Mr. Magazine

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

Bauer Media Group’s president and CEO, Steven Kotok, uses a positive barometer when facing the future. With the New Year approaching, and with change the only constant in everything magazine and magazine media, he firmly believes that where magazines best serve the reader, they will continue to thrive.

Woman’s World and First for Women are number one and number two respectively on newsstands, so Bauer Media is definitely best-serving its demographic, women. So, obviously, knowing your target audience has never been more important. And as Steven said, with 90 percent of the company’s revenue coming from its readers, engagement with the audience is Bauer’s life blood. But what better to flow through its veins?

So, please enjoy this most informative interview with Steven Kotok, president and CEO, Bauer Media Group as Mr. Magazine™ continues his series with the magazine and magazine media executives that make the industry world go-round.

(The conversations with the magazine and magazine media executives are going to be published chronologically as they took place).

But first the sound-bites:

On his assessment of magazines and magazine media in 2020: People today are more engaged with media of all kinds than ever before. And where magazine media can best serve the reader, magazines will continue to thrive as Bauer has. Ninety percent of our revenue is from readers, so that engagement is our life’s blood. But I don’t think there’s a blanket answer, it’s really different audience segments and different types of products that are going to really continue to engage readers. And then others may be better-served in other media.

On which segments of magazine media he thinks will thrive: We focus mainly on our own, and we’re really serving women over forty. So, our psychographics do still engage with magazine media. They find a lot of value in it. I think it’s also the type of products that people are putting out or where they’re earning money. From that product, I think you see some of the ad-supported titles that may not be as engaging to the consumer and they may have trouble, whereas others do better. But we feel strongly about our own.

On any success stories he can share from 2019: I’d say for us, we had traditionally been a newsstand-focused business and we made a big investment in growing our subscription revenue stream. And we did it with premium pricing, higher than a lot of our competitors, and we earned positive ROI from that investment. So, we grew our total subscription revenue and that was a really big win for us. We did it with some great marketing and some smart investment, but also because Woman’s World and First for Women continue to really engage our readers as much as ever. We have a great editor and a great team and they’re still number one and number two on newsstands in sales, so we know we’re doing the right thing in our traditional channel. But it’s been great to build additional revenue in the subscription channel, especially because it was a significant investment for us.

On any challenges he faced in 2019: There were definitely some challenges. (Laughs) The challenges are built-in. Your traditional question of what keeps you up at night, that’s kind of our days now. We used to worry about things happening, I think it’s all happened now. I think we’re all in. A lot of the challenges that maybe were concerns 20 years ago are now part of our daily lives. But on the Bauer front, every year we set ourselves a goal. For 2019, our biggest goal was really to execute an acquisition within the company, and we actually fell off with that goal. As much as those three achievements are great and made us a stronger business at the end of the year than we were at the beginning of the year, by our own measure of are we doing our core mission of serving the readers, or on a financial basis, there are a lot of moving pieces that have to come together to make an acquisition happen and make it make sense for us and for someone willing to part with something that we value. And it was just tough to make it happen this  year. But we hope that will be one of our 2020 successes.

On whether Bauer is interested in more acquisitions: Definitely. And in the last 24 months, Bauer has made something like 20 or so acquisitions around the world. We’re a very acquisitive company generally, but each market kind of has its own challenges, which makes it easier or harder.

On why he thinks magazine media companies are slow to jump in and change their business models: I don’t think it’s just magazine media, you see the same in digital, where you find a lot of digital brands trying to build subscription or membership revenue models. I don’t know whether people are slow to jump in, sometimes companies are accused of being too fast to jump into something. I think looking at any media, whatever media products that exist now were developed and evolved over years to align with a really particular business model. You can’t wake up one morning and just say, “I want to start earning money from these other people,” because the people’s people with their money, whether that’s consumers or advertisers or event sponsors, ecommerce shoppers or whatever, they’re going to have something to say about what they do with their money.

On how he sees the magazine media glass, half-full, three quarters full or 50/50: I know your job is to look at the whole media landscape, but those of us who are operators are really just running around show. Where we saw the glass might not have been half-full or we thought there had to be some consolidation to make it more than half-full, and there were actually some assets that we thought were going to be more valuable grouped together with other similar assets. For us, what we have, are women’s brands that are number one and number two at the newsstand and growing their subscription and ad revenues. To us that’s ninety percent full of something. Obviously, we wake up or start January 1 and just think about all of the stuff that isn’t done yet or took longer than we wanted it to. That’s the focus, that 10 percent to us is like 100 percent, it’s kind of the stuff that consumes us.

On whether he feels social media is a friend or foe to magazine media: I don’t know if different media are foes to each other, I don’t believe social media is a foe any more than TV is a foe. All the different media, we’re all competing for people’s time. People have a finite amount of time and we’re all competing to make good use of that time. I don’t think they’re foes. On one hand, magazines have built great audiences on social media the same as magazines can build and publicize their brands on TV, put your editor on TV or something. And by the same token, there is a lot of crosspollination among the different media, so I don’t know that there are foes, but we are all competing.

On anything he’d like to add: The rules in general don’t change, even if the mediums change. If you’re providing value to someone and you do it well, you’re going to find a way to make a buck and to keep on doing what you’re doing. That rule hasn’t changed, even with the environment changes.

On what keeps him up at night: What I said before I believe is true, a lot of the things that used to keep us up at night are now part of our daytime reality. But it’s part of the fabric of the world. It’s really about what to do next. We’re pretty happy with our business; we’ve done a lot to transform it. There’s always more to do, as I said, it always feels like you started at zero. But it really is what to do next; what else can we do to grow this business, whether through acquisitions or launches… or whatever, but it’s less of a defensive thing. It’s all factored in, priced in, all of these challenges. So, it’s really what’s the next thing that can grow.

 And now the lightly edited transcript of the Mr. Magazine™ interview with Steven Kotok, president & CEO, Bauer Media Group USA.

Samir Husni: As we approach 2020, what’s your assessment of the future of magazines and magazine media?

Steven Kotok: People today are more engaged with media of all kinds than ever before. And where magazine media can best serve the reader, magazines will continue to thrive as Bauer has. Ninety percent of our revenue is from readers, so that engagement is our life’s blood. But I don’t think there’s a blanket answer, it’s really different audience segments and different types of products that are going to really continue to engage readers. And then others may be better-served in other media.

Samir Husni: From your point of view, what are the segments that you think are going to thrive?

Steven Kotok: We focus mainly on our own, and really we’re serving women over forty. So, our psychographics do still engage with magazine media. They find a lot of value in it. I think it’s also the type of products that people are putting out or where they’re earning money. From that product, I think you see some of the ad-supported titles that may not be as engaging to the consumer and they may have trouble, whereas others do better. But we feel strongly about our own.

 Samir Husni: Having that strong feeling and knowing that 90 percent of your revenue is coming from readers who engage with your products, can you name three accomplishments or successes for 2019 that you’re proud of?

Steven Kotok: Yes, I’d say for us, we had traditionally been a newsstand-focused business and we made a big investment in growing our subscription revenue stream. And we did it with premium pricing, higher than a lot of our competitors, and we earned positive ROI from that investment. So, we grew our total subscription revenue and that was a really big win for us. We did it with some great marketing and some smart investment, but also because Woman’s World and First for Women continue to really engage our readers as much as ever. We have a great editor and a great team and they’re still number one and number two on newsstands in sales, so we know we’re doing the right thing in our traditional channel. But it’s been great to build additional revenue in the subscription channel, especially because it was a significant investment for us.

Number two; in our traditional newsstand channel we’ve put out a bunch of new products, continued to grow our SIP business, and those traditionally have been one-offs, but we’ve started doing more products that we’re going to repeat. We did Whoa, Wait for Walmart, which is available exclusively at Walmart, and that has been a big success. We plan on doing four of those next year. We also started a great series of inspirational content that has been a success called Everyday Faith, in partnership with DaySpring. We’ve been really happy that we can grow revenue in the newsstand channel as well.

And I’d say the third thing, and this might be first at some publishers, but it’s definitely third at Bauer, because anything that has to do with the readers comes first, but we were the only major publisher to grow both ad pages and ad revenue in 2019. And we’re most proud of that because we didn’t do it by changing the products to become a “better ad environment.” We really reinvented our messaging to the ad community to try and better articulate what the product does for the reader. We started with a deep reader study and really talked to the readers themselves, we did focus groups in multiple cities. So, we started with the readers to articulate to the advertisers why we are number one. That really led to a big turnaround in growth in ad revenue.

Bauer is still very much a bottom-line company and I think all three of those are tied to revenue growth, but I think all three of those also start with getting things right with the reader.

Samir Husni: Are you saying that 2019 was a walk in a rose garden for you, or you had a few challenges along the way?

Steven Kotok: No, there were definitely some challenges. (Laughs) The challenges are built-in. Your traditional question of what keeps you up at night, that’s kind of our days now. We used to worry about things happening, I think it’s all happened now. I think we’re all in. A lot of the challenges that maybe were concerns 20 years ago are now part of our daily lives.

But on the Bauer front, every year we set ourselves a goal. This is my third full year here; 2017 was really like optimizing the operations, which we did and we improved the bottom line for the first time in a while. In 2018, the goal was really to divest some of our assets and to focus on the women’s group for the long-term and that really improved our margins.

For 2019, our biggest goal was really to execute an acquisition within the company, and we actually fell off with that goal. As much as those three achievements are great and made us a stronger business at the end of the year than we were at the beginning of the year, by our own measure of are we doing our core mission of serving the readers, or on a financial basis, there are a lot of moving pieces that have to come together to make an acquisition happen and make it make sense for us and for someone willing to part with something that we value. And it was just tough to make it happen this  year. But we hope that will be one of our 2020 successes.

Samir Husni: While others are selling, Bauer is in the market to buy?

Steven Kotok: Definitely. And in the last 24 months, Bauer has made something like 20 or so acquisitions around the world. We’re a very acquisitive company generally, but each market kind of has its own challenges, which makes it easier or harder.

Samir Husni: As you look at magazine media in general, not just Bauer, and you’ve been in magazines for years now, why do you think magazine media companies are slow to change their business models? Why are they so slow in jumping in?

Steven Kotok: I don’t think it’s just magazine media, you see the same in digital, where you find a lot of digital brands trying to build subscription or membership revenue models. I don’t know whether people are slow to jump in, sometimes companies are accused of being too fast to jump into something. I think looking at any media, whatever media products that exist now were developed and evolved over years to align with a really particular business model. You can’t wake up one morning and just say, “I want to start earning money from these other people,” because the people’s people with their money, whether that’s consumers or advertisers or event sponsors, ecommerce shoppers or whatever, they’re going to have something to say about what they do with their money.

So, adding a new revenue stream to an existing product, I just don’t think that’s how we all got to where we were in the first place. Most of the successful media products out there didn’t start out trying to think about a revenue stream and then develop something for it. They really started with a problem they could solve for someone, some great idea that they felt would really have value to someone else. And then from there, obviously you have to do your math and ask, “Can I deliver this to people in a way that it makes more money than it costs to do?” And as we know, there’s a lot of great ideas that can’t generate more money than they cost to execute.

But where that’s possible is where people can be successful, taking an existing product that’s evolved to make its money a certain way and then adding a revenue stream to it. I just don’t think it’s ever going to get people where they need to go. I believe they have to go back to how they were successful in the first place, which was solving a consumer, or in some cases, an advertiser need and starting from there.

So, I guess I question the premise that people have been slow to do it, but I do think that you’re not going to be successful starting with adding a revenue stream to an existing product. You have to deliver value to the folks whose money you want.

Samir Husni: You’ve always been on the positive side of things and you’ve worked with very successful companies, so do you see the magazine media glass as half-full, three quarters full, or 50/50?

Steven Kotok: I know your job is to look at the whole media landscape, but those of us who are operators are really just running around show. Where we saw the glass might not have been half-full or we thought there had to be some consolidation to make it more than half-full, and there were actually some assets that we thought were going to be more valuable grouped together with other similar assets.

For us, what we have, are women’s brands that are number one and number two at the newsstand and growing their subscription and ad revenues. To us that’s ninety percent full of something. Obviously, we wake up or start January 1 and just think about all of the stuff that isn’t done yet or took longer than we wanted it to. That’s the focus, that 10 percent to us is like 100 percent, it’s kind of the stuff that consumes us.

I think for each medium or each brand or company, it’s really a different answer, and the answer may be different from people on the outside than on the inside. People on the inside are clearly investing their time and their careers in that company and they see an opportunity and they’re probably the best ones to run those companies. So, I think it really differs.

In general, as I said in the last question, if you’re delivering value to someone who’s going to pay for it in one way or another, whether it’s a consumer or an advertiser, you’re going to be in a good place. And when you can’t provide value or where you’re trying to get by with a trick or something, that’s not a great long-term plan. It really differs by company. A lot of us are just focusing on what we have in front of us. I assume most people feel good about the companies they’re running or they would hopefully find someone else to do it who had a more optimistic vision.

Samir Husni: Do you think social media is a friend or foe to magazine media?

Steven Kotok: I don’t know if different media are foes to each other, I don’t believe social media is a foe any more than TV is a foe. All the different media, we’re all competing for people’s time. People have a finite amount of time and we’re all competing to make good use of that time. I don’t think they’re foes. On one hand, magazines have built great audiences on social media the same as magazines can build and publicize their brands on TV, put your editor on TV or something. And by the same token, there is a lot of crosspollination among the different media, so I don’t know that there are foes, but we are all competing.

When you look at some categories, obviously, with Instagram, anything that’s built around famous people, famous people used to need to reach their audience through a third party media platform. Now with something like Instagram, a social media platform can serve that need for them. So, I think in that case, for people with a finite amount of time they can spend looking at celebrities, I would have to think that engaging directly with celebrities through social media has cut into the other thing.

I believe it’s one giant ecosystem and different subcategories, different brands, different businesses are always rising and falling. Seinfeld and MASH, the most popular shows ever aren’t on TV anymore. So, I think there’s always going to be rising and falling, but I don’t know that it’s a foe. I don’t know that social media is somehow damaging magazine media in some unique way other than the fight for attention for people’s time that all the different media engage in.

Samir Husni: Is there anything you’d like to add?

Steven Kotok: The rules in general don’t change, even if the mediums change. If you’re providing value to someone and you do it well, you’re going to find a way to make a buck and to keep on doing what you’re doing. That rule hasn’t changed, even with the environment changes.

Samir Husni: What keeps you up at night?

Steven Kotok: What I said before I believe is true, a lot of the things that used to keep us up at night are now part of our daytime reality. But it’s part of the fabric of the world. It’s really about what to do next. We’re pretty happy with our business; we’ve done a lot to transform it. There’s always more to do, as I said, it always feels like you started at zero. But it really is what to do next; what else can we do to grow this business, whether through acquisitions or launches… or whatever, but it’s less of a defensive thing. It’s all factored in, priced in, all of these challenges. So, it’s really what’s the next thing that can grow.

Samir Husni: Thank you.

Next up, Tom Quinlan, Chairman/CEO/President, LSC Communications Inc.