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Tony Silber

Understanding the Magazine Industry's Darkest Hour

Tony Silber M and A and Finance - 02/13/2009-15:52 PM

This comment on a blog post I wrote yesterday got me thinking about how people all over the industry are struggling to understand the unprecedented environment of today, which combines the fast-changing media structure combined with a remarkably difficult recession:

Driving revenue while trying to re-invent a business model is a difficult thing to do, it's like changing the tires on a moving truck.

I've lived through the economic downturns of early 1990s and 2000s, and right now, this one seems much worse.

Adding to the challenge is the fact that we're in an economy-wide crisis of confidence, where no one wants to spend money. Consumers who cancel frivolities like Netflix and gym memberships hold off on new cars and worry about putting kids through college. Businesses that scale back investment and hiring. Local governments that reduce their police overtime budgets and schools that make kids pay to participate in sports and other activities. And most relevant to us, advertisers who used to buy magazine ads Web banners, show sponsorships and newsletter insertions.

The smart ones still advertise, they still go big, but this year, right now, even a lot of these marketers are lying low.

All of this leaves a lot of us scrambling. Under pressure, we tend to fall into three general groups based on behavior patterns. There are those who panic, who cut the vitality out of their brands through layoffs and physical downgrades. (This group also includes those who sell their souls for a dollar, like those magazines that suddenly do happy features about their advertisers. You don't have to look far to find that in this space.)

And—a much more admirable group—there are those that try to understand where these sweeping changes are taking us. One of the best at this is Rex Hammock, whose blog is a source of nearly daily Socratic dialogue. Thursday, for example, he talked about the power of print media, and how he and Samir "Mr. Magazine" Husni are convinced that magazines will continue to play an important role in people's lives well into the future:

The "business model" is not necessarily selling ads or subscriptions (but can be—and Mr. Magazine loves studying how magazine companies do so). The business model is driven by whatever the greater organization's goals are. But to reach those goals, the institution must master any media important to its audience: magazines, books, events, licensing, TV programming, social (and personal and conversational) media and networking, eBooks, online community. The tools we have to work with today make this one of the most exciting times ever known. Yet we look around and see fear and defensiveness.

My response to that is this: The vast majority of companies in this business are built from the ground up on selling ads or subscriptions or both. That's what they do, and they often can't see beyond the basic economics of magazine publishing: "I either make enough money selling ads and subscriptions to pay for the cost of producing an ink-on-paper magazine and accompanying Web site, or I don't. And if I don't, then I'm going out of business."

And then there are those who take Rex Hammock's concept and execute on it. It seems to me that Hearst Magazines is one. In a speech last week at the Primex conference, Hearst EVP and general manager John Loughlin made a compelling presentation for how to model out your goals, establish strategies to achieve those goals and develop tactics to achieve those strategies.

It takes working through the minutia. As Loughlin said: "Hope is not a strategy."

Tony Silber

Hachette Dropping Out of the MPA Just Tip of the Iceberg

Tony Silber Association and Non-Profit - 02/12/2009-10:49 AM

I’m predicting that Hachette Filipacchi Media dropping its membership in the Magazine Publishers of America ("Hachette Drops Out of MPA") is just the tip of the iceberg. Publishers are feeling economic pain and, consequently, the associations, audit bureaus and others are as well. If this recession is long and as challenging as it is right now, there will be more high-profile dropouts.

Think of it from a publishing company’s perspective: Your revenue is declining, you’re laying people off, you’re freezing salaries, you’re not filling positions, you’re reducing frequencies, trim sizes, circulations, paper stock and more.

And as you comb through your budget trying to make the least damaging and least painful decisions, you see a line for association membership that may be $10,000 or may be $50,000. And in the case of the large companies, it’s certainly over $100,000.

There’s no way—no way—when you see that line that you don’t ask what the value is that you’re getting. Yes, you get lobbying for postal reform. Yes, you get research proving the value of magazine advertising. Yes, you get events with quality programs and valuable networking.

But in a time when all you want is to drive revenue with as lean a business as possible, those benefits are less compelling. Especially when you have to pay for virtually everything the association provides in addition to your dues. And that big, fat budget line becomes an easy target.

What publishers are looking for is not participation in committees and abstract reports and golf tournaments. Those are fine most of the time, but not now. Publishers want tools and resources that will keep them focused on effectively driving revenue in their markets.

It’s hard to overstate the message of HFM dropping out of MPA. Jack Kliger [pictured] was perhaps the highest profile and most effective chairman of the association in a decade or more. For his company to drop out within six months of Kliger stepping down as CEO says volumes about the extraordinary climate.

[EDITOR'S NOTE: Red 7 Media, FOLIO:'s parent company, is a member of the MPA.]

Tony Silber

Doubledown’s Demise

Tony Silber B2B - 02/11/2009-12:02 PM

I read a good column in the Wall Street Journal yesterday about Doubledown Media and its demise. Doubledown, in a very real sense, lived by the sword and ultimately died by it. It celebrated the kind of excess and greed that would have made Gordon Gekko [right] blush. It championed the bullying, any-means-necessary culture of Wall Street traders—the kind of culture that blinds people like ex-Merrill Lynch CEO John Thain to the profound immorality of their actions. (You remember Thain redecorated his office on company money, spending $130,000 on rugs and $35,000 on a toilet, among other things.)

In the end, as Journal columnist Thomas Frank points out, the super-successful traders weren’t financial geniuses, they were creators of a bubble that was bound to burst. And so Doubledown, which wrote about how to spend “unthinkable” bonuses, found itself unable to react quickly enough. It found itself reducing its magazines frequencies to quarterly, repurposing content across its magazines, desperately seeking new capital and enduring an inexorable death spiral over the last five months or so.

But it still kept up the lavish boxing matches and extravagant parties it became known for.

There’s a parallel here to the Industry Standard, the chronicler of the dot-com era, which itself became synonymous with the excesses of that era and crashed eight years ago—it was out of business a year after producing $140 million in revenue.

The Doubledown story is a story of a lot of things. It’s the sad story of a dream unrealized, the loss of jobs for good people. It’s the story of the collapse of a served market, and the demise of a company with some good ideas.

It’s the failure to effectively respond early enough in ways that could save the business, not decimate it on the way down, thereby ensuring the fate of the brands. It’s the story of hubris.

Tony Silber

Somber AMC Concludes with ‘Terminator’ Q+A

Tony Silber Consumer - 10/08/2008-21:27 PM

SAN FRANCISCO—The final day of a somber American Magazine Conference was capped by a long commercial for a mobile Web company called SnapNow and an engaging closing interview with California Governor Arnold Schwarzenegger.

Schwarzenegger described how he relates to Barack Obama even though he’s supporting John McCain. Obama, he said, must have had a burning ambition from childhood to become something great. “I always knew from the time I was 10 years old that I was going to come to America and become something great,” he said. “I didn’t know it was bodybuilding or powerlifting, but I knew it would be something.” Of course, he went from bodybuilding to a 20-year movie career and to politics.

Schwarzenegger’s funniest line, apparently inadvertent: Asked about the perils of misspeaking on the campaign trail, he noted that “in a campaign, people take what you say and spin it in 20 directions. So you have to be very careful about what you say, and you sometimes end up talking like a machine.”

A slow roll of audience laughter followed, and Schwarzenegger broke into a slow grin, adding, “I see you have a sense of humor.”   

The SnapNow presentation was made by the top executives at Women’s Day, who are testing the product. Essentially, participating brands, products, magazines and advertisers are entered into a SnapNow database, and their ads or images are tagged with a SnapNow logo. A mobile user takes a picture of the product and e-mails it to SnapNow, which sends a link to more information.

The interesting thing was the presentation was supposed to last 10 minutes, but extended to about 25 minutes as the presenters took questions waiting for Schwarzenegger to arrive. And the questions kept on coming, an indication that the technology and similar mobile-enabled texting technologies are striking a chord in the magazine industry.

Earlier sessions included one called “Monetizing Beyond the Ad Page,” and featured Jeff Price, president, SI Digital; Robert Ames, VP and GM, digital automotive and M.E.N. Networks at Hachette Filipacchi Media U.S., Inc.; and Jennifer Andre, online sales and marketing director, Healthy Living Group, Active Interest Media. Among their observations and advice:

• “Grow what you know.” Andre described how Yoga Journal readers have a passion for yoga poses, so she built a searchable online library of them.
• Ames (who noted that 15 percent of HFM’s revenues are from digital media) described special sponsored e-blasts that repurpose reviews from Car and Driver.
• Price described an early failure or two. First, he said, SI Digital was “a little slow to have an open-Web approach. We need to go where the sports fans are.”  He also noted that SI was slow in recognizing the value of organic search and tagging stories, and in online fantasy sports.
• Ames told of enabling Road and Track editors to be 24/7 reporters through the use of Web-enabled cell phones, where editors can go out and do tests and upload reports and images in real time.

Tony Silber

AMC 2008: ‘It’s a Slugfest Out There’

Tony Silber Consumer - 10/07/2008-10:57 AM

SAN FRANCISCO—The American Magazine Conference is a study of an industry in transition. I suppose not surprisingly, this year’s conference is very much focused on e-media. Of the sessions that focus on the magazine business, seven are e-media related while only six are specifically print oriented. The sessions featuring business and political celebrities have also been valuable, if purposefully light. (House Speaker Nancy Pelosi, pictured, didn’t illuminate much on the financial rescue of Wall Street—I doubt California Governor Arnold Schwarzenegger, coming Tuesday, will either.)

First full-day highlights included a session on reshaping the model for magazines, where IDG’s Bob Carrigan demonstrated how far out in front of the rest of the industry his company really is. Where others offered generalities, Bob was talking about what IDG has already done.

One of the keynotes Monday was Tom Rogers, former CEO of Primedia, the cobbled-together giant of the ‘90s that was broken up and sold over the last four years. Rogers is now CEO of TiVo. I remember when Rogers took over Primedia. I interviewed him his first day on the job, and he somewhat anxiously asked me what the big magazine companies like Time Inc., Hearst, and Condé Nast thought of Primedia. Now, nearly a decade later, he’s preaching to them.

Another highlight was a lunch presentation with Sheryl Sandberg, the COO of Facebook. BusinessWeek editor Stepher Adler, who interviewed her, set up the conversation this way: “WTF?”

This is the first AMC in a while that’s been held in a city, not a resort, signaling, I suppose, a businesslike attitude on the part of the Magazine Publishers of America, which recently needed to lay off some staff.

As Carrigan put it Monday: “Given the environment we’re in, there will be a migration towards performance-oriented media.” He wasn’t talking about magazines.

And Carrigan’s fellow panelist, Ed Kelly, CEO of Amex Publishing, was even more succinct. Asked his priorities for the next six to 12 months, he said: “For us, it’s hunker down. It’s a slugfest out there. Bring it on.”

[photo: Doug Goodman]

Tony Silber

Next Penton CEO Likely to Come From Outside B-to-B Publishing

Tony Silber B2B - 09/04/2008-14:40 PM

Penton Media will name a new CEO in the next 30 to 60 days, and when it does, the executive will likely come from outside of b-to-b publishing, Anup Bagaria, vice chairman of Penton owner Wasserstein & Co. said Thursday.

Bagaria’s comment is significant because it indicates how Wasserstein executives view the future of Penton, and that future is likely to be e-media centric. “We’re talking to a lot of people, but it’s more likely to be from outside the industry,” Bagaria told me.

Which means Penton, like Cygnus Business Media and the old Primedia, is at a crossroads.

As formerly print-based publishing companies struggle to transform themselves, they’ve found a clash of business imperatives that sometimes seems intractable. On the one hand, you have a rank-and-file organization and culture that has come up through print and is comfortable with its complex rhythms. As e-media grows, it’s not so much that these employees resist change or fundamentally don’t understand how to exploit online opportunities (although there is some of that, for sure)—it’s more that they’re scrambling to hit enormous print budgets even as print recedes, and at the same time trying to build out e-businesses.

When companies try to shift the emphasis, they often bring in executives from outside the industry who are charged with transformation. Those executives don’t understand the complexities of print media and are sometimes contemptuous of the culture, which they consider hidebound. But they almost never do what really needs to be done in a transformative environment, which is acknowledge that print is declining and massively reduce print budgets, right-size the workforce, take the revenue hit and free their remaining people up to attack the growing areas of the business.

And thus, they condemn themselves to failure.

So whoever the new Penton CEO is, that’s the challenge.

Tony Silber

Saluting Magazine Companies, Suppliers on the Inc. 5000 List

Tony Silber emedia and Technology - 08/22/2008-16:14 PM

So the Inc. 5000 list of the country's fastest-growing companies has just been released, and the results indicate that entrepreneurship is alive and well in the magazine industry, despite the waves of bad news recently. A slew of magazine companiesNext Step Publishing, BZ Media, EH Publishing, Agile Business Media, the Pohley Co., Schofield Media Group, Mental Floss, and the parent company of this Web site, Red 7 Media, which made the list for the second year in a row.  made the list, including

And magazine industry suppliers are represented too. Nxtbook Media, one of a growing and highly competitive category of digital magazine providers, was named 303rd fastest growing privately held company in the United States, and 38th fastest growing company providing business services in the U.S.

Nxtbook was the only digital magazine provider on the list, which is a real feather in that company's hat, and also a bit surprising, because of the rapid growth this sector is experiencing. 

Inc. wrote this about Nxtbook: "Why it's growing: Creates an innovative digital extension of its clients' print brand, which gives them worldwide distribution and opportunities to increase revenue. Also claims to use aggressive marketing tactics at important tradeshows."

What's noteworthy: "We are a new company in a renovated 100-year old building. "It's like an old standard with a new purpose, which is a lot like who we are: a high-tech company giving the printed medium new life," says CEO Michael Biggerstaff.

Tony Silber

How Do Print-Company Professionals Consume Media? Overwhelmingly Online

Tony Silber B2B - 08/12/2008-13:42 PM

Every day, it seems, headlines scream about the challenges facing print publishing.

It’s not exactly a secret that there’s a major change occurring in media, as readers move online and marketing dollars follow.

But how pervasive is that change? Maybe far more than anyone realizes.

At a Veronis Suhler Stevenson e-media conference for portfolio companies in New York Monday, 29 post-conference dinner guests were asked by their host, VSS’ Jeff Stevenson, about their media consumption habits. The guests were senior and executive managers from Advanstar Communications, Access Intelligence and Red 7 Media (FOLIO:’s parent company) all of which are traditional media companies whose brand flagships are print magazines. The vast majority were over 30—what should, in theory, be the bastion of print users.

Specifically, the attendees were asked to characterize whether their personal and professional media consumption habits skewed toward print or online. Here were their responses:

  • More than two-thirds of all media consumption is online: 19 attendees
  • More than two thirds of all media consumption is print: 4 attendees, including one who is a commuter
  • Media consumption is split equally between print and online: 6 attendees

Said one of the four print-focused media consumers: “I have to say I was surprised. I always assumed my media consumption habits were everyone else’s.”

Tony Silber

When Announcing Layoffs, How Can the Future Be 'Bright'?

Tony Silber B2B - 06/12/2008-14:49 PM

In National Lampoon's European Vacation, there's a scene where Eric Idle, playing an English bicyclist, is hit by the Griswald family vacation rental car (Chevy Chase can't quite get used to those tricky U.K. driving patterns). He's bloodied and bruised, but still insists on giving the tourists directions. When blood starts shooting out of his wrist, Idle downplays it as "just a flesh wound."

I wonder if there's a magazine industry counterpart in the memos that sometimes get sent accompanying layoffs.

Take Penton Media CEO John French's memo last week announcing the layoffs of 42 staffers. It outlined the challenges of transitioning to a multi-stream revenue model, shoring up print, dealing with a poor economy and operating in many markets, some of which are performing well for Penton and some of which are not.

But it also stated that "Penton remains a very strong company and the long-term outlook for our organization is bright."

It's a tough job running a media company these days, especially in b-to-b.

And it's terrible to lay people off (although worse for the people getting laid off). And French's memo was gracious and empathetic.

But let's face it, when you're any media and you're laying people off; when you're asking your managers to reforecast because you're missing your numbers; when your print magazines are shriveling; when you haven't raised rates for print ads in years; when online-only competitors are cropping up all around; when employees are leaving to start competitors; when you're so busy protecting declining print businesses that you're always a step behind in e-media; then maybe the future isn't so bright, and maybe you should say that.

I'm not singling out Penton. What French says is true of Reed, Nielsen, Cygnus, PennWell, Ascend—all of the big multi-market players.

Then again, perhaps it is merely a flesh wound. Perhaps.

Bonus video clip of the "flesh wound" scene below:

Tony Silber

Cygnus Co-CEOs in Penthouse Meeting

Tony Silber M and A and Finance - 06/11/2008-15:56 PM

SEE RELATED: Cygnus Exploring a Sale

I met with Cygnus’ co-CEOs, Tony O’Brien and Carr Davis [right], today at the Kitano hotel in New York. They confirmed the company is exploring a possible sale. (Click here for the full report.)

Shortly after the interview, two of the industry’s leading M&A brokers, Reed Phillips and Roland DeSilva, walked into the lobby and were whisked by Davis to a closed-door meeting in a penthouse conference room.

This story, as they say, is developing ... perhaps sooner than later.

Tony Silber

Ziff and Nielsen: The Backstory

Tony Silber B2B - 04/14/2008-09:06 AM

Two of the major b-to-b news stories this week—the restructuring at Ziff Davis Enterprise and the massive downsizing at Nielsen Co.—have interesting back stories.

When Steve Weitzner was named CEO of Ziff Davis Enterprise in January, he announced a major restructuring within days. The move surprised observers, but included no downsizing. The downsizing came this week.

But the cuts may have been foreshadowed last month when Insight Venture Partners—the company that carved out and acquired for $160 million a portion of Ziff Davis Media last June—took on a second private-equity partner. The new co-owner of ZDE was Bessemer Venture Partners, which put $20 million into the company in a move characterized as providing funding for acquisitions.

That may not be the case. Private-equity firms, says one industry source, are highly reluctant to dilute their equity position, and would only choose to do so in the event that they needed to-presumably because performance goals were not being hit.

This is, of course, pretty much pure speculation, but equity is the most expensive form of capital, and it's more likely that the BVP investment is a sign of turbulence than it's a bullish greenlight for acquisitions.

Regarding the Nielsen downsizing, one observer told me that it looks like standard General Electric practice. Of course, Nielsen CEO David Calhoun comes from GE. "It's the old GE playbook," the observer said. "They get handed their marching orders. Grow revenue in the high single digits and EBITDA by 15 percent. No questions asked."

Tony Silber

A Lesson in Execu-Speak 101 at F+W

Tony Silber Consumer - 01/24/2008-15:48 PM

A year apart, and in two different management regimes, two executives use remarkably similar language in describing remarkably similar priorities.

When Colin Ungaro [pictured, left] came on board as president of the magazine division of F+W Publication in April 2007, he was brimming with ideas and priorities in e-media, events and more. He predicted significant growth for the 60-title company and described a business with a strong bond to its readers, poised for great things.

He left the company in December 2007. Now David Nussbaum [above, right] has come on as CEO. In an interview this week, Nussbaum was brimming with ideas and priorities in e-media, events and more. He predicted significant growth for the company and described a business with a strong bond to its readers, poised for great things.

He sounded very much like Ungaro did in April 2007. In a way, it’s not surprising. This is an industry where executives often work off the same script when it comes to major announcements. Has anyone—anyone—not heard these kinds of phrases?

• “We are closing (selling) these properties to focus more on our core strengths ...”
• “I’m delighted to be forming this partnership with [fill in the blank] and its talented team. With their strong positions in their served markets...”
• “We’re thrilled to have an executive of [fill in the blank]’s rare level of experience and skill joining us as we aggressively build out our [fill in the blank] business…”
• “The variance to budget was a timing issue related to [fill in the blank] ...”

Some excerpts from Ungaro’s Q+A then, and Nussbaum’s Q+A now:

On what b-to-b and consumer-enthusiast media have in common ...

Ungaro 2007: “It’s serving a particular audience, which is what you do in b-to-b. There are a lot similarities between the two.

Nussbaum 2008: “I see b-to-b and enthusiast media as very similar. We serve highly defined markets. We have very interested and passionate communities. We are very vertical in our approach.”

On their plans for e-media expansion at F+W ...

Ungaro 2007:
“We already have the infrastructure in place to grow online. The infrastructure was in place before I got here. We have an interactive media department. So what I’m doing is building out what we already have.”

Nussbaum 2008: “F+W started aggressively building its e-media infrastructure about a year ago. In June 2007 it hired a top-notch talented leader in John Lerner. There is a lot to work with here from a talent perspective. And the current budget calls for a further meaningful investment in people, technology, and services to continue that investment.”

On new product development ...

Ungaro 2007: “We’ll be rolling out new products at a very fast pace.”

Nussbaum 2008: “There is an opportunity for the growth rate to be excellent. We think there are a myriad of new product ideas that need to be brought to market. Frankly, I took this job because there is such a deep and natural path for new revenue.”

On the strength of F+W events ...

Ungaro 2007: “Events are a very profitable part of our business. It helps us to serve our audiences much better and, I would say, we’ve only just scratched the surface in the market. We’re very bullish about the business and the growth we can achieve.”

Nussbaum 2008: “We are also going to be focused on event launches. For example, the annual How Design conference, which consistently experiences sell-out capacity, has given life to two additional conferences to better serve our customers. Both new conferences are well-attended, without sacrificing the success of the how conference.”

On serving enthusiasts ...

Ungaro 2007: "We’re serving different needs in different markets, but the common thread is that we’re serving enthusiasts that want to get very specific information in whatever they are interested in.”

Nussbaum 2008:
“‘Prosumers’ are willing to pay for information and products that are their passions and hobbies, and thus are committed to their media offerings and brands. There is a sacred pact between the media brand and its community to provide networking, information, data, and help in deepening the readers’ knowledge about the subject.”