TIME: Almanac 1993/TIME Almanac 1993.iso/time/070290/0702220.000

Text File | 1992-08-28 | 5.8 KB | 124 lines

                                                                                PRESS, Page 50

The Big Shake-Out Begins


A publication glut and a soft ad market spell turbulent times
for the consumer-magazine industry

By STEPHEN POMPER


    The overstuffed newsstands of the '80s told the story at a
glance: the fast-money decade spawned a prodigious magazine
boom, with titles crammed three deep into every trendy market
niche. Some 2,800 new magazines flew off the presses in the
past decade, 584 in the past year alone. Foreign media barons
opened their wallets wide, and American entrepreneurs -- from
Hartz Mountain pet-food magnate Leonard Stern to Frances Lear
(ex-wife of TV producer Norman) -- rushed into the  circulation
game.

    But now the shake-out is at hand. Magazines are going under
or changing hands at a dizzying rate. Owen Lipstein's
Psychology Today suspended publishing in February; struggling
monthlies such as CMP's Long Island Monthly and Time Inc.
Magazines' Southpoint went out of business; Rupert Murdoch's
debt-ridden News Corp. sold the gossipy Star to the National
Enquirer and delayed plans to launch its own weekly
newsmagazine.

    Last week Metrocorp's Manhattan, inc., which won a 1985
National Magazine Award for general excellence and critical
acclaim for its lacerating exposes of the New York City
business community, announced that its July issue would be the
last. The magazine and its top editor will be subsumed by
Fairchild Publications' M, a clothes-conscious men's
periodical. The new title: M inc. Manhattan, inc. lost more
than $8 million over six years, says publisher D. Herbert
Lipson. Its ad base was crippled when New York's financial and
real estate markets went dry. The 1987 stock-market crash stole
the magazine's indispensable asset: high-flying Wall Street
targets to shoot down. The magazine also lost some of its edge
when founding editor Jane Amsterdam was replaced by Clay
Felker.

    Still, the main source of all this turbulence has been the
advertising-industry slump -- attributed to soft markets in
cigarettes and automobiles. The downturn has robbed the big
consumer "books" of 3.5% of their ad pages in the first quarter
of this year and underscored the glut of consumer magazines on
the market. Even such industry stalwarts as Business Week,
Newsweek, PEOPLE, SPORTS ILLUSTRATED, TIME and TV Guide have
been affected, sharing in the ad-page losses for the first
quarter, however healthy their circulations. (Circulation
typically provides half of a magazine's revenues.)

    The biggest threat appears to be to highly leveraged foreign
investors. Diamandis Communications, a subsidiary of
French-owned Hachette, is looking to sell Woman's Day to offset
Hachette's estimated $400 million U.S. debt. Murdoch's News
Corp., reportedly $6.5 billion in debt, will soon begin
experimenting with the venerable but faltering TV Guide,
adjusting the magazine's iconic size and format in an effort to
become more accessible and compete with proliferating local
cable guides. Leslie Hinton, president of Murdoch Magazines,
rejects speculation that foreign investors want out of the U.S.
altogether. "Things go up and down," he says. "It would be
pretty shortsighted of us to abandon the market right now."

    In New York City, where one-third of all U.S. magazines are
launched, the slump has become a full-fledged recession. Thus
the city's small, high-profile purveyors of the trendy and
transient have less control over their own destinies. Details,
a chronicle of downtown marginalia, was bought by S.I. Newhouse
Jr.'s Conde Nast, and will be repositioned as a more mainstream
men's fashion magazine. And Spy, a satirical magazine that
proclaims itself "hip, but suspicious of hip," failed in a
highly publicized capital drive, although it still posts slim
profits. Spy hopes to hedge its bets by moving into
partnership deals in TV and movies.

    But the future may not be as bleak as the present. Thomas
Ryder, president of American Express Publishing, predicts that
the consumer-magazine industry will emerge from its slump
during the next 18 months "shaken, but stronger for it." In the
meantime, certain less glamorous market niches are flourishing:
witness the success of highly targeted publications like Model
Railroader and Golf Illustrated. Service and life-style
magazines, meanwhile, are attracting some keenly interested,
well-financed investors. American Express recently acquired D
(for Dallas) and  Atlanta as part of a plan to expand into 20
city markets. And on June 1 Time Inc. Magazines paid
approximately $215 million for the parent company of Sunset
magazine, a West Coast life-style publication. Says Ryder: "The
next twelve to 18 months represent one of the great buying
opportunities of all time."

    Unfortunately, as service-oriented publications are snatched
up, some of the most incisive new voices in journalism may be
lost. Abe Peck, chairman of the magazine group at Northwestern
University's Medill School of Journalism, complains that while
"there are plenty of magazines that tell you what to wear,
where to eat and how to shop," publications that offer a more
provocative editorial edge may be an endangered resource. Many
analysts feel this editorial quality is more important than
most advertisers realize, because it delivers more attentive
readers. Some of yesterday's faddiest publications, like
Rolling Stone, built on precisely that kind of approach to
become today's prosperous graybeards. Many media watchers had
recognized similar prospects for 7 Days, which in April won a
National Magazine Award for general excellence. It was an
ironic epitaph: the magazine had gone out of business one week
earlier, citing low ad pages, a slack economy and a dearth of
interested buyers.