Major Media CEOs Upbeat About New Media Growth
Interest rates are rising again in early 2006, there is a newly
appointed chief at the Fed, and media companies are reinvigorated to
find growth through new media. Against this backdrop, The Jordan,
Edmiston Group, Inc. asked a select group of senior executives from the
largest media companies for their thoughts on the following questions:
1. What is your outlook on the overall economy for the remainder of 2006 and 2007?
2. What will be the main drivers of growth for your own business in 2006 and 2007?
3. As audiences continue to migrate to
"new" content delivery channels (e.g., Internet; mobile; iPod; etc.)
for media consumption, how is your company transforming its business
model to take part in the growth?
Here are their responses:
Susan Lyne, President & CEO Martha Stewart Living Omnimedia, Inc.
We are confident that the economy will continue to grow, if not
dramatically. Despite a slowing housing market, we are entering the
housing category with some confidence, partnering with KB Homes in the
belief that we can bring enough style and functionality to new
construction to make a significant difference to prospective buyers.
Our publishing business is healthy, and we expect Martha Stewart Living ad pages to
increase 35% to 40% this year. Our Internet traffic and online ad sales
continue to build, and we are investing strategically in this segment
in 2006. Our television exposure (via Martha Stewart’s daily hour-long
program, MARTHA, and her appearances on the Today show) and our 24-hour
Sirius Satellite Radio channel attract new customers to our brands all
We are focused primarily on organic growth, but are well positioned to
consider acquisitions, given our healthy cash balance. By 2007,
our new merchandising initiatives like KB/Martha Stewart Homes and
Martha Stewart Crafts will be powerful additional revenue drivers.
As our Sirius Satellite Radio channel has shown, it is easy to extend
our expertise into a 24/7 medium, and judging by listener call-in, our
lifestyle programming is clearly filling a void. Mobile distribution of
this content is under consideration. Early in 2007, our Web site will
relaunch on a more robust platform, offering more video, tools and deep
search than in the past. Still, we remain staunch believers in print:
Blueprint, a new lifestyle magazine targeted at Generation X, will
publish twice this year.
William Kerr, Chairman Meredith Corporation
Most forecasts for real GDP growth are in the low single digits for
2006 and 2007. We don’t see any reason to suspect a major variance from
these estimates. The main growth drivers for Meredith will be:
will leverage our powerful magazine portfolio. We are the leading
publisher serving American women whose interests are their homes, their
families and their personal development. We remain focused on
increasing market share, growing advertising categories, improving
circulation profitability, expanding multi-platform and group sales
opportunities, and extending our ability to serve younger women and the
2). We will capture the margin upside in the former Gruner + Jahr magazines (Parents, Family Circle, Fitness, Child and Ser Padres), which we acquired in July 2005, and in our Broadcasting Group. Each business has revenue in excess of $300 million.
We will expand our content across multiple media platforms. Revenue
grew more than 80% in our Interactive Media operations in the first
half of fiscal 2006, and we are in the process of further enhancing our
Internet capabilities and developing video opportunities as well.
We will continue to grow our diversified publishing businesses. Books
and Integrated Marketing have grown rapidly in recent years, and we
believe both divisions have significant growth potential in the future.
In order to take part in the growth of digital media, we are investing
in initiatives to increase traffic, advertising revenue and
subscription sales. For example, we will enhance and expand the Better
Homes and Gardens Web site. Currently, BHG.com is a very successful
site, averaging nearly 60 million page views and nearly five million
unique visitors monthly. We will augment this site by: adding daily
programming; enhancing the consumer experience with more robust reader
feedback forums, blogs and portable content; leveraging interactive
tools, such as the site’s recipe center and color-a-room; and adding
video content. We are also developing a parenthood portal (Parents.com)
that will leverage the strengths of the American Baby, Parents and Child brands. American Baby has been an outstanding acquisition.
Today, the American Baby Group reaches 95% of the new parent market
through its monthly magazine, Hispanic and annual publications, events,
sampling, direct marketing programs, custom publications, and its Web
site, AmericanBaby.com. The site averages 16 million page views and 1.1
million unique visitors monthly. The portal will be expanded to contain
broad, deep, expert content readily accessible by age-stages and easily
personalized by parents. We believe this portal will increase
advertising revenue and enhance our ability to serve younger families,
including Generation X and the older members of the millennial
We have developed a strategy to generate new revenue and assist our
marketing partners to reach consumers through video. We will utilize
our broadcast production capabilities to produce video products and
repurpose content from our existing brands. Our ultimate objective is
to create a video archive that can be distributed across a variety of
media platforms, including cable television, Web sites,
video-on-demand, cell phones, in store displays and custom DVDs. Our
initial investment will be minor, and we will expand this activity as
demand and profits grow. We think of ourselves as excellent creators of
content and recognize that we need to have the capabilities of
delivering that content across multiple platforms.
Christie Hefner, Chairman & CEO Playboy Enterprises, Inc.
I think the U.S. economy will do just fine in 2006 and 2007. My areas of concern are not
macro economic, but rather, they are related to specific institutional
challenges to print, including: 1). a dysfunctional newsstand
distribution system; 2). continuing competitive pressure from new
media; and 3). questionable decision-making on behalf of consumer
magazine publishers driven by rate base concerns.
Our growth will be driven by new media, including VOD, online and
mobile. These segments of our business achieved 26% revenue growth in
2005 over 2004. Additionally, we expect to continue to take the
magazine into new markets overseas, as we did with Slovakia and
Argentina last year. We will continue to benefit from leveraging the
brand via licensing into appropriate lifestyle arenas. This includes
our first location-based entertainment project, The Playboy Tower at
The Palms Hotel/Casino, which is scheduled to open at the end of this
year, and three additional Playboy concept stores.
We will continue to execute against a platform agnostic, multi-media
strategy. We recently added a 24-hour radio channel, via a deal with
Sirius Satellite Radio. We also now have content on our Web site
that can be downloaded to mobile devices. Our near-term goals
include adding a senior level head of mobile and continuing to expand
our content offerings online.