During IAC's second quarter earnings call today, chairman Barry Diller provided some feedback on the future of Newsweek as a print magazine. While the print version's survivability has been endlessly speculated on, Diller took an opportunity in the call to put the issue in better, if not entirely clear, focus. In answering a question from an analyst on the outlook for Newsweek/The Daily Beast and whether there were plans to make it a "lighter asset," Diller noted that the brand is doing better overall. "The brand is now much better and stronger than when we acquired it," he said. "There has been a true improvement in the book and Tina Brown and her staff have done a superb job."However, the recent decision by the Harman family to stop investing in Newsweek has shifted the majority stake onto IAC, as well as more of the burden of managing what is still a money-losing operation. "The consolidation does put it squarely on our heads," said Diller who added that investments from IAC will also be scaling back. "Our investment next year will be considerably less than it is this year."And while Diller said the brand is stronger, its print operation is still a wrench in the gears. "So what is the problem? The problem is in manufacturing and producing a weekly news magazine and that has to be solved. Advertising in this category is entirely elective. The transition to online from hard print will take place. We're examining all of our options."From there, Diller tapered off on providing any specifics on when and how the transition might happen, but noted that things will begin to look "different" starting next year.Currently, Newsweek's web presence is relegated to a channel via the main nav bar on The Daily Beast's home page. For the first half, ad pages were up about 8 percent for the magazine, per PIB numbers, and as of the December 2011 ABC publisher's statement, single copy sales were up about 3 percent for the six-month period.
Update: Jim Romenesko has a staff memo from Tina Brown that douses some of the more aggressive reporting that Newsweek is going online only. She says: "Barry Diller would like to make it clear that he did not say on the earnings call as reported that Newsweek is going digital in September. He made the uncontroversial, industry-wide observation that print is moving in the direction of digital."
Do the names Hanley and Wood mean anything to you? They should. Mike Hanley and Michael Wood are the founders of one of the biggest b-to-b media companies in the U.S. And the two were reunited recently in a deal through Mr. Wood's investment firm, Redwood Investments. The firm bought CSP Information Group last week, a b-to-b media company that targets the convenience store and restaurant markets. The portfolio includes four magazines and associated newsletters, websites and events. The deal was brokered by Berkery Noyes, which represented Redwood.Wood's son, Mike Wood, Jr., who is president of Redwood, will become CEO of CSP, which he says has tripled its revenue in the last six years. According to Wood Jr., CSP will become a platform for further acquisitions in the convenience store and restaurant media space. "We expect to invest in and grow CSP's existing businesses particularly in the digital, mobile and information realms, and to become an active acquirer of c-store, restaurant and foodservice industry media, trade shows and businesses," he says in a statement. Michael Wood will become chairman of the new company and Mike Hanley, an investor in the company, will also join the board. Pair this deal with the recent acquisition of Northstar Travel Media by the Wicks Group and you get the sense that b-to-b media companies that effectively spread their revenue across print, digital and live events still have appeal. Marketing services may be where the action is, and banks definitely still have some troubled assets on their hands which has pinched financing and can wreak havoc with structuring a deal, but these types of transactions are still getting done.
Speculation on a potential sale of digital magazine and newsstand provider Zinio has been swirling for some time now, and Fortune reported Monday that the company had indeed put itself on the block: "The San Francisco-based company has hired investment bank Montgomery & Co. to manage the process, with one source saying that the company is seeking between $50 million and $100 million. No idea yet if there is buy-side interest at that price."Since that report, we put in a request for comment and Zinio has released a statement, telling Folio:, "Committed to growing the company, we have retained Montgomery & Co to facilitate capital raising strategies and discussions. While the company has been engaged in similar discussions in the past, Zinio has never had a stronger vision, strategy and roadmap to engage the right set of potential partners."The timing of Zinio's capital raising efforts comes on the heels of the sale of Texterity, a digital magazine services provider, to Godengo, a company that has roots in regional magazine web development and now builds content management systems. It's not necessarily a coincidence, but it is a very crowded market out there for digital magazine services and newsstand providers. In Texterity's case, the company ran out of money before it could take the necessary next steps to fund growth plans.Further speculation over a potential buyer could zero in on a technology company or, say, a company like RR Donnelley, a printer that's been rapidly expanding into digital content services. The company, with $10 billion in 2011 revenues, has made a series of acquisitions over the last year. Importantly, the company bought LibreDigital last year, which provides digital magazine content production, analytics and distribution services. It's also bought Journalism Online, maker of the Press+ paid content platform; scooped up EDGAR Online for $70.5 million; and invested $2.5 million in catalog shopping app CoffeeTable, which lets readers make purchases directly from within the application.
With 'traditional' publishers quickly making inroads into nontraditional content sales and development, their suppliers have only had to follow suit and acquisitions are the quickest way to play catch-up.
The Economist Group this week released its annual financials, ending March 31, and the numbers looked good, with revenue and profits up (4 percent and 6 percent), as well as circulation.
But while the overall circ of The Economist is at 1.6 million, says the company, only 123,000 subscribe digitally. But according to Oscar Grut, managing director, Economist Digital, that could change dramatically in the next year.
In a recent blog post, lifted from his comments in the annual report, Grut notes that reader studies have revealed that long-form content continues to be valued, especially in digital form:
"We are fortunate because tablets, e-readers and smartphones allow our readers to enjoy the ritual, lean-back, immersive experience of reading The Economist that they love in print. Many of our readers tell us that this experience is, in fact, even better than print, because as well as being lean-back, digital editions are delivered immediately and reliably (much more so than via the postal service)."
Grut adds that a majority of American subscribers noted in another survey conducted last year that print was the preferred format, but 60 percent of those respondents said by 2013 they'd likely change that preference to digital.
Grut's full post, where he digs into The Economist's broader digital strategy, is available here.
If TIME's latest cover sets the newsstand a-buzz as much as it has the social web it should have a hit on its hands. The May 21st U.S. edition touts a cover story about "attachment parenting" by featuring a young mother nursing her 3-year-old son who's standing on a chair and attached to her left, mostly exposed, breast. Both stare straight into the camera with practiced ennui.With the main cover lines shouting "Are You Mom Enough?" the cover is casually confrontational while subtly daring you to judge the concept itself. Media writer Jack Shafer quipped on Twitter that TIME has "Businessweek cover envy," alluding to a steady stream of provocative covers from Bloomberg Businessweek. That magazine's recent cover story on private equity was illustrated by an "American Psycho"-inspired, chainsaw wielding financier and was called out for misrepresenting the pro-private equity piece. Similarly provoking, but really more funny, a February Bloomberg Businessweek cover features fornicating jetliners. Hey, sex sells. But a Continental-United business merger? Not so much.The Economist is another weekly title that has used its covers to make its readers think, and sometimes chuckle, rather than bashing them over the head with the obvious.Envy or not, the newsstand is becoming a grim place to do business. The temptation to be eye-catching by tickling a funny bone or challenging a single-copy buyer's social or moral boundaries is high. But it's a fine line between nudge-nudge-wink-wink and this. One step over that line and you've abandoned wit for poor taste.Done right, however, and with some consistency, you can serve up a level of anticipation among readers and an added layer of personality to the brandâ€”especially those with a weekly frequency.
The IAB released its Internet Advertising Revenue Report yesterday, which details full-year 2011 results and was conducted by PricewaterhouseCoopers. As it has for the last ten years, except for a slight dip in 2009, annual revenue easily beat the previous yearâ€”hitting $31.7 billion in 2011, a 22 percent increase over 2010 and an all-time high. In the last decade, revenues have shot up $25.7 billion at 20.3 percent CAGR. Even so, mobile got recognition as a format that came into its own in 2011, jumping 149 percent to $1.6 billion for the year. 2011 also marked the first year in the report that mobile was broken out as a standalone format. Its revenue increase drove 3.7 percent of the overall 22 percent advertising growth for the year.While mobile's 5 percent slice of the full-year digital advertising pie is a tiny one, it's passed email (1 percent), sponsorship (4 percent) and rich media (4 percent) in share of revenues. Mobile is now tied with lead generation. It's likely been singled out due to its big jump over 2010's $641 million, by far the fastest growing segment. Plus, the platform has traditionally been bemoaned as one that's not been capitalized on nearly enough. Nevertheless, digital video (6 percent)Â and classifieds (8 percent) are still slightly ahead, as are display and banner advertising which command the highest share of revenues at 22 percent and 47 percent respectively.
For the full report, click here.
Annual Internet Ad Revenue (in billions)
Source: PwC and IAB, April 2012
For our March issue cover story, we convened a Folio: Roundtable to deliberate on the current state and future of content. Itâ€™s a topic that can easily get overlooked while we get distracted by the various technologies and platforms that enable its production and distribution. Content is not the same old product weâ€™ve been producing anymore. In no particular order, hereâ€™s why: 1. New Access DynamicsWhere our content gets delivered to and consumed from has not only enabled greater access, it has changed the way itâ€™s produced, demanding a new skill set from its creators. We donâ€™t simply pour identical content from one platform to another.2. Social MediaMore than just a content marketing vehicle, social media, and the audience feedback it fosters, directly influences the kind of content we emphasize and the kind we dial back.3. Audience DataThe more platforms our content appears on, the more data that gets kicked back that influences the subject matter, frequency, length and any number of characteristics. Weâ€™re incredibly more informed about audience likes, dislikes and preferences. 4. Content CreatorsYouâ€™ve heard it a million timesâ€”everyoneâ€™s a publisher. Your audience and your advertisers are becoming a larger and larger part of the content supply chain. Both have a valuable position in the creation phase and both can contribute to the economics of content.5. The Role of the EditorThe curatorial power of the editor has diminished. Thatâ€™s not as bad as it sounds and because of the way weâ€™ve allowed our audiences into the process to drive deeper engagement, itâ€™s inevitable. Editors certainly still drive what gets created, but the other 5 factors presented here have profoundly altered their role.6. EconomicsPaid versus free only scratches the surface. Cost pressures, cross-platform pricing configurations, bundling, a growing array of media platforms and audience data are all keeping the revenue formula in flux.
On Monday the LinkedIn announced a new Follow Company button that lets individuals follow a brand or company page. The feature is essentially an expansion of functionality that was already in place, but from within the network itself. Now companies can allow individuals to follow them from outside the LinkedIn ecosystem by clicking on a button embedded in their websites.According to the blog post by LinkedIn product manager Mike Grishaver announcing the new feature, AT&T, Starbucks, Sony and American Express, among others, are already using the button on their sites. There are four ways to follow a company, including the embeddable website button. On LinkedIn itself, you can click a follow button on the company's page, directly from a search results page, or by hovering over the company name in contact's page and clicking on the follow link in the pop-up window.LinkedIn says it has more than 2 million companies and, as of early February, about 150 million members. The 2 million companies is up from almost 1 million since the spring of 2010 when LinkedIn launched its original Follow Company feature. At that point, there was no way to receive status updates from companies, a function that didn't appear until later in 2011.
Barnes & Noble today announced a new $199, 8GB Nook tablet. The pricing and configuration put it right in line with Amazon's Kindle Fire.Meanwhile, the company has dropped its Nook Color pricing as well, from $199 to $169. The move clearly targets the Kindle Fire, but it's also an attempt to open the throttle on device and content sales even further. Both were up significantly, according to third-quarter financials. Where B&N's new Nook and Amazon's Kindle Fire will compete is in the content. Both offer their own cloud services but much of the Nook's content is through third-party relationships with Netflix, Hulu, Pandora, Rhapsody and Grooveshark, among others. In B&N's fiscal third quarter, total sales edged up 5 percent to $2.4 billion, with comparable store sales up a slight 2.8 percent. BN.com sales jumped 32 percent over the same period last year to $420 million.Overall Nook sales, including devices and content jumped 38 percent during the quarter to $542Â million. Breaking those numbers out, unit sales were up 64 percent for the quarter to $542 million while content salesâ€”books, newsstand and appsâ€”were up 85 percent. "Importantly, our NOOK digital content business continues to grow rapidly, and according to some of the largest U.S. publishers, we maintained or slightly gained share in the eBook market during the third quarter," says B&N CEO William Lynch in a statement. Earnings tell another story, however. Net income was $52 million for the quarter, down from $60.5 million in third quarter 2011.
The year, as it always does, has flown by and we're already in the midst of compiling our annual list of the top innovators in the magazine business and the markets that intersect and influence itâ€”the Folio: 40.We're excited to announce that starting now, you can have a hand in how the list turns out by nominating a colleagueâ€”either at your company or from another oneâ€”that has had a meaningful impact on a product, company or even market. We're looking for nominations in the following categories:C-Level VisionariesTop execs that transform culture, company or marketsIndustry InfluencersIndividuals that have single-handedly sparked a trendDirector-Level DoersManagers and other senior level executives that develop and execute on wildly successful new initiatives Under the RadarUnsung heroes or individuals that quietly work on transformative new ideas or operational breakthroughsAs we note every year, we're not simply looking for the marquee names. There will be some of those on the list for sure, but there are plenty of examples of envelope-pushers, bootstrappers and change agents that toil in the trenches, too. Nominate them.Click here to fill out our easy nomination form. Nominations are due by March 2nd. Here's last year's FOLIO: 40 to get you in the mood. The FOLIO: 40 will be unveiled in April. Submit your nominations now and good luck!
The sale of Ziff Davis Enterprise to online marketing company QuinStreet Friday raises some interesting and, on the surface, worrisome thoughts on the role brands and content play in connecting buyers and sellers. I should mention that we don't yet really know how QuinStreet is planning to incorporate ZDE's brands into its operation. The company declined to offer any details in that regard. What we do know is ZDE employees are in the dark as well, with the bulk of them helping transition the brands before their positions are phased out. As many as 100 of the 120 or so employees will not be moving over to the buyer. QuinStreet didn't buy ZDE as a company, it bought its assets.But how can you have ZDE's market and ZDE's brands when you don't have ZDE?Â According to sources, about 20 people will be offered positions with QuinStreet. The positions are a mix of editorial, marketing and sales, certainly not enough to continue supporting content production for eWeek, CIOInsight, Baseline, Channel Insider and Web Buyers Guide. However, QuinStreet says it has a base of content expertise in the IT space already in placeâ€”as many as 40 editors and a pool of 300 freelancer journalists, according to the company. QuinStreet also bought IT Business Edge last year, and the ZDE deal now gives it a much bigger foothold in the tech vertical.But presumably, along with the phasing out of ZDE's content, audience and sales specialists, so goes the institutional knowledge of the brands and their community.Regardless of the motivations behind the deal, whether ZDE's backers wanted a quick exit, you have to question how a dramatic course correction like the sale of these assets is going to have on content quality and, ultimately, brand equity. But at the end of the day, do these matter for a company that's dangling content to attract leads? Does the editorial mission change when the end-goal is servicing leads for marketing clients? I wouldn't be asking these questions about products created specifically for these purposes, but in this case we're talking about established brands that have rich editorial histories. You can look at this as simply another example of the decline of brands in a very competitive market, finding a resting place in a context that potentially homogenizes that experience. But it's disconcerting to see how easily it can happen.
More than a few magazine and media executives spent the holidays putting the finishing touches on deal closures. We're only 3 weeks into January and there's been a flurry of M&A actionâ€”from decently big deals to small. Here's a recap:Today of course Meredith announced it's buying Allrecipes.com from Reader's Digest Association, advancing a deep dive strategy into the food vertical as fast as RDA is pulling away from it, having also bought Everyday With Rachael Ray from them. The deal closely followed Meredith's acquisition of FamilyFun from Disney Publishing earlier in the month.
Harry Stagnito has sold Stagnito Media to private equity firm Topspin LBO, which also owns his son's Vermont-based Moose River Media. The deal, says Stagnito, will allow the company to build out its marketing services and data and information products. Edwin V. Avent's Heart & Soul magazine has been sold to a group of investors called Brown Curry Detry Taylor & Associates. BCDT's principals all have direct ties to the magazine, having worked for it in one capacity or another.Hanley Wood is now owned by Oaktree Capital Management, Strategic Value Partners and Tennenbaum Capital Partners after going through a major recapitalization, cutting its debt from $410 million to $80 million.In a retreat from the U.S. market, Future plc sold its U.S. group's Music Division, including 3 magazines, to NewBay Media for $3 million. Revenues for the group in Future's fiscal 2011 were about $13 million. Grand View Media has taken over management of Shooting Sports Retailer magazine. While not technically a sale, Grand View may have an option to buy after a certain period of time and certain performance goals are met.F+W Media is expanding its food vertical coverage, too. It bought World Tea Media, which produces the World Tea Expo as well as associated editorial products. Â Vibe Holdings has been merged with BlackBook Media and Access Network, forming Vibe Media. The combined entity will be owned by the Yucaipa Johnson Fund, backed by Ron Burkle and Earvin "Magic" Johnson, and InterMedia Partners.Bangor Metro, a regional magazine serving the Bangor, Maine region, has been sold to Cashman Asset Management.