Smaller Titles Join The Circ-Level Reduction Trend

Circulation Management, May 1, 2003

Byline: BAIRD DAVIS

The overall circulation of audited consumer magazines fell again to 294 million in second half 2002 - this time, by 6 million, or 2 percent, as compared with second half 2001.

However, as I've stressed all along, the declines that I've documented since the circ level peaked at 312 million in first half 2001, represent healthy adjustments. The publishing industry was long overdue for a shakeout of marginal titles, and for strategic circulation reductions on viable titles whose rate bases and/or bonus circulation were inflated during the advertising boom years.

Here's a closer look at the dynamics at play, as revealed by these most recent publisher's statements.

FEWER AUDITED TITLES

Between the second halves of last year and 2001, the number of audited titles declined by 1 percent, from 628 to 622. Thirty titles either ceased publication or stopped being audited, representing a combined circulation of 7.7 million. Twenty-four were added to the auditing ranks, but their combined circ was just 1.7 million, resulting in a net audited circ decline of 6 million.

NEWSSTAND CONTRIBUTES TO OVERALL DECLINE

Audited newsstand circulation fell by 2 million, or 3.4 percent. Moreover, the newsstand contribution to total circulation sank to an all-time low of 19.3 percent (compared to 19.7 percent in last year's second half). The newsstand scenario intensified many publishers' struggle to find economical subscription replacements for "lost" circulation, contributing to the general financial malaise of the industry.

TOTAL AUDITED CONSUMER CIRCULATION

Second Half 2002 vs. Second Half 2001 (millions)

STRATEGIC CIRC REDUCTIONS

The number and magnitude of selective circulation reductions is clearly growing. In second half 2002, 76 publications dropped their respective circulations by 5 percent or more, compared to 66 initiating decreases of the same magnitude in first half 2002.

Not surprisingly, general interest titles showed the largest decreases, led by National Geographic (-1,007,000) and Reader's Digest (-621,000).

Four other titles showed reductions of 200,000 or more: Outdoor Life (-336,000), Rosie (-276,000), O, The Oprah Magazine (-269,000) and Money (-203,000). In addition, nine titles showed level reductions of more than 100,000: Kiplinger's Personal Finance, Newsweek, PC World, This Old House, Field & Stream, OG, Star Magazine, Penthouse and Family Circle.

In some instances, magazines such as National Geographic, Reader's Digest, Family Circle, Field & Stream and PC World lowered their rate bases in conjunction with circ-level reductions. But for the most part, these titles lopped off significant portions of bonus circulation, and if they had published rate bases, they were not adjusted.

The 15 titles that dropped more than 100,000 represented a 4 million aggregate drop in circulation.

One of the more notable trends during this period was a growing tendency among smaller-circulation, mainly special interest titles to also begin reducing circulation sizes. These publications, many of which are more circ-driven than their larger brethren, had up to this point largely resisted taking their levels down.

Primedia, the major player in the special interest sector, set a strong example, reducing circ levels on nearly one-third of its 68 audited titles. In addition, Primedia removed nine titles from the auditing ranks. None of these is believed to be folded, which leads one to speculate that there may be plans to further reduce their circulations down the road.

On the other hand, Primedia increased the circulations of several other titles - notably, those that continue to have strong newsstand performances. In my book, this looks like responsible circulation management.

TOTAL AUDITED CONSUMER CIRCULATION SECOND HALF 2002 VS. SECOND HALF 2001 (MILLIONS)

Including Breakouts for 38 Publishers with Circulations of 1 Million or Greater

CIRCULATION LEADERS

In last year's second half, there were 38 publishing companies with aggregate corporate circulation of more than 1 million. These companies represent about 87 percent of the industry's total circulation.

Eight companies have more than 10 million in aggregate circulation: Time Inc., Hearst, Conde Nast, Primedia, Meredith, G J USA, Reader's Digest and Hachette. Of these, Primedia, G J and Reader's Digest each decreased their aggregate circ levels by more than 5 percent during this latest reporting period. The circ levels of the other five leaders remained stable or grew slightly.

With its acquisition of Weider Publications, American Media jumped into the top 10, nearly doubling its total circulation, from 4.6 million to 8.4 million. American Media, which prior to the acquisition had a relatively small subscription base, now boasts nearly 3.7 million subs - a change in makeup that will, obviously, require a shift in its circulation management operations.

FINAL THOUGHTS

While magazine foldings have made the biggest impact on the industry's circulation levels in recent years, the momentum for selective level reductions is clearly growing. For this reason, I'm inclined to stick by my prediction that overall audited circulation levels will continue to decline over the next three or four years, ultimately dropping to 270 million (a 13 percent decline from the peak of 312 million).