BoSacks Speaks Out: Publishing Acts Out Again In Mississippi
Imagine, if you will, a cozy academic auditorium filled with professionals from every part of the publishing universe – publishers, editors, circulators, investment bankers, writers, digital visionaries, retail experts, printers and even people who sell paper. Sure, and let’s throw a pundit or two into the mix and then fill the rest of the seats with enthusiastic journalism students. What you have is the ACT 4 Experience at Ole Miss created and hosted by Dr. Samir Husni.
This is the fourth year of this amazing annual event and the third time for me. I would have been at all the events but four years ago I had a fight with some kidney stones, and I lost my first and only debate in many a season. It turns out that logic doesn’t work with kidney stones.
Over the course of two days we heard perspectives from every aspect possible in the publishing business. The event opened when we heard from Billy Morris, CEO of Morris Communications, a private, family-owned company which began more than two centuries ago as a single newspaper in Augusta, Ga. and today has grown into a diversified, midsized, global media company. Mr. Morris explained how his company is still growing and merging his print empire into a diversified global print and digital company. He explained carefully that print and digital are a marriage and for them to work together both have to be respected. He said, “We believe in print and it is paying the bills.” He also said, “Digital is not a challenge nor a threat, but rather it is an opportunity and an evolving new media. What we do is gather, assemble, package and deliver content on any platform. We are now selling a continued contact with the reader.”
Next we heard from Donna Kessler, President of Morris Media Network which publishes Where Magazine. Yes, that’s right, the magazine you and I have found in any major city hotel in damn near any country you can name. Did you know that the world-wide circulation of Where Magazine is 65,000,000? They have created a broad platform in each market. As an example they have printed 60 million brochures in Paris in multiple languages including Chinese. If I heard Donna right she suggested that they have the high end magazine, the middle end magazine, and a lesser grade magazine in each market, and all built off of one single platform.
Mr Morris added that Morris Communications intends to “become indispensable world-wide.” Bo’s reaction is that, that ain’t bad for a 200 year old company which clearly isn’t having trouble adjusting to either a profitable 21st century or the digital age.
Jim Elliott, president of the James G. Elliott Co., which is the largest national magazine advertising sales outsourcing firm for publishers, interviewed Reed Phillips, Co-founder of DeSilva+Phillips, which is one of the leading M&A advisors to the media and marketing industries. DeSilva+Phillips have advised our industry on more than 250 transactions valued at over $8.5 billion.
Do any of you remember the old advertising campaign from a few decades ago, “When E. F. Hutton talks, people listens?” It was a classic often repeated campaign. Well, when Reed was talking, everyone was listening. When it comes to the publishing world, Reed is an advisor to kings, sometimes known as publishers.
He told us that from an investor’s perspective, “Magazines are based on their profitability and that is how investors must look at it.” He said there have been changes and adjustments to investing and that EBITDA is now worth half of what they were once were. (EBITDA is an acronym that refers to a company’s earnings before the deduction of interest, tax, depreciation and amortization.) He also said recurring revenue such as getting money from subscribers ahead of actually making the product is an important consideration. Investors want companies with broad exposure and varied avenues of revenue, such as events and other creative, monetized sources.
I would say from one who was listening carefully that it was a meaningful and sobering dialog about how successful investors are looking at our industry. All of us, professionals and students alike, learned a lot in a 45 minute investor chat.
Tony Silber, General Manager of Red 7 Media, who among other media titles publish FOLIO: magazine and MIN (Media Industry Newsletter) had the envious job of moderating a panel of start-up publishers on the topic of Why and How We Launch Print. On the panel were Julie Wilson, of Story magazine, Craig Chapman of Real Food Real Kitchens, Laine Craft of WHOA Magazine, Carol Kicinski and Thom Kicinski of Simply Gluten Free Magazine, Megan Smith of Cake & Whiskey magazine, Jordana Megonigal of Business Black Box magazine, Kelly Waldrop of Covey Rise Magazine.
As you can see from the broad diversity of editorial topics chosen by these start-ups, the entrepreneurial spirit is still very much alive and well in the field of publishing. Tony started with the not so simple question, “Why Print?” The answers were diverse, but several pointed out that they had heard often readers enthusiastically say they loved the printed magazines, but never heard as much excitement about digital magazines.
Most, if not all, admitted that they were learning on the job and adjusting to business conditions and the media school of hard knocks. Jordana Megonigal confessed she knew she made a few mistakes early on, but recently changed her business plan with great new results. I think there is a great lesson to be learned in that. As hard as it sometimes is, rather than admitting defeat, be ready to acknowledge mistakes made and errors in your plans and then change direction. Many a business fails because they never learn that flexibility.
Next John Harrington, founder and editor of The New Single Copy, discussed the newsstand business and introduced, Gil Brechtel, President and CEO of MagNet Data. Gil’s company tracks almost every magazine on sale, and they collect valuable data on our progress as a newsstand industry. He started with a review of newsstand from 2003 to 2007 when both unit and dollar sales increased, driven by cover price increases which on average went from $3.86 to $4.13 – an average of 27 cents per copy sold. What makes the information even more impressive is that TV Guide and other tabloids were declining during this same time period. It was mostly the celebrity titles that were driving the newsstand sales upward. At the end of 2007, the magazine newsstand business was producing nearly $5 billion annually.
Unfortunately, as Gil pointed out, 2008-2012 provided a very different economic picture for the country and the magazine business. The economy dropped in 2008 and sadly the newsstand sales trends went with it. Celebrity and newsweekly sales losses were big contributing factors to the overall newsstand losses.
The other major impact on newsstand sales came from the fact that the consumer is no longer making as many shopping trips as they had previously. Online shopping is having a big impact on the number of trips consumers are making to brick and mortar stores.
Gil noted that the top 1,000 magazine titles in 2012 were down 12.6 % in sales. Besides the celebrity title numbers are those titles ranked below the top 1,000 in sales. These smaller niche title sales were down $960 million, 74% in dollars and over 75% in units. So, of the total $1.4 billion dollar sales loss during the last five complete year sales period, nearly $1.2 billion came from celebrity titles and small niche titles that either exited the newsstand or were dropped by the wholesalers.
On the bright side, if it can be considered that, all of the rest of the titles were down only about 15%. Gil pointed out this mixture of sales figures brings a sobriety to the analysis, but it’s important to look at all the details of the newsstand business before calling it dead. Gil suggested that at an average cover price of $6.84, wholesalers can make money on magazine titles if they manage to fix their efficiencies and focus on those titles that are truly niche and not just “me, too” titles. In short, Gil said that there are too many duplicate titles on the newsstand, and the industry would perform better if there was less sameness of subject matter.
Of course, the problem in that is the wonderful entrepreneurial spirit as discussed above in the start-up session with Tony Silber. Who can, would, or should say to any wannabe publisher, “No, for the betterment of the industry, you can’t print and publish that title?” That is an unanswerable business dilemma.
My friend Samir threw me a curve ball this year that I greatly enjoyed. Usually I speak at the ACT Experience about the future of the industry including a recap of where we are and where we are going. This year Samir asked me to moderate a panel of printers with the title “The Future of Print and the Printing Presses.” As a seasoned Director of Manufacturing, talking to printers is like coming home for Thanksgiving. On the Panel was John Bussolari of Lane Press, James Pilcher of Freeport Press, Gal Shweiki of Shweiki Press, Michael Simon from Publishers Press, Thomas Whitney from Democrat Printing and Steve Zdanowicz of Brown Printing.
Since I was moderating, I don’t have notes of how the discussion developed, but I thought each panelist handled himself with distinction and had insightful things to say, and there were a number of compliments afterwards. Later I tweeted the following:
Epiphany. Moderating a panel of magazine printers at @MrMagazine’s Act 4 event is much like herding cats who were straying tangentially
Here are some other random notes or statements from the Act 4 Experience in no particular order.
Lynn Rosen – Editorial Director, Publishing Executive… While speaking to a panel of editors asked a great question. Do you look at the sales potential of your work?
Jay Annis – VP of The Taunton Press. “We survived better than most because we are reader driven”
Rich Jacobsen – President and CEO, Time Inc. Retail Sales and Marketing. “Magazines are no different than milk, bread or coke to retailers.” What a wacky idea – “Media companies using media to sell their magazines.”
Steve Slon – Editor-in-Chief at the Saturday Evening Post, “The most important content in a magazine might be the cover lines.”
Luke Magerko – Managing Director, Market Analytics Project LLP, “My solution to newsstand centers around the analysis of data, but just not from an operational standpoint. This data cannot only generate bottom line savings and sales opportunities, but also provide publishers with a wealth of data to aid editorial analysis and insights to the entire publishing house.”
Michael Simon – EVP, Publishers Press, “We believe that the printed magazine sector has a place at the future media landscape table”
Roy Reiman – Founder of Reiman Publications (Taste of Home), “I think the future of print is great… If you have an excellent product. There are still 300 million people in the country and a good percentage of them still like to ‘hold things in their hands’ as they read them. So for quality magazines, I think the future is promising.”
Maarten Lens-Fitzgerald – Co-Founder and US General Manager at Layar, “I think surviving is not a matter of technology or medium; it’s a matter of the publisher. The publisher needs to know its audience and mold its products according to the needs and desires of the reader.”
John Puterbaugh – EVP & CDO at Nellymoser, “Magazines are linear narrative, carefully constructed and curated collections that have resulted in some of the strongest brands we’ve known… In the future mobile and social media will make print more interactive, blurring the boundaries and distinctions between form and content, between the static and the social.”
Bernie Mann – Publisher, Our State Media, “I don’t think there is such a thing as the “magazine industry.” To me the magazine industry is not of one mind, but of 11,000 views of how to be successful. For some the future looks bleak. For others, like myself, 2013 has been the best year in the 80 year history of my magazine company. And I fully expect it will be even better in the future.”
