Can You Believe It? More Cut Backs — Mediaweek

I’m starting to feel seriously relieved that I am no longer working at Conde Nast. I loved it there, but jeez it’s just bad new bears every day from that place. I can hardly find anything else to write about except for cut backs all across the board. So let’s talk about it. Typical formula here — ad spending is done, so let’s get rid of some staffers. For the most part its on the sales and marketing, rather than the editorial side. Last week, Conde Nast Media Group let go of 20 people, which accounts for a decently-sizable 15% of its staff. The big cut on the corporate side derives from the cessation of large-scale,  cross-platform deals that those sales departments were in charge of.

Hachette Filipacchi Media has also let go of 3 staffers in the consumer marketing department, while Alpha Media Group seems to be looking to consolidate positions to stretch the staffers they do have. Blender publisher Ben Madden has quietly taken on double duty as group publisher, adding sales responsibility for Maxim. Maxim is an interesting case, since the top spot at publisher has been open since the magazine was acquired by Alpha earlier this year.

Both Bledner and Maxim have been hit hard in this economy, but Blender has taken a particularly rough beating, so much so that it is switching from perfect binding to staples. It’s that thin kiddos!

 

Freelancers Fight For Their Right to Write — FOLIO

The decision by the Reader’s Digest Association to populate much of its editorial space in two new publications, Fresh Home and Best You, with repurposed content from other RDA titles abroad, has a small group of American freelance writers up in arms. These freelancers have decided to boycott these publications since they claim that the decision to repurpose content reduces the working opportunities available to them.

The informal spokesperson for the freelancers group, Meg Weaver, believes that RDA’s claim that these two new publications would not have been able to launch without the repurposing policy is bogus. She claims: “This didn’t ring true to me, as writing fees have become miniscule compared to the budget of a 300,000 circ magazine.  So, I asked for clarification and, eventually, received an answer, which basically said: We don’t care where we get our content.”

While Weaver’s paraphrasing of the response from RDA may be a bit blunt, and thus self-serving, I doubt it’s completely off base. While Weaver may be right that a freelancer’s fee may be miniscule, in the current economic climate every single penny counts, especially when the company has shown signs that it is in trouble. As is the case with RDA, which recently reported that it has hired law firm Kirkland & Ellis and financial adviser Miller Buckfire to explore restructuring options, including a possible bankruptcy filing.

Thus, who can really blame RDA for utilizing its resources, and using original content from its international publications as a means of providing readers with new titles? It’s highly unlikely that readers of Fresh Home and Best You will have already read the repurposed content in its original context, so its not as though the reader will be jipped. This may be upsetting to freelance writers, but RDA doesn’t really have an obligation to serve writers, but it does have an obligation to serve its customers: the readers.

Not that I don’t feel bad for the writers. Hey if they can’t find a job they might up like this guy:

 

Ellen Grabs Attention … But Not Cuz She’s Gay or Funny — AdWeek

Ellen DeGeneres graces the cover of the March issue of Ladies’ Home Journal, and then we get to see her again as soon as we open the magazine in a 2-page ad for Cover Girl, which is then mentioned in the editorial copy of the DeGeneres story as well as credited with the cover photo. Quinky-dink? I think not.

And clearly I wasn’t the only one who thought that there might be some funny business going on at LHJ because the American Society of Magazine Editors got involved, suggesting that pay-for-play stratgies might be in effect. The organization has a set of voluntary, yet generally-accepted guidelines that specify that ads containing products should not run next to editorial pages that mention those same products. This is set up so that readers can have some trust in what they read in a magazine’s editorial content — they want to know that they should buy a product because a well-informed writer (hopefully) with lots of industry experience did his or her research and determined the product was worthy of purchase. What a reader does not want is to be told by a writer that a product is awesome because they were put under pressure by their publishers to hype products made by companies that support the magazine by buying its ad space.

Despite concerns voiced by several members of the ASME, its CEO, Sid Holt, concluded that the issue of LHJ did not violate the organization’s guidelines. This was a tricky case because the guidelines do not say anything about the placement of people images, only products. Therefore, since DeGeneres in not the advertised product in the Cover Girl ads, no violation could be reported. However, Holt did remark that the ad’s proximity to the cover, nature of that photo and advertiser’s mention in the story create an unfortunate combination.

However, this kind of under-the-table promotion is nothing new in the industry. While most magazines aim for truth in their editorial content, the implicit pressure to maintain and increase ad revenue is always alive, and can’t be overlooked. Especially in this economic and advertising climate, magazines are feeling this pressure more than ever. While the ASME guidelines state that “Advertisers should not pay to place their products in editorial pages nor should they demand placement in return for advertising,” it stops there.

There is no way to truly police pressure, and it basically comes down to individual decisions for each magazine, and unfortunately advertisers’ products are given editiorial preference all the time. Having worked in  public relations for over a year, I have witnessed this first hand. I will not mention specific brands, but there have been many times when I have been told by an editor: “We love this new product you sent us, but the brand is small and we really have to keep our big advertisers happy right now, but we will keep this in mind.” As a publicist with a fantastic new product that has yet to make a big name for itself, this kind of statement is utterly diasppointing and incredibly frustrating, yet it’s hard not to sympathize with the writers who are just trying not to bite the hand that feeds them.

The ASME is taking note of this as well. They recognize that given the punishing ad climate the pressure “to devise ad treatements that blur church and state lines” is rising to almost unbearable degrees. Therefore they have conceded that they have not kept pace with the evolving industry standards, and plan to release a new set of guidelines by September.

 

A Trio of TaTa’s (One Just For Now) — Mediaweek

Another three publications said farewell this week in the face of plunging ad sales: Best Life, Travel & Leisure Golf, and Scottsdale magazines. The mature men’s lifestyle pub, Best Life, published by Rodale, shut down after just 4 years in production. The mag targeted 40-plus men with well-rounded interests: a.k.a wealthy middle-aged men that had babies and big bank accounts. It was doing well through 2008, growing in size and bringing in 88 new advertisers, but was unable to sustain this growth during the economic downturn, as has been the case with so many other publications that rely on the  luxury logos to stock its ad pages. This year through April, the mag’s ad pages have fell 38.5%, compared to 16.5% for the men’s lifestyle/fitness/outdoor category overall. The good news (wait there’s good news?) is that Rodale hopes to place 10-15 of Best Life’s staffers in other positions in the company.

The staffing reshuffle is taking place elsewhere in the pulishing world, as AmEx shuts down its niche golf publication, Travel & Lesiure Golf, after a 31.4% drop in ad pages this year was reported. And AmEx isn’t trying to cite any other reason for saying sayonara to the mag, as some others have. The mag was in the process of switching to a controlled-circulation model, and lowered its rate base from 625,000 to 500,000 as part of this move. However, it simply wasn’t enough to save the pub. However, there’s some good news in this story as well: its affinity organization, the T&L Golf Players Club, will continue and it has yet to be decided what will happen with the mag’s website and affiliated events. AmEx hopes to find a new home for some of the mag’s 18 employees as well.

Finally, Scottsdale magazine, which was acquired from the former private owner and publisher, Vicki Collins Edwards, by Modern Luxury in mid-February, will be shut down for a minimum of 6 months while it undergoes a “complete overhaul.” The publication will join the Modern Luxury ranks that now encompasses 13 controlled-circulation titles aimed at high-income residents in the country’s prime markets. The design, content, and circulation will be altered, and thus the mag’s staff of 12 has been let go until further notice. It was not reported if these employees have been given any promise of employment after the redesign. In an interesting move for a publication that is so market-specific, ML plans to replace 1/4 of the content with editorial that runs in its other titles. ML is backed by private equity, and seems to weathering the economic storm better than many other publishers, as indicated by its launch of a New York title, and acquisition of the Arizona mag in early 2009.

 

Let’s Take a Closer Look at Where Mickey Lives

The Walt Disney Company (WDC) is the second largest media conglomerate behind Time Warner. The WDC is a global company that has divided its operations into four business segments: Media Networks, Parks and Resorts, Studio Entertainment and Consumer Products. While many associate the Disney brand with its main man – well mouse – Mickey, its corporate tentacles are spread far further than cartoon characters and theme parks. When a company reaches conglomerate status the opportunities for synergy and cross-promotion abound, but unless an individual is familiar with a corporate tree, it is often difficult to spot synergy in action — don’t think I don’t know how the High School Musical kids wound up in that splashy performance during the Oscars!

Media Networks:

Possibly the most notable of the company’s media networks is the ABC television network, which has affiliation agreements with 233 local stations thus reaching 99% of all US TV households. As with most TV networks, ABC derives its revenues from the sale of commercial ad space during its programming. While some of the programming content is sourced from third-party production companies, ABC also produces much of its live action and animated content under the ABC Studios, Buena Vista Productions and ABC Family Productions labels. The WDC also handles much of the distribution of its products through its distribution companies: Disney-ABC Domestic Television and Disney-ABC ESPN Television International.

The WDC also owns nine VHF stations (6 in the top 10 US markets) and one UHF station. In addition to the broadcast networks, WDC maintains operations of cable networks, primarily those under the ESPN and Disney Channel brands. Both of these brands also have branded radio operations, which the company manages along with the cable operations. Revenue derived from the cable networks is comprised of fees charged to cable, satellite and telecommunications service providers as well as the sale of advertising space.

ESPN may be one of the company’s most diversified companies, as it operates six TV sports networks, four HDTV simulcast services, a sports web site, mobile properties, a syndicator of collegiate sports programming, a radio network, a magazine, a licensing service, in addition to having equity interests in or distribution agreements with 45 international sports networks.

The company’s Internet and mobile operations develop, publish and distribute content for online and wireless services. Websites include ABC.com, ABCNews.com, Disney.com, ABCFamily.com, SOAPnet.com, ESPN.com, ESPN360.com and Disney’s Club Penguin. ABC.com, the official website of the ABC TV Network was one of the first of the major broadcast networks companion sites to offer full-length episodes of its programming online. The various other sites create digital extensions, creating portals to increase interactivity and provide platforms for social networking and the development of user-generated content.

Disney Mobile Studios develops and publishes content that is distributed through various mobile carriers. However, they have also developed Disney branded phone services in international markets, beginning with Japan and Italy. This division of the company derives revenue from advertising, sponsorships, subscriptions and e-commerce.
As a note, the company’s 10K report cites several specific FCC rules and policies as well as certain provisions of the Communications Act. From my perusal of the information, the company appears to adhere to the necessary provisions, but is careful to note that these regulations are always subject to change. Thus, they cannot predict how and when these changes may occur, and if and how they may affect their operations.
Parks and Resorts:
The WDC owns and operates the following parks and resorts: Walt Disney World Resort in Florida, the Disneyland Resort in California, the Disney Vacation Club, the Disney Cruise Line, Adventures by Disney and ESPN Zone. It also has effective and managerial ownership in Disneyland Resort Paris and Hong Kong Disneyland Resort, while it licenses operations of the Tokyo Disney Resort. Walt Disney Imagineering (a name I find delightful and clever) designs and develops new theme park concepts, attractions and resort properties.

It is important to note that the Walt Disney Resorts are not just your typical hotel with a few restaurants, a pool, and maybe a spa. Rather they are multi-thousand acre spreads that are home to theme parks, hotels, vacation club properties, massive retail, dining, entertainment and sport complexes, conference centers, campgrounds, golf courses, water parks as well as other miscellaneous recreational facilities.

Revenues for this division of the WDC are generated from the sale of tickets to the theme parks, stays at the hotels, merchandise, food and beverage, and rentals of vacation clubs properties and cruise vacation packages. All of the various parks and resorts properties are in operation year-round, but attendance and occupancy are subject to seasonal and economic fluctuations. In general, the numbers peak during the summer months (due to school vacation), as well winter and spring-break vacation periods.

Studio Entertainment:
This sector encompasses the production and exhibition of live-action and animated motion pictures, direct-to-video programming, musical recordings and live stage plays. Walt Disney Pictures produces and acquires live-action films that are then distributed under that company name or one of its subsidiaries: Touchstone Pictures and Miramax Film Corp. The company’s animated films are produced through Walt Disney Pictures and Pixar. The company distributes and markets its film primarily through its own companies in the US, and through a mix of in-house and independent distributors abroad. Due to the high expense of marketing films, losses are typically incurred in the theatrical market.

However, this is characteristic of the film industry in general, and what expenses are not covered through the theatrical exhibition of films is often made up in the various other ancillary markets, such as the home entertainment (DVD, Blu-ray and electronic) and television markets. Home entertainment releases typically occur 4-6 months after theatrical exhibition, while television releases typically occur 1-2 months after home entertainment.

The Disney Music Group includes Walt Disney records, Hollywood Records (made up of Mammoth Records and Buena Vista Records labels), Lyric Street Records, Buena Vista Concerts and Disney Music Publishing. These companies create soundtracks for the company’s film and TV products, as well as recordings from talent that spans a broad spectrum of pop music, while Lyric Street develops, produces and markets recordings in the country genre. The concert company produces live shows with artists that are signed to any of the Disney Music Group labels, while Disney Music Publishing is responsible for the management, protection and licensing of the contents of the Disney song catalog.

Finally, the Disney Theatrical Group includes the live theatrical performances such as Broadway musicals as well as professional touring troupes (under Disney Theatrical Productions), and Disney Live Family Entertainment, which delivers worldwide touring productions under the Disney On Ice and Disney Live brands.

Consumer Products:
This division of the company deals with the licensing of Disney characters and intellectual property to various manufacturers, publishers and retailers to create a wide variety of branded products. It also handles the distribution of these products through the brick-and-mortar Disney Store as well as the e-commerce site, DisneyShopping.com. Significant product categories include: toys, apparel, accessories, footwear, home furnishings, home décor, health, beauty, food, stationery and consumer electronics. Disney Publishing Worldwide publishes children’s books and magazines on a global scale, while Disney Interactive Studios creates, develops, markets and distributes multi-platform video games worldwide.

Risk Factors:
Even a media conglomerate as huge as The Walt Disney Company is not immune to the general economic turmoil. As consumers’ discretionary budgets are pinched, the vitality of a company that primarily provides entertainment and leisure products and services is threatened. Just as the success of the company’s products and services are tied to consumer’s wallets, they are also tied to consumer’s tastes and preferences, which are sometimes unpredictable. Changes in technology and consumption patterns are major factors; as more and more eyeballs move from movie and TV screens to the computer screen, the company must adjust its focus and capabilities in the online market. Technological changes have also led to an increase in the unauthorized use of intellectual property, which costs the company in the form of lost revenues and fees paid to ensure greater protection of the company’s properties.

I feel that the above listed factors have the greatest potential to affect the success of the Walt Disney Company, however the report included several other factors, which I have listed in bullet form below in order to be succinct yet complete in my review:

• Changes in our business strategy or restructuring of our businesses may increase our costs or otherwise affect the profitability of our businesses
• Recent turmoil in the financial markets could increase our cost of borrowing and impede access to or increase the cost of financing our operations and investments.
• Increased competitive pressures may reduce our revenues or increase our costs.
• Sustained increases in costs of pension and postretirement medical and other employee health and welfare benefits may reduce our profitability.
• Our results may be adversely affected if long-term programming or carriage contracts are not renewed on sufficiently favorable terms.
• Changes in regulations applicable to our businesses may impair the profitability of our businesses.
• Labor disputes may disrupt our operations and adversely affect the profitability of any of our businesses.
• Provisions in our corporate documents and Delaware state law could delay or prevent a change of control, even if that change would be beneficial to shareholders.
• The seasonality of certain of our businesses could exacerbate negative impacts on our operations.

 

It Might Get Nasty at Conde Nast — NYPost

The publishing giant could be showing true signs of danger for the first time. While the magazine publishing industry is seeing red nearly universally, it is Conde Nast that seems to be struggling the most. While the industry is down 24% so far in this first quarter, many of Conde’s titles are down 30% with others plunging even further with Portfolio and Wired posting drops of 60% and 57%, respectively.

Industry members are critical of the company’s relatively conservative response to the soft economy. With so many publications struggling  some argue that staffing and expense cutbacks of 5% are simply not enough. With so many publications in the luxe-class, it is not surprising that they are struggling to secure the kind of advertising they have in the past. And with a firm policy of not discounting of their rate cards (a common industry practice) it has become even more difficult to continue their relationships with advertisers who are hoarding their budgets.

There has been much shifting on the publishing side for the company in the past month, much of which has been documented on this blog. Company stalwart, Lisa Hughes, has taken on The New Yorker. Former Wired publisher, Chris Mitchell, filled Hughes post at Conde Nast Traveler, and David Carey, one of the company’s group presidents, has just added The New Yorker and Traveler to his portfolio. While fresh eyes on publications can certainly help, I wonder if it will be enough to take on the massive blow the industry has been dealt.

 

Is Hef Ready to Say Bye to the Bunny? — NYT

I heard a few weeks back from a friend that Playboy was shutting down its New York office and saw this as quite the harbinger of bunny doom, but wasn’t ready to believe it till I read it in the news. And now I have.

Everything seems to be in flux with Playboy right now. From Christie Heffner stepping down as the company’s CEO after over two decades at the post, to the move of the mag’s offices back to Chicago, to Hef’s most recent girlfriends all packing up and movin’ on out of the mansion last month. Having posted a quarterly loss of $145.7 million (up from $1.1 in the last quarter of 2007) it comes as no surprise that the company is considering serious changes.

However, what has surprised many, especially investors, is the announcement that the company is open to negotiations for sale. The company’s spokeswoman was careful to note that Playboy is only open to discussing the sale of the company as a whole, not the magazine as an entity. Yet the costs of running a stand-alone magazine are staggering, and if Playboy can’t turn this around or at least focus on licensing the publication Mr. Hefner may soon have no choice but to say goodbye.

 

Another One Bites the Dust — MediaWeek

Ladies and gents I’m sure this will hardly come as a shocker to anyone at this point, but we have another magazine that has just fallen as the newest victim of the economic crisis. Hallmark Magazine folded yesterday after just three years in operation.

As already noted this is hardly jaw-dropping news (some of you may have never known this magazine existed in the first place) but I found it interesting since Hallmark is unique in that it was shut down even amidst continuously climbing performance. The Publisher Industry Bureau reported that the lifestyle pub has doubled its rate base since inception to an impressive 800,000, and secured an 11% increase in ad pages in 2008.

Even competing against such magazine giants as Martha Stewart Living and Real Simple, Hallmark was managing to make its mark. However, the parent company is under pressure to slim down and is only focusing on projects that have the strongest potential to create long-term revenue growth for the company. Magazines simply don’t carry this kind of promise, seeing as even the most successful of publications often take 5 years to turn a profit.

 

Newsweek to Undergo Massive Makeover — NYTimes

Going “lean and mean” is a term that we have heard a lot during the past few months. Businesses are looking to get by with fewer employees, fewer ad dollars, and now Newsweek is saying that they are going to get by with fewer readers. Traditionally Newsweek took the position of covering all the most current news, regardless of whether or not the weekly publication had anything groundbreaking to add to the current discourse. However, as they look to cut costs they are taking a new quality over quantity approach. 

Editor, James Meacham, explained that no longer would Newsweek conform to the sayings: “we need to weigh in on” or “we need to take note of.” Rather, the publication will only publish stories in which they have something new and profound to say. It will move away from the 5 W’s and into more opinionated, prescriptive and offbeat commentary. The content is not the only sector of the publication that is going to experience change — the design and readership are going to get tweaked as well. 

The publication is going to look to hit a slimmer demographic with higher incomes and extensive educational background. The content and design will be tailored to this core reader base, and the price of the pub may experience a hike. However, editors and publishers are confident that this core audience will continue to subscribe/purchase regardless of any changes in price. However, the revamped Newsweek will have to compete on ground with The Economist, The New Yorker and The Atlantic.

 

Magazines Take to the Airwaves — NYTimes

Fashion mag, Marie Claire, is the latest book to open its doors to the reality TV show camera. MC follows in the footsteps of (now defunct) Jane magazine, which housed part of the plot of summer series “The Fashionista Diaries” last year, and ELLE magazine, which created a fake studio set to create a pretty picture of publishing for last season’s “Stylista.” 

MC’s show, ‘Running in Heels” will premiere March 1 on the Style Network and will follow the trials and tribulations of three interns as they try to make their way through the summer at the MC offices. I could go on and on about the show, and the personalities on it, etc. but since this is a media biz class I’m just going to say this:

I think that this speaks to the overall trend of what is happening in magazine publishing. Advertisers are getting scared, and are threatening to pull pages from the mags that they aren’t sure eyes are hitting enough. While opening your business’ doors to reality TV can be scary, it also opens up the door for greater advertising opportunities.

Advertisers that buy pages in MC (disclaimer: this was not reported by NYTimes, but I can’t imagine it wouldn’t be going down like this) are presented with packages that may buy them a mention in the show — possibly in the form of a special intern challenge. Besides ad tie-ins, the creation of this TV show gives advertisers incentive to buy in MC since they know greater attention will be paid to the magazine, hopefully as more readers start picking up this magazine, which its E.I.C., Joanna Coles, describes as “not as well known as it should be.” 

MC has been getting aggressive in its strategy since it hired Nina Garcia, formerly of  Project Runway and ELLE magazine fame, as its new Fashion Director last year. Bringing Garcia on board was not only indicative of trying to pull fans to the magazine’s pages, but also acted as a harbinger of a TV show to come. Not only is MC releasing its own show, it’s gunning to replace ELLE as the magazine partner on Project Runway. 

I myself am a MC fan, and agree with Coles that it’s under-represented in the marketplace. I’m not sure if this show will actually provide any kind of quality entertainment, but I do think it will draw readers in, and if they succeed in assuming the crucial role on Project Runway, MC stands to experience big changes in the future.