Analysis: Flat Newsstand Sales Mask Major Change in Product Mix
By Baird Davis
Newsstand sales in the first half of 2005 were flat. Unit sales of titles audited by ABC and BPA rose .1 percent and retail revenue fell .4 percent. Aggregate revenue fell to just under $1.6 billion, a modest decline of $5.9 million. The slight drop in revenue was inline with sales performance for the past several years. In ’02 and ’03 newsstand revenue of audited publications declined .1 percent and .4 percent respectively. In 2004 the revenue rose 2.6 percent. Over the last 3 years retail revenue has increased at less than a 1 percent annual rate.
2. American Media – They publish three of the top ten selling publications (Star, National Enquirer, Globe). However, the newsstand market was not kind to them in the first half of this year. Their unit sales were down 9.4 percent and the revenue abated by 7.3 percent. Nine of their twelve audited publications reported sales declines. National Enquirer, whose revenue was down 9 percent, has given way to US as the second leading newsstand sales revenue publication. The sales of the Star dropped 4 percent. Globe was a company exception with sales up nearly 12 percent. Several years ago American Media was the unit sales leader, but they are rapidly losing ground to Bauer, the company that’s supplanted them as the industry’s unit sales standard bearer.
3. Bauer – Time Inc. may be the newsstand sales revenue leader, but Bauer is quickly becoming the company that’s setting the newsstand agenda. In the last two years they have successfully launched two weekly titles (In Touch and Life & Style). This has helped boost their unit sales 43 percent and their revenue by 48 percent. In the first half of the year their newsstand revenue increased to $188 million, a 30 percent improvement. This growth was promulgated by the continuing strong performance of In Touch, the successful first half debut of Life & Style and the sustained sales strength of Woman’s World, the fifth leading newsstand publication. Their unit sales rose to over 98 million, 34 percent more than Time, Inc and 31 percent greater than American Media. In the first half over 20 percent of all audited publications sold at the newsstand (an astonishing one of every five) was a Bauer title. Bauer is a major newsstand presence and a publishing force to be reckoned with.
4 | 5. Hearst and Conde Nast – Hearst's sales were up .3 percent and Conde Nast’s down 2.8 percent. Without any entrants in the celebrity field or any broadly distributed weekly publications (assumes Conde Nast’s The New Yorker is primarily a regional publication) these companies were still able to maintain relatively stable sales. This is a testament to the quality of their product offerings. However, in the vital newsstand market share battle both companies lost ground to Time Inc., Bauer and rapidly soaring Wenner.
6. Wenner – Their sales rose an astounding 36.8 percent. Us was the catalyst for their dynamic growth, which boosted them ahead of Primedia into sixth place. All of their growth was organic, none via acquisition. Their retail revenue is now within 6 percent of fifth ranked Conde Nast. In the last three years their sales have more than doubled. With semi-annual retail revenue approaching $100 million they have joined the newsstand elite.
7. Primedia – Their sales revenue was down over 10 percent, hurt by the 13 percent decline ($3.9 million) of their two soap publications and by the 15 percent decline ($5.9 million) of their 20 audited auto specialty titles. The auto specialty decline was particularly surprising considering the newsstand success enjoyed by these titles the last several years. The sales shrinkage of their soap publications also has to be of concern because they lost valuable market share to Bauer’s two entrants in this category. It was not a good newsstand half for a company that may have been hurt by the aggressive price increase strategy they have pursued for the last three years.
8. Meredith – They showed a sales gain of over $17 million (31 percent) only because the titles they purchased from G+J in the first half of this year are included in the 2005 numbers. However, if the first half ’04 and first half ’05 sales for the former G+J titles and their own are combined it reveals a rather surprising sales reduction of 22 percent, nearly $14 million. This reflects the precipitous decline of their BH&G Specials and smaller decreases for BH&G and some of their other titles. Plus it includes Family Circle’s major 27 percent ($4.5 million) drop and Parents’ 18 percent decrease. Meredith is now the publisher of three (BH&G, Ladies Home Journal, Family Circle) of the “six sisters”. This could prove to be a burden in a market that increasingly favors low priced women’s and celebrity oriented titles published on a weekly frequency.
9. Hachette – Their sales revenue declined over 9 percent. They were adversely affected by Woman’s Day’s 13 percent ($2.7 million) drop, Elle Girl’s 41 percent decrease and the 12 percent fall of their auto/motorcycle titles (Car & Driver, Road & Track, Cycle World). They did, however, receive a small boost from Elle’s 6 percent sales gain.
10. Dennis – It was a tough first half of the year for Dennis on the newsstand -sales declined over 12 percent. The “laddie craze” appears to be abating. This is reflected in Maxim’s 17 percent sales shrinkage and Blender’s 26 percent decline.
Competitive Characteristics of the Newsstand Market Remain Strong – Newsstand sales success in a given category continues to invite new competitors – witness the growth in the celebrity category. Besides the seven audited celebrity titles discussed in this article, there are at least 3 other weekly frequency celebrity oriented titles currently being published – OK (U.K.-owned publisher Northern & Shell North America Ltd) publisher), Inside TV (TV Guide) and Celebrity Living (American Media). Plus Wenner indicated they are considering launching another entry in this field in 2006. In the low cover priced weekly women’s field Bauer’s Woman’s World once stood alone. But it has been joined by product entrants from some of America’s most influential publishers – All You (Time Inc.), For Me (Hachette) and later this year Quick & Simple, published by Hearst. When is Conde Nast going to join the fray?
The Market Influence of Weekly Frequency Publications Continues to Expand – Two years ago the sales of weeklies (with greater than $5 million semi-annual sales revenue) represented 45 percent of unit and 34 percent of the revenue of audited publication sales. In the first half of ’05 the market penetration of weeklies dramatically jumped – to 50 percent of unit sales and 40 percent of revenue.
Newsstand Market Share Battle Among Major Publishers is Intensifying – As the major newsstand publishers continue to battle for market share (i.e. the celebrity and weekly woman’s categories) sales opportunities for others are reduced.