Snicker. "Read the papers, pal."
At midyear, magazine publishers sit stunned, walloped by a worse-than-expected ad downturn-and that's just the beginning. Add on ever-worsening circulation scenarios, a 9.9% postal increase, a 2.6% surcharge coming into effect in July, even bigger hikes threatened next year, and no ad recovery in plain sight and you get a sense of the anxiety and uncertainty gripping the industry.
Magazine executives foresee a turnaround at some point next year. But that's based more on hope than hard evidence.
"The overall feeling is that there's no money out there," said a Time Inc. executive, who requested anonymity for directly contradicting AOL Time Warner CEO Gerald Levin's public statements that the ad slide has stabilized: "I don't see it," the executive said. "Right now [the third quarter] looks worse than the second."
No matter where the slide ends, executives all but unanimously agree the speed and depth of this year's trough came much faster than any in recent history. That speed and certain underlying economic factors-a still-healthy housing market, low inflation and unemployment, consumer confidence holding up reasonably well-lead many to muse aloud that perhaps an uptick will come just as quickly.
Till then, though, there's the rest of this year to get through.
One observation remains constant. Advertiser bookings continue to come later than ever, thus making clear viewing of later-year prospects impossible. "There's every sign that this will continue through the end of the year," warned Valerie Muller, VP-director of print services for Grey Global Group's MediaCom, New York. "I still have things on the books for the fourth quarter, and I don't know if they're going to run or not."
Meanwhile, the shibboleth some publishers clung to during the tough sledding of early 2001-a second-half pick-up-has turned to dust. "I don't see any reason to assume the second half will be better than the first half," said Dan Brewster, president-CEO of Gruner & Jahr USA Publishing, who'd doubted second-half surge scenarios.
The drivers are simple. Philip Morris Cos.' cigarette brands exited over forty magazines late last year. Dot-com business evaporated (International Data Group's weekly Industry Standard, No. 1 in ad pages for 2000, ranked No. 17 through May). And domestic auto continues to be slow, said Jack Kliger, CEO of Hachette Fillipacchi Magazines, which publishes Car and Driver and Road & Track. "All I'm looking for is for things not to get worse" for automotive this year, Mr. Kliger said, to "muddle through and start picking up next year."
Through May, according to Publishers Information Bureau, overall U.S. magazine ad pages are down 9.4%. Automotive pages, the industry's second-largest category for volume, are down 9.4% as well, and that's coming off a weak year in 2000.
Executives all over sing a similar song: Domestic auto is tough, imports better; beauty and fashion appear to be holding up (beauty and cosmetics pages are up 13% through May), as are packaged goods; cigarettes and dot-coms are essentially gone forever.
Looming, too, for publishers is a nasty fight over postal rates. In response to the prospect of postal rates rising up to 30% next year, in mid-June the Magazine Publishers of America sent a letter to members saying it needed an additional $1.5 million for lobbying this year, of which the MPA will kick in $500,000.
The letter warned that such a postal increase, should it be proposed and approved, would cost the industry between $500 million and $600 million a year. Not the kind of news you want to hear as the revenue picture dissolves.
The upside, in the eyes of one industry vet? "People do believe there will be a recovery," said Mark Edmiston, managing director of AdMedia Partners. "It's not like the early eighties, where it was flat for years."
But Mr. Edmiston added he did not believe the forecast of Robert Coen, senior VP of Interpublic Group of Cos.' Universal McCann. Noted forecaster Mr. Coen tweaked his ad-spending outlook in June to show magazine revenues growing 1% in 2001.
This year, Mr. Edmiston said, "will be negative."