Pittman: AOL a proven seller of subscriptions

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[Southampton, Bermuda] America Online President-Chief Operating Officer Bob Pittman was hustled off, rock star style, to his plane mere moments after dazzling the American Magazine Conference with a talk on convergence.

But on reflection, wisenheimers prowling the hotel lobby where Mr. Pittman spoke pointed out that, for all of his powers at the podium, he'd said little more than his standard spiel. Evidence: His suddenly outmoded warning to publishers that venture capitalists lurk with millions ready to bankroll potential online competitors.

Mr. Pittman, who will be co-chief operating officer of the soon-to-be-merged AOL-Time Warner, made news nonetheless, with pronouncements that Time Inc., Turner Broadcasting and AOL share only four of AOL-Time Warner's top 300 advertisers. And in a five-month test, AOL sold 500,000 subscriptions to Time Inc. magazines; of those, 95% were paid for via credit card and 50% were evergreen -- or automatically renewed until customer cancellation. An impressive evergreen figure, but shortly afterward Time Inc. Chairman-CEO Don Logan said "I want more. We've got to get that higher."

Standing nearby, Rick Smith, Newsweek chairman and editor in chief, waxed less optimistic on the future of circulation, predicting widespread rate base cuts in the near future. But, he warned "this is such an ego-driven business" that publishers won't leap to make such moves. He implied that bottom-line pain at propping up falling circ will need to be felt first.

Perhaps with antitrust concerns over the still-unapproved AOL-Time Warner merger in mind, Mr. Pittman said AOL would continue to have relationships with and sell subscriptions to Hachette Filipacchi Magazines' titles and Business Week, among others. And Mr. Logan said AOL-Time Warner would "not really" combine the formidable customer databases of AOL and Time Inc.

Mr. Logan spoke at length about the company's $475 million purchase of Times Mirror Magazines, "a full price," he admitted. While he said he expected some consolidation as the magazines merge, he dismissed concerns about layoffs by citing Time Inc.'s track record. Time Inc. and Times Mirror's current management will decide what cost savings are likely.

Confirming a concern expressed by many other Times Mirror bidders, Mr. Logan admitted the titles' circulation profits "were not up to the standard of Time Inc., and we may not get them there."

Mr. Logan made future acquisitions sound certain, pointing out that Time Inc.'s goals this year of $800 million in operating profit and maintaining growth rates -- which averaged 13% over the past nine years -- mean "We've got to find" $100 million in additional profits each year.

One dealmaker at the conference suggested the Times Mirror deal will remake the way the company looks at acquisitions, and that more aggregations of smaller, more targeted titles -- by Time Inc.'s mass-oriented standards, that is -- may follow.

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