages in 2000 to closing shop in August. Mr. Dunning was ousted by his former partners last summer and they are now embroiled in a remarkably acrimonious court fight. FamilyPC-which was briefly renamed Family Internet Life-is gone, as is Expedia Travels and Inter@ctive Week. A new crew is running the place under Chairman-CEO Robert Callahan, and new launches in targeted business-to-business niches like CIO Insight and Baseline continue. But the company still needs Willis Stein to kick in cash to make interest payments, and the upcoming prospects for the tech sector remain remarkably ugly. (The category last year saw its ad pages decline 37.1%, according to Taylor Nelson Sofres' CMR.) Last year, Ziff Davis saw its overall ad pages among its publications measured by PIB-which doesn't track its trade titles-drop 33.9%; its best PIB-audited performer, PC Magazine, had its ad pages drop 24.8%. (Ziff Davis' gaming-related titles, which aren't audited by PIB, have been a lone bright spot for the company.) Mr. Callahan clearly has his work cut out for him; the rest of the industry may simply choose to avert their eyes or utter a heartfelt "Ouch."

In this article:
Most Popular