G&J shops services

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Grasping for opportunity in the struggling magazine environment, Gruner & Jahr USA Publishing is shopping to rival publishers the use of its back-office services, including circulation, manufacturing and information technologies, for a fee.

G&J declined to identify the companies targeted for the effort, aimed at pooling resources and leveraging the resulting scale. But it's known to have approached American Express Publishing Corp., Hachette Filipacchi Media U.S., Miller Publishing Group and Ziff Davis Media.

Thus far, G&J's advances have found no takers, although the company's only been at it for about month.

"There is merit, which is why we'll have some conversations with them," said Bob Miller, CEO of Miller Publishing, which publishes Spin and Vibe. But, he warned, "I'm prepared to pay a premium to have that expertise in-house." A Ziff Davis spokeswoman confirmed ongoing discussions but said, "Nothing's been finalized."A Hachette spokeswoman declined comment.

The move comes in the context of a magazine economy that remains difficult: Company executives are grappling with increased profit-margin demands in times when fixed costs are significant, advertising remains moribund, and the circulation landscape remains highly challenging.

"The main thing is taking on a couple of publishers as clients to provide these kinds of services," said Dan Rubin, G&J's senior VP-business development and strategic planning, and the point person for this effort. He characterized G&J's pitch as "we can give you scale that you don't have."

"Let's say we do this for Publisher A, so they don't provide these types of services anymore" continued Mr. Rubin. "There may be some talent there we can fold into our operation" to "enhance the service we provide ourselves," as well as bulking up G&J's scale in these areas as well.


Approaching American Express Publishing is an interesting move, given its management contract with Time Inc., although American Express handles many back office functions on its own. Both Mr. Rubin and Dan Brewster, president-CEO of G&J, are Time Inc. veterans. Mr. Brewster arrived at G&J after serving for eight years as president-CEO of American Express Publishing. But talks between these companies appear finished. American Express did not return calls for comment.

The move befits Mr. Brewster's ambitious plans for the company, as well as his pride in the staff he's assembled up top at G&J, which include many former Time Inc. colleagues. He came to the company nearly two years ago with marching orders to double the size of the $420 million company, and he's repeatedly invoked the need for scale in order to survive the current media landscape. G&J, 74.9% owned by Germany's Bertelsmann, is the No. 12 U.S. magazine publisher with such titles as Family Circle, Rosie's and Fast Company, according to Advertising Age data.

One industry executive familiar with G&J's approaches strongly questioned the wisdom of the company's notions. "With the big companies, there's virtually no economies of scale to be achieved," the executive said. Aside from monies saved by cutting a few positions, the executive said, the benefits are negligible, and companies lose people who specifically worry about, say, specific titles' newsstand performance and placement.

Mr. Rubin pointed to his past presidency at Time Inc.'s newsstand units Warner Publishing Services and Time Distribution Services and experience with handling outside clients through them.

"It's not easy," he conceded. "But based on that"-meaning his prior experience-"I know it's doable."

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