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Economics

Magazines
By the Project For Excellence In Journalism
Economics

A staggering drop in ad volume in news magazines accelerated in 2009, raising serious questions about whether strategic redesigns or cuts in circulation undertaken by many publishers would succeed.

Just one of the seven news magazines we studied managed to sell more ad pages: The Week.

U.S. News & World Report did the worst. It sold 81% fewer ad pages. That largely reflected its shift from a weekly to a monthly, but it also illustrated the cost of taking that step.1

As a group, the six news magazines studied here – not including U.S. News — saw their ad pages drop by 19%.2 That is better than the 25.6% decline experienced by all magazines tracked by the Publishers Information Bureau, which includes some publications that ceased to exist. 3 (Read more about PIB’s ad page counts).

“It’s no secret that there’s just less money out there, so even if readers react very positively to the changes, it’s a difficult time,” Scott Kruse, director for print investments at MediaCom USA, told the New York Times. “The core categories in the newsweeklies have been automotive, financial, tech and pharmaceutical, and all of those are under-delivering in a major way right now. So they’re going to have to bring in new advertisers from new categories, and I just wonder where all those ads are going to come from.” 4

Changes in Ad Pages, Selected News Magazines

Publication 2009 Pages 2008 Pages Change
All magazines 173,735.34 233,558.34 -25.6%
The Week 659.91 602.73 9.5
The Atlantic 445.67 528.71 -15.7
Time 1,447.05 1,752.19 -17.4
The Economist 1,970.55 2,468.28 -20.2
The New Yorker 1,125.11 1,478.15 -23.9
Newsweek 1,116.73 1,506.06 -25.9
U.S. News & World Report 206.98 1,109.59 -81.3

Source: Publishers Information Bureau.

Some experts also fear news magazines will not be among the boats lifted if and when the tide comes back in. As the Wall Street Journal intoned, “Industry executives believe news, business and general-interest magazines — unlike fashion and entertainment publications — are unlikely to rebound fully even after the economy is on a firmer footing.”5

Bill Mickey, group managing editor of Folio and Audience Development magazines, said a long-term shakeout is under way in the magazine industry that will disproportionately effect news magazines, especially the biggest ones.6

One reason for the pessimism is the cumulative nature of the losses:

  • Despite stable circulation, Time sold 17% fewer ad pages in 2009 compared with the same period a year earlier. This followed a 19% drop for 2008.
  • Even the New Yorker, which enjoyed gains in circulation, was off 24% in 2009, on top of a loss of 27% in 2008.
  • The Economist, which stood out in 2008 for its 4% growth in ad page sales, fared much worse in 2009. It was down 20% despite gains in circulation and impressive demographics: its readers are the youngest and among the wealthiest of the news magazines.

Perhaps the most attention was focused on results at Newsweek in response to its new focus.

Financially, the results were tough. Its ad page count was off 26% in 2009, on top of a drop of 19% for 2008.

Most publishers do not report revenue figures for individual magazines. But Newsweek, which is owned by the publicly traded Washington Post Company, does, and it showed ad revenue was down 38% for the first nine months of 2009. That is an even sharper plunge than its 26% drop in the number of ad pages sold for all of 2009 as counted by the Publishers Information Bureau.7

In the third quarter, its ad revenue was down 48%. In that quarter, the company ordered another round of staff reductions in the division but still failed to stay in the black. The Post’s magazine division – consisting of Newsweek and a travel guide — posted an operating loss of $29.7 million for the first nine months of 2009, compared to an operating loss of $27 million for the first nine months of 2008. For more on job cuts at Newsweek and other publications, go to the News Investment chapter .

Despite the results, Newsweek officials continued to express optimism for the strategic shift, one that was being closely watched in the industry. “It’s been a disgusting economy, in case nobody else noticed,” Thomas E. Ascheim, the chief executive of Newsweek told the New York Times. He said that Newsweek had driven up its per-subscriber subscription revenue and that renewals were strong.

Ascheim said he hoped the magazine could be profitable again in 2011, but that sounded like something less than a promise.8

In 2010, he said, “We expect to operate less in the red.”

Changes in Ad Pages Sold, Select Magazines
2008 vs.2009
Design Your Own Chart
Source: Publishers Information Bureau

The biggest success story financially among news magazines in 2009 was The Week.Though it has half the number of ad pages as Time, The Week sold nearly 10% more ad pages in 2009 than it did in 2008 and the publication expected to post its first annual profit.

The Week’s singular gain in ad pages came on top of a flat 2008, which was not an insignificant accomplishment given the declines most magazines endured that year.

The Week had an especially good year at the newsstand, too, with single-copy sales rising 86% in the second half of the year compared with the same period a year earlier. And its readership boasts a median household income of $150,900, the wealthiest of the newsmagazines.9

The Week does not reveal its financial results, but its editor, William Falk, said 2009 was its first profitable year since it was founded in 2001.10 He told PEJ that the magazine nearly broke even in 2008. Its British owner, Dennis Publishing, also operates versions of the magazine in the United Kingdom and Australia.

Forbes reported The Week’s revenue climbed from $20 million in 2004 to $48 million in 2008.11

The company manages with a business model that is almost as unique as its editorial approach. From the start, it has eschewed discounted subscriptions.

The Week in 2009 also announced an unusual sweetener to advertisers. It said it would guarantee that its readers would remember an ad run in The Week more than one run in the pages of most competitors. It said it would hire a research firm to convene focus groups and test them for recall of ads in The Week. If the research doesn’t put The Week among the top one-third of magazines in which consumers recall seeing a given ad, the magazine will run free ad pages until it hits the mark.

“We were trying to think, ‘What’s the most accountable thing you could do?’” said Steven Kotok, president of The Week. “This is a way they can say when they buy The Week, they know it’s money well spent, because we’re guaranteeing it will be among the most effective ads they purchase.”12


Footnotes

1. Publishers Information Bureau, “PIB Ad Revenue and Pages,” January 12, 2010. http://www.magazine.org/advertising/revenue/by_ad_category/pib-4q-2009.aspx The seven magazines for which the data was available were The Week, The Atlantic, Time, The Economist, the New Yorker, Newsweek and U.S. News & World Report.

2. Publishers Information Bureau, “PIB Ad Revenue and Pages,” January 12, 2010. http://www.magazine.org/advertising/revenue/by_ad_category/pib-4q-2009.aspx The seven magazines for which the data was available were The Week, The Atlantic, Time, The Economist, the New Yorker, Newsweek and U.S. News & World Report.

3. With U.S. News & World Report included, the seven news magazines sold 26.2% fewer ad pages in 2009 compared with a year earlier.

4. Richard Pérez-Peña, “Newsweek Plans Makeover to Fit a Smaller Audience,” New York Times, February 8, 2009.

5. Shira Ovide, “Fortune Magazine Cuts Back Number of Issues,” Wall Street Journal, October 23, 2009.

6. Bill Mickey, interview with PEJ, December 9, 2009.

7. Washington Post Company SEC filing, third quarter 2009.

8. Richard Pérez-Peña, “Glimmers of Progress at a Leaner Newsweek,” New York Times, November 15, 2009.

9. The Week, audience information. Accessed from the company’s website.

10. William Falk, interview with PEJ. December 4, 2009.

11. Lauren Streib, “Winning The Week,” Forbes Magazine, October 22, 2009.

12. Stephanie Clifford, “A Magazine Promises Ads Will Register,” New York Times, November 9, 2009.