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There are a lot of changes ahead in the publishing world in the fourth quarter.
Reeling from an unprecedented downturn in advertising revenue, declining newsstand sales and growing competition from the Internet, magazine publishers are reshaping for the new era — and are expected to unveil their strategies in the coming months as they prep their businesses for 2010.
On Monday, Condé Nast revealed plans to close Gourmet, Cookie, Modern Bride and Elegant Bride magazines, with the loss of about 180 jobs, after the firm hired consultants McKinsey & Co. to evaluate its business and find ways to increase profitability across its magazines and Web sites.
“We asked [McKinsey & Co.] to focus on properties that have the greatest opportunity to improve contribution” to the company, said Charles Townsend, chief executive officer of Condé Nast. “I would say this: As it relates to these four, McKinsey provided us with a confirmation that these properties weren’t going to be profitable.”
The changes come as the industry has lost a quarter of its ad page revenue in 2009 during the crippling recession, and follow closures and budget cuts throughout the sector, including Blender, Domino, Country Home, Condé Nast Portfolio and Best Life. Media research firm ZenithOptimedia predicts ad spend will drop 15 percent in 2009 versus 2007, to $49 billion.
Townsend stressed Condé Nast wouldn’t close any more titles. “This is it on magazine closures,” he insisted. “I have very viable businesses in the portfolio now.”
That said, further reductions lie ahead as magazines are being asked to cut up to 25 percent of their costs for their 2010 budgets, which are due in 10 days. These cuts are expected to include everything from staffing to car service, freelance budgets to photographer rates to frequency changes at several magazines. Multiple sources also said further closures could happen next year as up to a half-dozen titles are being monitored closely to see if they can undergo a turnaround within the first half of 2010.
“As decisions are made, we will make nuanced changes in the remaining properties,” Townsend said. As he explained in his memo to employees Monday morning: “The review has led us to a number of decisions designed to navigate the company through the economic downturn and to position us to take advantage of coming opportunities.”
But Condé Nast is not alone in finding ways to right-size its business as publishers from Hearst Magazines to Time Inc. to Rodale make adjustments. McGraw-Hill is looking to sell its flagship title BusinessWeek, with the latest speculation a buyer of the weekly business magazine would retain the name and Web site, but operate with a smaller staff. Meanwhile, speculation has resurfaced about Hachette Filipacchi Media U.S. shopping Elle, with the Paris-based publisher said to be looking for a licensing deal with either Hearst or Time Inc. Hachette in the U.S. continues to deny it is looking to get rid of the title.
And the rumor mill has long been churning that Time Warner might sell its magazine properties at Time Inc., though ceo Jeff Bewkes firmly denied Time Inc. was for sale at an Atlantic magazine forum last week in Washington, D.C. “The magazine business has plenty of expansion in it,” Bewkes said Friday. “You do have to think carefully about how celebrity magazines like People, and news magazines like Time and [sports publications] like Sports Illustrated are going to evolve as they move, and add not just print versions but Internet-based versions.”