In the past year, the U.S. consumer magazine industry has been reshaped in ways that will impact the industry for the next decade. This summer, there were leadership changes at all four top consumer magazine publishers – Time, Inc., Hearst, Meredith and Condé Nast.
First, David Carey of Condé Nast was tapped to succeed Cathie Black as President of Hearst Magazines (Cathie was elevated to Chairwoman). When David left his position at Condé Nast, Bob Sauerberg was promoted to President of Condé Nast (Chuck Townsend gave up that title, but retains the CEO title). Then, Jack Griffin, President of the National Media Group at Meredith, announced he was leaving. He was replaced by Tom Harty. And, now Jack is replacing Ann Moore at Time Inc. as CEO (Ann will remain Chairman until the end of September, then Jack will assume that title as well).
Also, in the past 18 months, several venerable magazine brands have been sold for nominal prices or shut down.
Weekly news and information magazines like Newsweek, BusinessWeek and TV Guide were sold for shockingly low prices, ranging from just $1 to $5 million. And, each of the top four consumer magazine publishers closed prominent, long-standing magazines. The most notable was Gourmet, which Condé Nast shuttered after 69 years of publication. Time Inc. closed Southern Accents (published since 1977), Meredith closed Country Home (published since 1986) and Hearst closed CosmoGirl (published since 1999).
Not that long ago, TV Guide and its related properties were worth $3 billion and McGraw-Hill reportedly turned down an offer of $1 billion for BusinessWeek during the past decade.
So, what’s going on? In the 30 years I have been in and around the magazine industry I have never seen changes of this magnitude over such a short period of time.
First, the consumer magazine industry has just suffered through a severe recession that created a great deal of pain for 90% of the industry. Most consumer magazines saw revenue declines of 30%, or more, as advertising budgets were sharply reduced. When revenues decline that precipitously, it is hard for the expense-cutters to respond quickly enough to have much impact. Overnight, profitable magazines became unprofitable.
Second, the Internet is starting to wreak havoc for the media properties that are not transitioning quickly enough to digital business models.
The declines in revenues and profitability from the recession along with the impact the Internet is having have finally aroused the magazine industry to action. New leadership is in place and with it, a new way of thinking about the challenges ahead.
Over the next five years, I think the consumer magazine industry will continue to see unprecedented change. I am already seeing it. Just last week, a CEO told me they no longer think of themselves as magazine publishers because to do so is too limiting. They now see themselves as producers and sellers of content and products. Another CEO told me that his company is outsourcing its circulation department because “circulation” is no longer a critical function. It is now hiring experts in e-commerce in place of circulation executives.
The magazine industry has great opportunities ahead as long as it is willing to re-imagine its way of doing business. As new business methods are tested and confirmed, the industry will regain its footing and be in a position to prosper again.
Reed Phillips co-founded DeSilva+Phillips in 1996 and has completed more than 175 transactions during the past 18 years with companies such as Capital Cities/ABC, Inc., Condé Nast, Dow Jones, IDG, The New York Times Company, Primedia, Time Inc., and more. He is the winner of the “2007 Media Deal of the Year,” presented at ACG’s InterGrowth Conference by Mergers & Acquisitions. He was founder of Fathers magazine, Associate Publisher, The New Republic, Vice President, The Washington Weekly, Circulation Director, The Washington Monthly.