Corporate America's Woes May not Pull in Readers

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NEW YORK ( -- What the business cycle giveth, the business cycle taketh away. And few understand that as well as the business magazines.

The big three of Forbes, Fortune and McGraw Hill Cos.' Business Week have seen two consecutive January through May ad-page declines topping 20%. Now they also face an environment when key assumptions underpinning American business are thrown into question by day-to-day events:

Companies will state results fairly (oops -- hello, Enron and Worldcom). Auditors will do their jobs scrupulously (oops -- hello Arthur Andersen), as will analysts (oops -- hello New York State Attorney General Eliot Spitzer, hot on the trail of Merrill Lynch). And CEOs are the new celebrities of the new era (but suddenly Martha Stewart and Tyco CEO Dennis Kozlowski are getting famous for other reasons).

Bad news, great journalism
This may make for great journalism -- which can drive circulation, albeit less than some would like to think -- but the unceasing drumbeat of down news is wearying the audience, confess executives.

"It does depress demand for business news and information," said Chris Poleway, president of Time Inc.'s Fortune Group. For readers, "it just

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becomes a not very pleasant experience."

For the last half of '01 -- before the above situations were apparent -- the best newsstand performance of a key business or personal finance title was Business Week, which was off 8%. Forbes and Fortune newsstand were off 34%and 23%, respectively; four of the big personal finance titles -- Time Inc.'s Money and Mutual Funds, Hearst Magazines and Dow Jones' Smart Money and Kiplinger's Personal Finance -- were all off more than 20%.

Mired in a downturn
Overall circulation was healthy, though, and the newsstand situation won't last forever. "Readership will rebound quickly when there's a turnaround," said Chris Lambiase, president-CEO of Smart Money. But that gets at a deeper problem than the casual reader's waning interest. Other magazine sectors see hints of a recovery, but business titles remain mired in a downturn.

And, while some business magazine executives voice the first hints of optimism, those close to the purse strings of the companies who floated them in the boom are quick to dash it.

"We at Carat are not seeing any pickup in core business [magazine] categories," said David Verklin, CEO of Aegis Group's Carat North America. "There's no money in technology, very little in financial services, very little venture capital money running. ... I'm not seeing any recovery."

"If we can hold steady with bookings," said Geoff Dodge, associate publisher and ad director of Business Week, which has taken a relatively (underscore that word) bullish outlook for the category, by yearend "we will build back to levels we saw last year." Business Week finished 2001 at 3,785.6 ad pages, down 37% from 2000's record-breaking 6,005.7. That brought it to levels not seen since 1994.

And Business Week's declines are not even the worst in the category. That distinction goes to Forbes, down 38.6% for '01 and down 39.1% through May. (Jim Berrien, president of the Forbes magazine group, attributes this to the company cutting back on special ad sections.)

No more boomtimes
Like the business-minded they cater to, the business magazines are still adjusting to a more finite post-boom world. "You're talking about '96 page levels" when the recovery comes, Verklin said. "There's no way it's going back" to the highs of '99 and 2000. "There's just not enough volume in the marketplace," he said, citing factors ranging from the tech implosion to banking's consolidation.

Will the business magazines ever see boom-time page levels again?

"Not for a long time," said Business Week's Dodge.

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