The future of magazines

Folio: The Magazine for Magazine Management, Nov 1, 1992

Eight industry pundits examine the state of the business, its faults, its potential and its promise for the future.

With the magazine industry beginning to climb out of its worst recession since World War II, FOLIO: asked six of its leading figures to join in a discussion of what the future holds for magazine publishing. The participants were James A. Autry, former president of Meredith Magazines Group who is now an author, poet and consultant; Jerry Reitman, executive vice president of Leo Burnett Co., Chicago; Francis P. Pandolfi, president and CEO of Times-Mirror Magazines; John Klingel, vice president, development, Time Publishing Ventures; Wilma Jordan, co-chair of the Jordan Edmiston Group, an investment banking and consulting firm; and Thomas Kenney, president, Magazine Publishing Group, The Reader's Digest Association, Inc. The discussion was moderated by Hershel Sarbin, CEO of Cowles Business Media, publisher of FOLIO:, and Sean Callahan, editor of FOLIO:

SARBIN: You all not only bring great skills, but you've all had experience working with large and small magazines. Even in the large companies represented, many of you work with small magazines. Therefore, in our discussion today we are addressing the problems of all magazine publishers, large and small, trade and consumer.

I'm going to start by asking you to share your views of the future for magazines over the next five years. Will this business ever be the same?

KLINGEL: What we're going through right now is a massive and very rapid change. By the year 2000, we will probably see totally different economic formulas being used in our industry. I'm not sure what those economic formulas will be, but certainly they include a permanent decline in ad dollars in print. That doesn't mean that our companies can't find other ways to attract advertising, but traditional print advertising has probably seen a permanent decline.

I think companies that can adapt to the changing environment will survive, and those that are too entrenched in their current economic formulas will probably get blown out of the water.

Also, I think for the first time in our industry, "largeness" is becoming a real big advantage. In the decades ahead of us, the size and diversity of the company are going to become much more critical factors--which is not to say we can't have independent companies. But succeeding as an independent is going to be more difficult.

JORDAN: I think that publishing is truly an organic business; it's always going to change because it has to adapt to a new environment every year. I would assert that if we look back over the years, it's changed every decade--and the challenges have been different every time.

I agree that the dynamics of the marketplace have changed pretty dramatically to favor large companies, and that's very scary for mid-size companies. They're going to have to be a lot fleeter of foot to really compete.

On the positive side, with advances in technology and the recent downsizing for maximum productivity, I would say that from now to five years from now, we should have very high margins in this business. So while we are going to go through some pretty dramatic changes this decade, I still think it's a very good business to be in.

KENNEY: The big challenge is going to be to stay ahead of that change curve, and the way to accomplish that is to find and exploit the competitive advantages we each have. For those companies that have yet to build or exploit competitive advantages, I suspect that the current economic vise hasn't squeezed them as it will. There won't be room for those players in the future.

When companies develop real substantive value packages for various clients--both readers and advertisers--there's no reason why the growth rates, the ROIs and all the other indicators of success can't be as healthy in the future as they have been in the past.

AUTRY: Generally, I'm optimistic. I think it's been a long time since any of us started magazines with the attitude that we were creating some new institution like a Better Homes and Gardens or a Time. Now we are starting new publications that may have their own product life cycle, like a lot of other products. That attitude drives us toward certain economic disciplines that have to do with the time frame of payback. And indeed, I think that being in the product-development business of serving customers--readers and advertisers--instills good business disciplines.

I also think small is still good. You talk about the advantages of large companies, but I see that mainly as advertising advantages. Any magazine that can get readers to pay decent money for its information can still effect very good margins. Size doesn't have to be a factor. I'm much less optimistic about larger magazines, however, where the total number of ad-page dollars is probably not going to rise very much. They are in a share fight that is putting them in this terrible cycle of ever-declining margins. But boy, I think there are opportunities galore in niche magazines.