Time to party - or panic?

Folio: The Magazine for Magazine Management, Feb 1, 1995 by Anne M. Russell

Explain this: On my desk are the results of the Conference Board's consumer confidence survey and Cahners' Business Confidence Index for December--both showing multi-year highs. And in this issue (page 19) are Don Kummerfeld's and Gordon Hughes' goodnews reports on the performances of their respective associations' members. Yet our last issue's News section (January 15, page 13) told the opposite story. Jauntily skylined "Taxes, paper shortages, rate hikes--happy New Year!" by our news editor, Sue Hovey, it painted a picture of an industry barely out of one trough about to fall into another. No wonder economists dredge up old chestnuts like "mixed outlook" when asked to predict the economy's performance.

Together, the individual items that comprised FOLIO:'s News secion in that prior issue read like an equation documenting the financial dynamics of publishing: steep cost increases tax disincentives industry consolidation = slow or no job growth.

As an economic indicator, new employment represents the future of our industry. Sure, you can eke profitability out of even the most moribund magazine by cutting, cutting, cutting--into staffing, research, capital investment, paper and printing. But you do so at the expense of your future, in terms of both the individual property and the company. When an industry is on the rise, new jobs are created and companies spend for research and development: Witness, for example, the current patterns of the online services.

Am I seeing the glass half empty, while others, more accurately, see it half full? Certainly The New York Times media column has had no shortage of cheery reports about recovery (recent interviews with Steve Florio of Conde Nast and David Pecker of Hachette Filipacchi, for example). Actually, though, I think it's more a matter of looking at entirely different glasses--filled perhaps with different beverages. From what I hear from smaller publishers, who have the least clout with vendors and none whatsoever with the Postal Service, 1995 will be the year of the Big Squeeze.

Granted, we all knew a couple of years ago that paper prices would increase this year, but I think few people anticipated the drastic shortages in certain weights and grades and the consequent scrambles for supply. More than one paper vendor described the situation to us as "the worm is turning," which says a lot about the antagonistic nature of buyer-seller relationships in an era when everyone is being leaned on hard by his or her customers for price concessions.

And what of the USPS? Again, we've known for several years that a new postal rate case was coming this year. But now here it is, in all its 14 percent glory, with another--unanticipated--increase looming behind it. Are Postmaster General Marvin Runyon's warnings about the Republicans' "Contract on the Postal Service" just bluster? Don't wait to find out: Call your trade associations and Congresspeople now and tell them what another postal increase would mean to your ability to create new jobs and generate profits on which to pay corporate taxes.

If this year turns out as rosy as the business and consumer indices suggest--well, then I will accept the Chicken Little award. But it couldn't hurt to lobby the new, allegedly "business-friendly" Congress now and to consider alternative scenarios that might still permit your magazines to move ahead with new projects and growth, even in a period of harsher financial pressures.