MAKING MAGAZINES WORK – PUBLISHING

Meredith Corporation is the Iowa publishing company that recently bought Time, Inc: Time, Fortune, Money, People Magazine, and Sports Illustrated.

The company’s CEO Tom Harty and its executives have a management philosophy that they have found has served them well over time: all business can be divided into “problems” and “situations.”  Their philosophy further explains that problems can’t be solved with any amount of money, while situations can be overcome with the right approach.  Of the Time, Inc. magazines that were acquired, the problems were identified as: Time magazine, Fortune, Money and Sports Illustrated.  These titles clearly had the richest history and the greatest cachet, but their content depended on information easily found elsewhere.  Meredith didn’t see a way to change the downward spiral of these publications, so they put them up for sale.  People magazine was determined to be a “situation.”  The magazine was highly profitable but also contained the stresses of modern publishing – substantial decline in print advertising and newsstand revenue and insufficient online ad growth (ref. WSJ).  Meredith determined that People was a powerful brand that wasn’t fully capitalizing on its access to celebrities. There was, they determined, valuable exclusive material  – from Hollywood stars to human interest stories and true-crime tales – and a very good chance to bring in more money.  The philosophy of the company is to invest in assets with the promise of profit growth and not to waste money trying to fix the weak ones, no matter the nostalgia for the past glory.  Meredith’s Chairman of the Board, Steve Lacy, has carefully formed that philosophy over the years that he was CEO.  Lacy believes in being direct and unemotional in business decisions, and he isn’t reluctant to be the bearer of bad news when cuts need to be made.  Two months after acquiring the Time, Inc. magazines, Meredith held numerous meetings to make clear who would be losing their jobs: one group would be out by March 31st; another would go later.  About 600 of the New York employees were cut.  Last year, total ad pages across the magazine industry declined 14% and they have fallen 38% since 2014.  The executives at Meredith, however, don’t see the picture as hopelessly dire.  While they believe that there isn’t value in magazines providing news or sports coverage in an online world replete with real-time updates, they see big opportunities in the lifestyle areas of food, fashion, and home content as well as the styles of famous personalities.  And they are planning on growing sources of revenue in these areas like licensing, live events and online retailing,  They also see possibilities for limiting the damage of print’s decline by charging more for the magazines.  And, even though it means that fewer copies might be sold, each copy brings in more revenue and printing costs are lower.  CEO Harty has stated recently that the company outperformed key rivals in recent years and declared, “Our philosophy [is] focusing on women and not news-generated content.”  It’s definitely an interesting approach and one that bears watching.  And, in case you were wondering,  Time magazine was sold for $190 million; Fortune for $150 million; talks are in the works for Sports Illustrated to be sold for $110 million; and Money Magazine is publishing its last print edition in June and then continuing as a digital property.

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