Friday, December 11, 2009

What does it mean to be "profitable" today?

A TNM Editor & Publisher autopsy:

The announcement yesterday by Nielsen of the sale of The Hollywood Reporter and other books, and the closing of Editor & Publisher and Kirkus Reviews are stark reminders of how brutal this business can be.

Whether it is just the nature of the business, or a twist of fate, I have been involved with a large number of sales in my career.  While a young pup at Hearst, the Los Angeles Herald Examiner purchased a group of suburban newspapers in S.E. Los Angeles county in an attempt to grow market penetration (it didn't work). But that was the start of many sales in which I was on either end of the transaction (I was involved in the Reed Business Information divestiture of 2001 that included the two magazines for which I was publisher).

My point: I've see up close these kinds of sales and the question that usually that follows a sales is "why did this-or-that property sell, and why is this one being closed?"  And so today there are a group of Nielsen employees coming to work knowing that their days at their job are numbered, hoping a white knight will appear to bailout the publication.

Sometimes it works out. Often it doesn't. In either case, being directly involved in a sale or a closing sucks. The pressure on you and your family is huge, and there are many sleepless nights (unless you are independently wealthy, I guess). I figure that the number of bloggers out there, including myself, is as large as it is directly because of these kinds of developments.

Should Editor & Publisher have been closed? Should the consortium that included James Finkelstein have fought to include E&P, or did they fight not to include E&P?

I can guess what the P&L statement of E&P looked like: seven editorial staffers plus three sales/sales management people; a monthly publication of a moderate to small number of pages; a smallish circ of around 12K. Some of these elements (monthly, small print run) would have kept costs down; but others elements would have worked against the magazine -- loss of classified, low display potential . . . and that editorial staffing level in a New York office.

The numbers:
  • 12,000 subscribers, $99 one year subscription -- even if a huge number of readers paid full pop this would only contribute $1 million to the bottom line (though I know a lot of controlled circulation magazines that wouldn't mind subscriptions contributing a million dollars)
  • Classified: formerly the bread-and-butter of E&P, Nielsen lumped E&P's help-wanted into something called Media Jobmarket. Ultimately, this had to dramatically lower the potential of online help-wanted, especially with the rise of such sites as  As for the print publication, the move from weekly to monthly pretty much ended the possibility that the publication could rely on classified to pay the bills. (I was once a CAM and am always surprised how many publishers under estimate the potential of "back of the book" revenue.
  • Display: the move to a monthly publication probably helped -- after all, weeklies have a tendency to run in cycles -- a couple good issues a month, a couple thin ones. 
  • Online advertising: the E&P web site (which appeared online this morning but is back up now) wasn't a bounty of advertising.
As you can see, the picture must have been bleak. But did it have to look this way?

If asked, as a consultant, to look at this picture fresh, I would ask several questions: 1) what is the advertising market, is it huge advertisers (like the auto industry, for instance), or a lot of small players? 2) how large is the market? Is it growing or shrinking? 3) does this magazine serve a purpose beyond the bottom line.

For me, this is a book that screams inside sales: jobs, directories, events. Yet caught in the Nielsen corporate structure, it is hard to see that E&P would have garnered the attention it needed in this area. With one classified rep, who appeared shared (her e-mail is not an E&P address, but a Nielsen address), it is doubtful that the magazine had the resources to sell much from the phone.

Obviously, the newspaper industry is shrinking . . . quickly. There is not much a publishing team can do about that . . . except "right size" (I hate that term) in the areas that do not effect revenue. Seven people are listed in editorial, plus someone who obviously wrote for MediaWeek.  'Nuff said.

(At my last job, one group I managed had three editors for four magazines, and no associate editors -- it was absurd. Yet there was pressure to shrink even further. My question was always "if a magazine does not deserve its own dedicated editor is it still worth publishing?" -- a question that would get me a dirty look or two.)

So it is obvious that E&P was not profitable. But could it be? Not within the Nielsen structure, that is for sure. We haven't even talked about "G&A" -- those ugly expenses the company throws on your P&L to cover administration, and group costs. Sure they can be justified, but they are killer for smaller publications. But within the right environment, either a solo enterprise, or within a small group, E&P could eek out a dollar or two. And for some owners, that would be "profitable" (to answer the question posed by the headline). For Nielsen? Presumably not good enough.

Surely E&P will now go "online only" with a new owner, right?

Well, I hope so, I would hate to lose the title. I have depended on this book my entire career -- even after leaving the newspaper industry for trade magazines.

As an online entity, E&P would have to have a slim editorial staff, inside sales and maybe an outside person -- though in today's world the differences between inside and outside sales are small. But any one on the phone eight hours a day doing classified and directory sales is definitely an "inside" sales person, right?

Would a break-even E&P be worth owning? Absolutely.

The newspaper industry, even in its shrinking state, is still hugely influential -- politically, locally, as the news source of record. Influence the newspaper world and you influence all of media. In addition, newspapers are still a major source of news on the web. For those who think the web will replace all forms of print news, think for a moment what news on the web would be like without the New York Times, let alone the WSJ or AP. Newspapers may change, go completely online, but those news staffs are still the source of much we call "news".

So someone should pick up the Editor & Publisher brand -- someone who wants influence, but understands that to be a voice for the newspaper industry you have to have street cred. I would bet there are plenty of web only properties who recognize the value of E&P, but they would not be a good fit.

Anyone want to buy into history?

Any autopsy conducted from afar is bound to have some basic facts wrong. Because of that I'll correct any mistakes here if given new information. Given that this site has just gone live, and few people have discovered TNM yet, there is a good chance this article will go unnoticed. Nevertheless, don't hesitate to contact me if you would like tho set the record straight or want your voice heard in this matter.