Stressed Publishing Execs Address 'the New Realities'

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NEW YORK ( -- Business Week editor in chief Steve Shepard, moderating CEOs on
Photo: Doug Goodman
CEOs on stage discuss the 'New Realities.'

today's American Magazine Conference panel "Managing the New Realities," opened the talk with a disclosure about the situation at his own title.

"We came off five great years," he said, citing steady ad page growth: 4,000 pages in 1998, 5,000 pages in 1999 and 6,000 pages in 2000.

'It ain't pretty'
For 2001, he said, ad pages looked likely to be around 4,000 -- and profit levels would drop to lows not seen since the recession of 1991. "It ain't pretty," he said.

His forthrightness was refreshing but somewhat foolhardy, as no other panelist -- Steve Florio, president-CEO of Conde Nast Publications; Jack Kliger, president-CEO of Hachette Filipacchi Magazines; Tom Rogers, chairman-CEO of Primedia; and Martha Stewart, chairman-CEO of Martha Stewart

Living Omnimedia -- dared detail their own woes in such depth.

Throughout the panel the strain of the year was clear in its executives' words and the tension sometimes flitting across their faces, tension occasionally broken by "inside baseball" jokes and verbal horseplay.

Pointed questions
Or perhaps it was Mr. Shepard's pointed questions that caused the tension. His opener to Mr. Florio -- following an introduction in which Mr. Shepard said company revenues were "thought to be" around $1 billion and profits "thin or nonexistent" -- made mention of a recent e-mail exchange the two had shared.

"Does business suck, and, if so, what are you going to do about it?"

"Who writes this stuff for you, Steve?" a mock-incredulous Mr. Florio said.

Photo: Doug Goodman
Conde Nast Publications President-CEO Steve T. Florio said the economy 'does indeed suck.'

"And by the way, where did you get your profit figures? I've been trying to figure that out for years."

"It does indeed suck," Mr. Florio said. "Whattaya do?"

Burdens of corporate culture
One answer to that question was surprising, considering it came from the CEO of the industry's legendarily lavish glamour center. "We're burdened with a corporate culture that goes back to the turn of the century," Mr. Florio admitted, but he added that the current environment allowed him "to look at cost controls and, at last, implement cost controls."

(Following the closing of Conde Nast's Mademoiselle, one company employee joked that cutbacks in company-comped car services meant many staffers were left at a complete loss in how to get around the city.)

In addition, Mr. Florio said he had "put together a real profit-and-loss budget, which will come as a shock to everyone in this room."

Martha, the 'Big Mom'
On more serious matters, like that of soothing scared staffs in light of the

Photo: Doug Goodman
Martha Stewart said she's 'Big Mom' to her employees.

attacks on America, bomb threats and anthrax scares, such wisecracking ceased. Ms. Stewart said in such times it was crucial for top executives "to listen, care for [staffers] concerns. Be a mom. I look at myself as Big Mom."

Ms. Stewart told the panel she was thinking of starting a new magazine -- "I'm not going to tell you the subject" -- and that an upcoming one-shot, single-sponsored issue of Martha Stweart Living by Hewlett-Packard on the theme of living with technology was coming up shortly (such one-time issues are how her company frequently tests potential launches).

All the same, her publishing operations will be "up in pages but down in revenue" this year.

Messy curtains
She also said the stay-at-home trend spoken of in the wake of the attacks would increase the demand for her company's products, as the new breed of stay-at-homes would begin looking around them and say, "Oh my God -- my curtains are a mess! Oh! What will my friends think?"

Mr. Rogers, whose company recently has come under tough press coverage, pointed out that what he called "the guts" of his company -- its stable of heavily niched "enthusiast" titles -- was "actually doing quite well." Such titles, he said, made up two-thirds of the company's ad revenue streams.

"It may not sound as if it's credible," he conceded, and further added that business-to-business and brand advertising was "not in good shape." But he also said endemic advertising actually grew in the last media recession.

$2 billion in debt
As for his company's battered stock -- by late afternoon Tuesday it stood at $1.89, well off its 52-week high of $16.50 -- Mr. Rogers spoke with greater candor than he had recently, saying it was "a function of being a media and Internet" company in the current environment.

Speaking to the company's twisty financial structure, he said being "a complex financial being with $2 billion in debt does not make you a popular place to park money" in current times.

Mr. Kliger, once a vice president under Mr. Florio, endured some ribbing from his former boss. "You remember Mr. Newhouse, Jack?" he asked, referring to Conde Nast Chairman Samuel I. "Si" Newhouse. "He speaks fondly of you."

"At last," sighed Mr. Kliger.

Choice: people or pages
Speaking for his present and future, Mr. Kliger admitted that "fairly low revenue [growth] over the next few years" -- an ominously long time for a battered industry -- led him to look more carefully at costs.

"Do we need the same number of people to produce editorial pages? How many [were used] five years ago? If it's a choice between people and pages," Mr. Kliger said, "I'll do something about the people."

Of all the panelists, Mr. Kliger spoke the most expansively of the need for change within the industry, whether for magazines to begin thinking about ways to syndicate their content as broadcast TV does, or if the industry needs to "change its model" and stop being "too dependent on ad revenue."

Following the panel, Mr. Florio jokingly confronted Mr. Shepard outside the conference room. He told the moderator that his questions were along the lines of the "Frank Campbell, we're-all-gonna-die" variety -- referring to a well-known funeral home on Madison Avenue.

A grinning Mr. Shepard joshed the CEO right back: "I had to be honest and blunt, because you guys aren't."

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