With Major US Magazine Publishers Time Inc. and McGraw-Hill Making Savage Job Cuts The Signals Are Clear – The Difficulties Magazines Faced in 2005 Are Just a Taste of What to Expect in 2006

Before Christmas Time Inc., the largest US publisher announced 105 layoffs, some of them at senior level including the Time Magazine President Eileen Naughton, Richard Atkinson, the executive vice president in charge of the company’s news and information group, Jack Haire, head of the company’s corporate sales and marketing group. Some 20 journalists went, including the bureau chiefs in Beijing, Moscow, and Seoul, (the cost of expatriate journalists these days is something no decent accountant will overlook), but the feeling was that editorial escaped in relatively good shape.

ftm background

Which Magazine Would You Buy If the Cover Showed: (a) British Chic Personality Liz Hurley, 40, Shown Full Length Modeling A Bikini, or (b) Facial Shot of American Actress, Jane Fonda, 67, Wrinkles and All?
The headline to this story is not meant to be sexist. It’s a real choice. See the cover pictures below. And that type of question is increasingly being asked at many big name magazines. Do you need sex to sell, or can the face of a 67-year-old star on the cover of a magazine read mostly by females over 30 do the job?

Germany’s Privately-Held Bertelsmann, Virtually Debt-Free, Spends Some €1.5 Billion on Mostly TV Acquisitions This Year and Still Has Another €500 Million to Go
Bertelsmann, the world’s fourth largest media company, has been busy this year investing its €2 billion war chest on such diverse entities as an automobile magazine publisher in Europe to CD direct seller Columbia House in the US, while at the same time getting out of the US magazine business, but it is its investments in the European television market that attract the most attention.

Gruner + Jahr May be Europe’s Largest and Most Successful Magazine Publisher, But Its US Operation Was An Absolute Disaster That Severely Tarnished the Brand. Its Solution -- Hold A Fire Sale and Then Get the Hell Out of Dodge City
In announcing its sale of Family Circle, Parents, Fitness, and Child to Meredith Corporation for $350 million – about half of what they should have gotten if the magazines had been well looked after -- Gruner +Jarhr has finally given up the ghost of its US magazine operation. If it can’t sell its two remaining properties, Inc. and Fast Company, by June 30 then Meredith will take them on and sell them probably in an auction.

The Newsweek Debacle: Whatever Happened to the Rule That Before Something Got Printed It Had Two Reliable Named Sources?
Ever since the global revulsion to the Abu Ghraib prison scandal in Iraq the media has been aware that particularly in the Moslem world they take their religion and customs very seriously, and when American wrongdoing towards Moslems is uncovered it’s going to cause very serious consequences. That doesn’t mean that such events should not be reported, but it does mean extra care needs to be taken to ensure such reporting is correct.

SanomaWSOY, Axel Springer, Ringier, WAZ and Handelsblatt Expand, Consolidate East European Operations. Lagardere Looks to US Hispanic Market.
The announcement by SanomaWSOY of its €142 million takeover of Dutch-owned Independent Media, Russia’s largest publisher of consumer magazines, marks yet another continuing step by Europe’s leading publishing houses to become dominant players on the East European media scene.

But this week Time’s London employees received a nasty shock. All 20 were asked to take voluntary buyouts and then appear before a life or death panel that decides how many really should go and who should stay, with the goal, apparently, that the editorial team be cut in half.

Already the London-based European editor, James Geary, is gone and the magazine’s Hong Kong based international editor will now split his time between London and Hong Kong (the accountants will also note that business class between Hong Kong and London is no bargain, either!).

McGraw Hill has also announced a restructuring that sees 500 jobs disappear. Among the changes are discontinuing regional print editions of Business Week in Europe and Asia.

In other magazine upheavals, G+J USA Publishing, owned by Germany’s Bertelsmann, got out of its disastrous US magazine business in 2005, principally by selling four of its titles to Meredith Corp.

Advance Magazine Group consolidated all its magazines, including Fairchild, under the Conde Nast brand. That in turn has seen senior executives leaving because they didn’t like what the reorganization did, particularly to their egos -- case in point being Mary Berner, the very well liked and respected head executive of Fairchild who previously had reported directly to the boss, Si Newhouse, but who would no longer under the reorganization, so she decided to go.

Even Fortune magazine, part of Time, Inc., has lost its own independent web site. In a boost to the CNN brand (also owned by Time-Warner) Fortune is now found as part of the CNN Money web site along with Business 2.0 and Money.

While certain niche magazines -- consumer magazines and particularly the $1.99 entertainment weeklies – are doing well (note the US launch of the UK’s OK! Magazine in the US three months ago at $3.49 a copy has been a flop at around 100,000 circulation weekly so starting in mid-February for the next six months they’re going to try it at $1.99), but for news weeklies and business magazines in particular the picture has been particularly dismal.

At Time, for instance, 2005 advertising pages fell by 12.2% from 2004, according to the Publishers Information Bureau. Newsweek was down 11% and US News & World Report dropped under 1%, but all those numbers are in stark contrast to 2004 figures over 2003 when the magazines enjoyed double digit advertising page increases.

Time Inc. also had problems with several other popular titles. Sports Illustrated was down 18.5%, Fortune down 10.3% Entertainment Weekly down 6.4% and Money 2.1%. But its blockbuster, People, was up only 6.4%, substantially under the 38.4% gain by In Touch, or the 10% gain by Us Weekly. .

Those page drops are the clearest signal that advertisers are diverting their spend elsewhere – principally to the Internet. And it is difficult to find anyone in the advertising forecasting business to suggest that things will get any better in 2006.

Reinforcing that is a recent survey of Fortune 500 company chief marketing officers who acknowledged they had dropped ther November, 2005, magazine spend proportion down to 15% from the 22% spent on the sector in September.

And as if magazines don’t have enough problems with circulation stalling – a lot of people are drifting to read those same magazine stories on the Internet -- and the advertising spend down, the new year brings an additional cost of some $180 million from a 5.4% increase in US postage rates, let alone what the increase in the cost of paper will be.

And even the cost of getting subscriptions is on the rise with the costs of direct marketing going up and the returns still very low. But there is a cheap way to get subscriptions. That very same Internet that is carrying away customers and advertisements provides a very simple platform to promote subscriptions. And for those who don’t like reading paper any more there are always digital versions that can be delivered to desktops.

So with all of that doom and gloom are things really so bad. Earnings and future projections may not be as high as Wall Street wants to see, but given that Time Inc.’s ad revenue was said to be about $100 million higher in 2005 than it was in 2004, then all things are relative.

But with Wall Street always looking to the future, Time and McGraw-Hill’s actions would indicate tougher times ahead.

More Jobs Go At Time Magazine, And It Closes Its Canadian Bureau - April 18, 2006

Time Inc. has fired about 250 employees this month, bringing the total to some 455 employees since December as the magazine advertising outlook still looks bleak. Auto advertising in particular was weak last year, and a possible GM bankruptcy if Delphi goes on strike would hit the magazine hard. Time Magazine gets more auto advertising than any other US magazine.

In another cost saving move Time Magazine is closing its Toronto news bureau leaving no full-time news correspondents in Canada. Business operations will remain.

The company this month cut 250 mid and junior-level publishing positions across consumer marketing, production, public relations and sales at magazines such as Entertainment Weekly, In Style, People, Fortune, Time, Sports Illustrated, Essence, and at Time4 Media.

"As Time Inc. continues to evolve to a multiplatform media company, we're looking to run our business more efficiently and effectively re-allocating our assets and investing in areas of higher growth," a spokesperson said. The company is said to be looking to add 50 staff to its online operations.

More Firings At TIME Inc. - January 31, 2006

TIME Inc., is firing another 66 employees, 26 of them non-guild editorial, and an unknown number of guild employees – thought to be around 30 – have been offered voluntary redundancy packages.

A company spokeswoman said that when all was said and done no more than 100 employees would go, and that no other firings were foreseen. These dismissals follow more than 100 in December.

Apart from the editorial employees, some 40 business unit staffers are among those being forced out.