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How Lean Is Too Lean?

At what point do cost and people cuts go too far?



By Matt Kinsman
02/27/2009

Last month at the DeSilva + Phillips 2009 Media Dealmakers Summit, a consumer publishing panel featuring J. Scott Crystal, president and CEO of TV Guide, Joseph Holland, vice president of strategy and corporate development at Martha Stewart Living Omnimedia and Andrew Armstrong, Jr., managing member of Spire Capital Partners, were asked whether they were concerned about cutting too deeply and affecting the quality of the product. Other than Crystal saying, “We aren’t affecting the quality,” none of the panelists touched the question. “When it comes to costs on magazines, we only have a few levers: frequency, folio size and print order,” Crystal added.

Of course, there is another lever, and that’s personnel, the number one expense for most small- and mid-size publishers and a tempting (and even necessary) place to cut. Yet at some point, it yields diminishing returns.

Last month, Chicago-based Johnson Publishing announced a “multi-phased” staffing reorganization in which employees will be required to reapply for their current positions. A Johnson spokesperson assured Folio: that there were no layoffs associated but declined to offer specifics about the new plan other than to say Johnson expects to “see a net gain” in employee head count.

“All media outlets are revising their revenue outlook and expense reductions and these realities have resulted in a never-ending balancing act of lowering expenses and cutting head-count while meeting long-term business goals,” says Michael Desiato, group publisher of Incisive Media’s Real Estate Media, which last November cut nine jobs across sales, administration and support, editorial and events. “Reducing the size and frequency of some of our publications and shifting more focus to digital production and delivery formats has allowed us to lower costs and still maintain our relevance and brand integrity through the downturn.”

Changing the Value Proposition

What many publishers need to recognize is that slashing staffs can also change the value proposition of their product. “The short answer is, when you start to lose your subject matter experts and those who serve as your content champions for your audience, you’ve probably reached a dangerous place on a slippery slope,” says Wyatt Kash, editor-in-chief of Government Computer News. “But it also depends on where on the content value spectrum a publisher wants to be. If a publication’s value depends largely on offering original content or perspective that is distinct in a market, then you need some core of editors who are subject matter experts to generate—or commission others to generate—specialized content. As publishers cut back staff, beats are consolidated, expertise and contacts are lost, and eventually, so is the ability of the remaining editors to deliver the value proposition. Do you continue to limp along? Or do you creatively reinvent the value proposition?”

New Reality For “Figureheads”

Few editors are as familiar with doing more with less than Mark Newman, editor of regional lifestyle title Southern Breeze, whose three-person staff also does double duty with custom projects for parent company Compass Marketing (and having been laid off almost as many times as he’s been hired for a new job, he’s not insensitive to the plight of those newly out of work). But for Newman, some of the cutbacks have been a long time coming, particularly on the mass consumer side. “Many consumer magazines are crammed full of executive editors and editors-in-chief who haven’t copy-edited a page in 20 years,” Newman says. “It’s time to stop being figureheads and do some work.”

But Newman says this is a problem with some of the larger b-to-b publishers as well, including his old haunt, VNU (now Nielsen). “At VNU, there were editors-in-chief who would walk around like Anna Wintour and they had 7,000 people reading their magazines,” he adds. ”The excess of the magazine industry of the 1980s and 1990s is coming back to bite people in the ass.”

And prepare for many of these cuts to be permanent. “Southern Breeze will go to paper stock not as white, we will reduce trim size and have to cut 16 pages out,” Newman says. “Cheaper paper won’t reduce the quality of the writing. It will be an adjustment and the industry will bounce back but not to where it once was.”

By Matt Kinsman
02/27/2009







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