Magazine Marketplace: A highly selective industry chronicle

Folio: The Magazine for Magazine Management, May 1, 2003

THE DEALS

The first quarter was sluggish for magazine M&A activity, and the war and continued economic uncertainty could keep things slow for the rest of the year. "The first issue that has to be dealt with is getting over the war," says Bob Crosland, managing director at AdMedia Partners. "Then people are going to turn their attention back to the state of the economy." But Wilma Jordan, CEO of the Jordan, Edmiston Group, sees things picking up. "Once this war is put behind us, I think you're going to see a big rebound in the stock market and in M&A activity," she says. "People want to get things done."

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Louise Blouin MacBain acquires Art & Auction magazine from LVMH Moet Hennessy Louis Vuitton SA

Blouin MacBain added the 14,500-circ Art & Auction to her stable of 300 magazines and 60 Web sites at the beginning of April (terms of the deal were not disclosed). Although current publisher and editor-in-chief Bruce Wolmer will remain in his current positions, and there are no plans to trim the 21-person staff, there are changes afoot at the title. Wolmer says the June issue of A&A will feature a redesign - to be unveiled at the Basel Art Fair - that will "modernize" the look of the magazine.

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Emap plc to acquire Excelsior Publications SA pending competition authority clearance in France

With the acquisition of Excelsior - for 90 million euros, or $96.2 million - Emap becomes the second-largest consumer magazine publisher in France. Excelsior publishes titles such as Science & Vie, Science & Vie Junior, Biba, 20 Ans, Vital, and Max. The magazines will be run by the Emap France management group (Emap France publishes about 40 magazines). The terms of the deal also give Emap a 70-percent stake in Excelsior Publicite Interdeco, a joint venture between Excelsior and Interdeco, which handles advertising sales for Excelsior's titles.

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Amrep Corp. acquires subscription fulfillment business from EDS

The dwindling number of major U.S. fulfillment houses dropped by one in early April when Amrep Corporation, parent of Kable News Company, announced its acquisition of EDS's subscription fulfillment business for $10 million. The acquisition makes Kable, based in Mount Morris, Illinois, the second-largest provider in the sector behind Communications Data Service. EDS had announced its intentions to sell off the business last September. It was a strategic decision for the company to divest non-core assets, says Sean Healy, EDS's director of corporate media relations. - Geoff Van Dyke

THE DEVELOPMENTS

THE BEGINNING OF THE END OF FREE CONTENT?

Starting in late March, users logging on to EW.com and People.com for a quick catch-up on the latest celeb gossip were in for a rude awakening - unless, of course, they already had a subscription to those magazines, or had the latest newsstand copy, or had a subscription to AOL. In addition to EW and People, In Style, Real Simple, Southern Living, Southern Accents, Health, Coastal Living, Sunset, Parenting, Teen People, Time for Kids, and SI for Kids are all switching to a Web subscription model. Time, Sports Illustrated, Fortune, and Money will continue to be free online. "Maintaining quality and doing it based solely on ad revenues online is just not an option," says John Squires, a Time Inc. executive vice president who oversees the company's Interactive unit. "We need to bring in some sort of payment from the consumer side to support the journalism we're doing here."

Some say the move indicates AOL Time Warner has given up on an advertising model for its magazines online. "AOL is throwing in the towel just at the moment that we're seeing this as a significant source of revenue," says Sarah Chubb, president of CondeNet, the online division for Conde Nast magazines. Chubb says CondeNet's revenues have grown by 50 percent two years in a row. Squires counters that Time Inc. isn't giving up on online advertising. "We don't expect advertising dollars to go down at all," he says.

OUR TAKE: Advertisers generally agree that the ad-only model just doesn't add up for mags on the Web. But the question remains: Will customers willingly pay? Unless the information is essential to them, probably not. - Susan Thea Posnock

MORE CUTS AT VNU

VNU Business Media, a subsidiary of the Dutch publishing giant VNU, announced in late March it was reducing its U.S.-based workforce by another 2 percent and closing Point of Purchase magazine. The company, which publishes the well-known trades Billboard and The Hollywood Reporter - as well as a host of niche publications, such as Progressive Grocer and Business Travel News - laid off 37 employees, though spokeswoman Deborah Patton says an undisclosed number of them may be re-absorbed in other areas of VNU. "Periodically we review our portfolio with a keen eye to maximize its effectiveness," she says. "That's an ongoing discipline of ours. This was exacerbated by market conditions and the war." Patton cites continued weakness in the retail, travel, and media industries as reasons for the cuts and says they will hit VNU's retail books the hardest, followed closely by its stable of media titles - Adweek, BrandWeek, MediaWeek, and Editor & Publisher. The shuttered title, Point of Purchase, will be relaunched as a section within Display and Design Ideas. The cuts are part of VNU's strategy to reduce its dependence on cyclical businesses.