Budgeting in a Down Economy
Publishers weigh in on putting together next year’s budget.
From reforecastings and bankruptcy filings to foldings and restructurings, there’s no argument that the magazine industry has been feeling, and will continue to feel, the effects of the ailing economy. As we move deeper into the second quarter, publishers are beginning to consider their budgets for 2009, and how best to account for the economy and the shift toward digital.
Topeka, Kansas-based Ogden Publications began its 2009 budgeting process in April. “We have traditionally referred to our process as forecasting rather than budgeting, to promote the notion that we can make strategic changes in direction at any time regardless of the budget period,” publisher and editorial director Bryan Welch tells FOLIO:.
At Ogden—which publishes several self-sufficiency and rural lifestyle titles including Mother Earth News, Utne Reader and Natural Home—a team of 14 executive and mid- level managers are involved in the forecasting process, and they plan to make several adjustments for rising costs in print. “We’ve been relatively successful in marketing print subscriptions online, and in order to cope with the combination of increasing costs and weak advertising revenues, we have trimmed back direct-mail subscription promotions,” says Welch. “We think we can maintain a modest rate of growth in circulation by training our attention on digital sources.”
Tom Larranaga, publisher of Lebhar-Friedman’s Nation’s Restaurant News magazine, says that he and his team will be “realistic and conservative” in their projections, investing mostly in people and events. “Today, the market is contracting and the amount and quality of competition is greater,” he says. “If our goal is to be number one in the business we compete then further investment is required.”
The Digital Shift
Like a number of other publishers, Rockaway, New Jersey-based Business Media this spring announced that it was cutting several print jobs in an effort to consolidate and build out its e-media team by 20 positions. Last year, the company employed 23 digital staffers and, today, it has 40 and expects to fill13 more positions before the end of June.
“We are budgeting print to be slightly down year over year,” explains CEO Rich Reiff. “We have a new magazine—Tool & Technology, which launched in February—that will do about $1 million in print its first full year. Considering that revenue, our print revenue is budgeted to be flat. Our digital plan calls for growth of 44 percent year over year.”
Josh Dunn, president of Tacoma, Washington-based regional publisher Premiere Media Group, says his digital budget has increased slowly over the last few years (10 percent in 2007, 15 percent in 2008 and 17 percent in 2009) but that print is still his “bread and butter.” American Express Publishing’s Food + Wine magazine has seen increases in its digital budgets, says publisher Christina Grdovic, but the magazine is creating integrated deals that include print and digital. At Ogden, digital is a “relatively young facet” of its business, accounting for about 15 percent of revenues this year and perhaps 20 percent in 2009, Welch says.
After spending months hammering out the details of the coming year’s budget, there’s nothing like a first quarter loss to impact a company’s performance over the rest of the year. Leaving some wiggle room financially, and taking stock periodically, are the best ways to make sure your 2009 remains on track.
Larranaga’s team at the Nation’s Restaurant News has a monthly budget reworking process he calls LTYE (latest total year estimates). “Contingency plans are developed and rolled out to keep us on plan,” he says. “My business manager is my right-hand man who keeps me smart, honest and on the best possible track.”
Overall, the sooner you begin the budgeting process, the better, Reiff says. “Start early, require a plan of business to include a content and revenue strategy, involve many and, most importantly, ask for a commitment from everyone to do their respective job well with a goal to be better than the competition.”