Does Print Need a Bailout?

As certain industries are feeling a financial pinch, namely, the mortgage and credit industries including banks; automotive; and retail; the trickle down effect is felt in the advertising mediums that relied on those sectors for advertising revenue.

But it wasn't just the recession that caused the hurt. It was changes in consumer behavior that began when we were rolling in the dough.

Print publications are dropping like flies. Many are scrambling to try and make money and reorganize to stay alive. What has caused this? Basically the internet.

No, we won't see a bailout of the newspaper or magazine industry, or any other advertising medium. We'll see changes accelerate in the next 12 months as the old media restructures and the new business model emerges. This story shows what is going on in the magazine industry:


2008: Magazines Ad Sales Plummet

As if there isn't enough bad news, 2008 has turned out to be the worst year in decades for magazines, as measured by total ad pages. Through the middle of December, consumer magazines are down 9.4% from last year, according to MIN Online; this compares with a 7.8% drop in 2001. Worse, magazines do not appear to be headed for a quick rebound like the last recession.

At this rate, 2008's losses will almost certainly be compounded in 2009--bringing two straight years of declines, which will result in more magazine closures and layoffs.

Monthly magazines have seen ad pages tumble by double-digit percentages in the final two quarters, according to MIN Online, and the trend is clearly accelerating. On a quarterly basis, year-over-year declines have steadily deepened from -4.6% in the first quarter to -6.1% in the second, to -11.5% in the third, and finally -13.9% in the fourth. In the last six months, the rate of year-over-year decline has increased from -11.3% in July to -17.7% in December.

Much of this decline can be attributed to the recession, which officially began a year ago, according to a recent analysis by the National Bureau of Economic Research. However, the decline is more troubling in light of recent historical context: 2006 and 2007 were also slow years, with an average year-over-year growth rate of just 1.25% per quarter.

This was a period when the economy was supposedly healthy, suggesting that magazines were already under attack from Internet advertising and other new media. Now that the two trends are coinciding, with secular media shifts reinforced by the economic downturn, there is no telling where the bottom is, or if there is one.

Among the weeklies, the biggest year-to-date losers in terms of ad pages include: U.S. News and World Report (31.2%), Time (26%), Newsweek(21.7%), The New Yorker (21.5%), Entertainment Weekly (18.7%), Life & Style Weekly (18.2%), BusinessWeek (18%). Among biweeklies, they are: Country Weekly (23.6%), Rolling Stone (23%), ESPN (18.5%) and Forbes (16.8%).

Monthlies are also hurting. The biggest year-to-date losers are: More (30.1%), Smart Money (29.6%), Blender (29%), Gourmet (23.7%), Fitness (22.6%), Cooking Light (21.3%), Ladies' Home Journal (20.3%), Real Simple (18.4%), Better Homes and Gardens (17.6%), Vanity Fair (15.3%), Southern Living (15.2%), In Style (14.8%), Esquire (14.5%), Family Circle (13.7%), O, the Oprah Magazine (13.7%), Prevention (12.5%), Glamour (12.4%), Motor Trend (11.7%), GQ (11.5%), Lucky (11.3%) and Martha Stewart Living (11.2%).

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