Circ Levels: Getting a Grip

Circulation Management, May 1, 2004

Byline: Baird Davis

The overall circulation of audited consumer magazines continued its retreat from its overheated levels in the second half of 2003. It fell by over 6 million to 288 million or 2.3% as compared to the second half of 2002. This decline offers some relief for an industry whose aggregate circ peaked at 312 million in the first half of 2001. In the last 2 1/2 years, the level has declined 7.7%. This decline is welcome, but it only partially alleviates a seriously bloated condition.

Let's take a look at the events that affected circulation levels in the second half of 2003 and explore some of the ramifications:

Newsstand Contribution to Aggregate Circ Levels

Audited newsstand sales fell 2.7 million, or 4.8%. By way of comparison, the aggregate subscription level fell 1.4%. It's good news that publishers appear not to be "replacing" the declining newsstand circ with subscription circulation at the same furious rate of years past. However, it's a genuine industry concern that the newsstand contribution to total circulation dropped to a record low of 18.8%, down from 19.3% in the second half of 2002.

Fewer Audited Titles

The number of audited titles declined in the 2nd half of 2003, compared to the year previous period by 2%, from 622 to 610. 45 titles either ceased publication or stopped being audited, representing a combined circulation of 12.7 million. 33 titles were added to the auditing ranks and their combined circ was 6.7 million. This resulted in a net audited circ decline of 6 million.

Strategic Circ Reductions

The amount of selective circulation reductions is rising. In the second half of 2003, 112 publications dropped their respective circulations by 5% or more compared to 76 titles initiating decreases of the same magnitude in the first half of 2002. The largest circulation decrease is attributed to Reader's Digest (900,000). Eight other titles had reductions of 100,000 or more: Soap Opera Digest (371,000), National Enquirer (234,000), The Star (178,000), Ebony (178,000), Playboy (168,000), Discover (149,000), Seventeen (124,000) and Your Prom (104,000). Another 16 titles had circulation reductions of less than 100,000, but more than 50,000.

These 25 titles reduced their combined circulation by 3.5 million. Among these titles, Reader's Digest, Soap Opera Digest, Discover, Premiere, American Photo, Sound & Vision and Sunset lowered their rate bases in conjunction with the circ level reductions. However for the most part, the titles with significant circ declines either reduced the amount of bonus circulation or they did not have a published rate base.

Industry's Circ Growth is Not Yet Dead

The combined net reduction effect of new and departing titles and of the 25 audited titles with 50,000 or more circ declines, as indicated above, was 9.5 million. However, the industry's aggregate level only dropped 6 million in the second half of 2003. This means the circulation of the remaining 552 audited consumer publications rose 3.5 million. This helps demonstrate that the industry's circulation growth hunger has not been entirely extinguished. Some of that growth can be attributed to new titles that have not yet reached their optimal circ levels. However, many others are associated with mature titles that are still supporting the growth paradigm.

Performance of Circulation Leaders

In the second half there were 39 publishing companies (total 301 titles) with aggregate corporate circulation levels of more than 1 million. They represent 87% of the industry's total audited circulation, up slightly from 86% a year ago.

Eight companies have more than 10 million in aggregate circulation: Time, Inc, Hearst, Conde Nast, Meredith, Reader's Digest, G+J USA, Primedia and Hachette. None of these companies experienced a dramatic increase in circulation, although Hearst's circ increased 5 percent, primarily as a result of the Seventeen acquisition. However, there were some major decliners. G+J's circ dropped 20%, mainly due to the demise of Rosie (3.3 million circ in the 2nd half of '02) and Primedia's circ fell 29%.

Primedia's performance warrants special mention. It's a company that stands out for its vigorous pursuit of circ level reductions. Their aggregate circulation declined more than 5 million in the second half of 2003 and in the last two years their circulation has dropped 7.8 million, or 38%. A significant portion of these reductions can be attributed to divestitures (Seventeen and New York Magazine in 2003). But close evaluation reveals they have become the industry leader in strategically paring circ levels. For example 51 of their 64 audited publications (80%) had circ level reductions in the 2nd half of 2003.

Some of the Primedia cuts were small, but the cumulative effect is they reduced the circ on their current titles by more than 1.1 million, for a total of 8%. Many of their titles do not have published rate bases, which makes it somewhat easier to reduce circ levels. Nevertheless, they should be congratulated for these changes. Among the leading circulation companies it should also be noted that Hachette reduced the rate base, and circ levels, on three of their titles - American Photo, Premiere and Sound & Vision. In addition, Reader's Digest demonstrated circ reduction courage, by cutting their rate base by 1 million (8%) and G+J should be commended for their recently announced decision to cut the rate base on YM by 25%. These are all laudatory moves.