Memo Pad: Ouch, It Hurts... Holy Smokes...

Magazine publishers are already feeling the pinch from fears of a recession ¿ and many observers expect things to get worse before they get better.

OUCH, IT HURTS: Magazine publishers are already feeling the pinch from fears of a recession — and many observers expect things to get worse before they get better.

George Janson, managing partner, director of print for Mediaedge:cia, predicts it will be a challenging year, with perhaps minor growth in packaged goods. "If there is any overall growth, it will run between 0 and 2 percent," he said.

Deutsche Bank also maintains a cautious view on the prospects of consumer magazines this year. It expects revenue performance to continue to be constrained since structural pressures remain in key sectors, including automotive and men's lifestyle. According to a report from the bank last month, online revenues are growing quickly but aren't enough to offset erosion elsewhere in the business. "We believe the recent Emap consumer magazines sale for 9.5x EBITDA, compared with an average 11.3x EBITDA M&A multiple for the industry, is a clear indicator of the pressure on consumer magazine asset values at present," the report said.

Retail advertising is turning into a sore spot for many magazines — so what do fashion titles do when one of their key ad categories is down? Focus even more on luxury, it appears.

Valerie Salembier, senior vice president/publisher at Harper's Bazaar, said she just returned from Paris and the only concern she heard was how retail was going in the U.S. She added that, so far, the magazine has experienced no losses from luxury advertisers. Donna Lagani, senior vice president and publishing director at Cosmopolitan, agreed retail continues to be a tough category for the magazine, but added her ad base is diverse enough to offset a downturn in spending.

"If you read the papers, you see that retail is awfully vulnerable because of the comparable-store sales," said Lagani. Still, Kohl's, J.C. Penney, Sears and Wal-Mart are all advertising in Cosmo. "We don't have the reliance on the retail sector as other magazines with whom we compete. We've expanded in technology and packaged goods. There's a lot of money in that stuff." And the Hearst title is also picking up business that would normally go to TV, at least temporarily, thanks to the writers' strike: "One is a beauty client, two are packaged goods," Lagani said.
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