Publishing/Writing: Insights, News, Intrigue

02/16/2010

Reader’s Digest, Playboy, Others Miss Rate Base


A magazine’s “rate base”, as I understand it, is the rate charged to advertisers in the magazine and is related to the circulation figures of the magazine…The higher the circulation the higher the cost to advertise in the periodical since it reaches more potential buyers.

FOLIO magazine’s Jason Fell wrote an informative article on this subject today:

While many of the consumer magazines included in the Audit Bureau of Circulations’ FAS-FAX report for the second half of 2009 made their rate base requirements for the period, many others, including some heavyweights, did not.

Of the 30 or so large circulation magazines with rate bases of 2 million or higher—including AARP, Time and Better Home & Gardens—Reader’s Digest and Playboy were the only titles to fall short of their circ. guarantee. Playboy reported an overall circ. of 2,021,751, more than 570,000 off its 2.6 million rate base. The magazine also fell short during the first half of 2009, delivering a total paid and verified circ. of 2,453,266.

With an 8 million rate base, Reader’s Digest delivered an overall paid and verified circulation of 7,099,558 during the second half. Last summer, the magazine said it was cutting frequency and reducing its rate base to 5.5 million—an 18-month process that would start with the February 2010 issue. A Reader’s Digest spokesperson told FOLIO: that missing its rate base during the second half last year was part of that strategy.

Generally, when a magazine doesn’t make its rate base, its publisher is required to issue refunds to its advertisers or make other concessions.

A number of celebrity titles also had trouble reaching their minimum circ. numbers during the second half of 2009. Among them were American Media’s Star (1.1 million rate base compared to 1,035,713 overall circ.), OK! (800,000 rate base vs. 753,886 overall circ.) and Bauer’s In Touch (800,000 rate base vs. 790,395 overall circ.).

Chicago-based Johnson Publishing also failed to reach its circ. promises. Ebony reported an overall circ of 1,169,870 compared to a rate base of 1,250,000. Jet, meanwhile, missed its 900,000 rate base, reporting an overall circ of only 795,055.

Other notable titles that missed rate bases were Harper’s (200,000 rate base vs. 195,114 overall circ.), Soap Opera Digest (500,000 rate base vs. 487,629 overall circ.) and Emmis Publishing’s Los Angeles (150,000 rate base vs. 140,022 overall circ.).

Biggest Overall Gainers

Although the vast majority of magazines claiming rate bases saw overall total paid and verified circulation declines during the last six months last year, some in fact reported significant gains. The biggest growth came from Rodale’s Women’s Health, which saw overall circ grow 21.5 percent to 1,454,545.

That was followed by Martha Stewart Living Omnimedia’s Body + Soul (+19.7 percent to 678,136), Birds & Blooms (+14.7 percent to 1,737,397), Meredith’s Siempre Mujer (+11.8 percent to 458,000) and All You (+10.6 percent to 1,023,242).

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12/31/2009

Playboy Passes Core Business Duties to AMI


Playboy is delegating advertising, sales, marketing, circulation and production to get lean and mean and return to profitability by 2011!

The venerable mens magazine is also being assaulted by the current economic times as well as technological multi-media advances (what ever happened to Mariyln Monroe ?)

Jason Fell of Folio Magazine reported the inside info on this Playboy re-structuring with some interesting, insightful figures:

During a recent earnings call, Playboy Enterprises CEO Scott Flanders said he was working on a joint venture to develop a new business model that would help Playboy magazine profitable again. Some details of that venture have come to light.

Playboy said it has agreed to farm out the magazine’s advertising sales, circulation, marketing, production and all other business operations to American Media Inc. Playboy will continue to oversee the magazine’s editorial operations.

AMI’s Distribution Services, Inc. will handle Playboy’s newsstand marketing and distribution services.

Roughly 25 jobs will be affected as a result, although some of those could be transferred to AMI. “AMI will be interviewing all of our employees in the areas being outsourced, and it’s not clear how many of them will be asked to join their company,” a Playboy spokesperson told FOLIO:. “We will also keep a few employees.”

Playboy will incur a $2 million restructuring charge in the fourth quarter related to the deal.

Financial terms were not disclosed. As part of the agreement, Playboy said AMI will be paid “negotiated fees” and will be incented to increase both advertising and circulation revenues. The publishers expect to complete the transition by March 2010. UPDATE: Under terms of the contract, AMI said it will be paid “potential fees” in the range of $5 million for advertising, circulation, production and related services. This, the company said, would result in profitability of approximately $2 million.

When asked about AMI’s strategy behind boosting Playboy’s ad and newsstand sales, and its plans for managing the magazine’s recently reduced rate base and frequency, AMI CEO David Pecker had no comment.

According to Flanders, AMI will be able to manage the magazine operations “more effectively than we can as a standalone publisher. By joining forces with American Media, we will be able to significantly reduce our cost structure and leverage the economies of scale related to manufacturing, distribution and marketing that are available to this large, multi-title publisher.”

Flanders said Playboy magazine is expected to lose $8 million this year. This deal, he projected, will allow the magazine reduce the loss to approximately $5 million in 2010 and to reach profitability again by late 2011.

During the earnings call, Playboy Enterprises reported a $23.5 million net loss through the third quarter, down from a $13.6 million net loss in 2008. The company’s print/digital group reported a $900,000 loss through the first nine months compared to a $3 million loss during the same period last year. Flanders said he expects the magazine to report a 38 percent decline in ad pages during the fourth quarter this year.

AMI publishes several titles already targeting man aged 18 to 34 years, including Men’s Fitness, Muscle & Fitness and Flex. AMI also publishes Shape, Star, Natural Health and the National Enquirer.

It was not immediately clear how the agreement with AMI might affect a potential sale of Playboy Enterprises. The company has been said to be entertaining a number of offers, including one from London-based brand management firm Iconix Group. The Playboy spokesperson declined to comment on a potential sale.

11/05/2009

Playboy Publisher Scrambles To Maintain Profits


From Folio magazine by Jason Fell 11/5/2009

Cost Cutting, New Business Model Top Priority for Playboy CEO.

Company reports $23.5 million net loss through first nine months.

In order for the print edition of Playboy magazine to break even or be profitable, “bolder steps are required,” recently-named CEO Scott Flanders said during the company’s third quarter earnings call Thursday morning. The company’s print/digital group reported a $900,000 loss through the first nine months compared to a $3 million loss during the same period in 2008.

Overall, Playboy Enterprises reported a $23.5 million net loss through the third quarter, down from a $13.6 million net loss last year.

During the call, Flanders declined to offer specifics about the “bolder” steps, but said three things are sure: he’s creating a new “corporate culture” that enables his staff to think and perform across divisions; he’s working on a joint venture in the development of a new business model for the company; and is strongly considering further cost cutting initiatives.

Flanders said he expects to announce those developments before the end of the year.

Last month, the company said it would reduce its rate base to 1.5 million from 2.6 million, and will combine its January and February issues into one, meaning it will publish two issues total during the first quarter next year. This summer, Playboy published a singular July/August issue that saved the company roughly $1 million in printing, paper and other costs. Those savings were offset slightly by expected declines in ad and circulation revenues as well as higher editorial costs, Flanders said during the earnings call.

Licensing, meanwhile, remains Playboy’s most profitable business, he said. The division reported a net profit of $15.9 million through the first nine months, down from $19.4 million during the same period last year.

Flanders said he expects to report a 38 percent decline in ad pages during the fourth quarter this year.

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