The Irony of the Hearst-Condé Nast Joint Venture Seeking Smaller Publishers As Clients
Last month, Condé Nast and Hearst Magazines announced the formation of PubWorx, a joint venture that will manage production, procurement, and circulation management for both publishers, as well as offer services to publishers across the industry. As a former publisher and national distributor and current circulation consultant, I find it amusing that Hearst and Condé Nast propose to sell services to the very publishers they have damaged, knowingly or unknowingly, over the years.
Going back as far as the 1980's the Hearst Distribution Group (then I.C.D.) announced at an ACIDA wholesaler meeting that they sold a supermarket cross-merchandising program with a major cosmetics company, possibly the first in the industry that generated over $10 million in advertising revenues through their newsstand program. The program consisted of a free-standing display in the HBA department with a pocket for magazines. Immediately after that meeting, magazine wholesalers, then numbering 800, began asking magazine publishers for additional discounts to share in the advertising bounty that newsstand distribution generated for publishers. However niche, specialty magazines had no such advertising revenues.
When The Association of Magazine Media (MPA) negotiated new postal rates a few years back, small publishers with low subscriber files were thrown under the bus. The large publishers (the primary members of the MPA) advocated a sliding scale that was implemented and which penalized the small publisher, favoring the larger publisher with inflated rate bases due to low cost subscription rates.
Magnet's quarterly performance analysis indicates that the checkout publishers are the ones with the double-digit losses. Specialty and niche publishers are showing increases, and are successfully working to build readers profitably on the newsstand, and not subscriber bases.
And the success of building "traditional newsstand sales" is a lost art for the major publishers involved. In the 1988 Harris Publishing sold Woman Magazine to Condé Nast, which then took a very successful newsstand title with a high ROI, no subscriptions, high newsstand sales, and a handful of editors and added their magic to it. Multiple editors, art directors, paper improvement, and a subscription program soon forced its closing in a little over 18 months. Yes, we can point to Dr. Oz and it's newsstand success but with Hearst's ownership of the checkout, Dr. Oz got the front-end exposure denied to non-Hearst owned titles when launching because of space availability.
And another example, when Condé Nast and Hearst took over the management of Hearst's national distribution arm I.C.D. and renamed it CMG, they soon shut down Eastern News, the pre-eminent distributor of specialty and niche magazines to retailers, forcing many publications to close or to enter into unfavorable distribution deals elsewhere. Now, CMG is no longer owned by the Condé Nast/Hearst management.
Small, specialty publishers are looking for answers in an area they have little or no knowledge about -- newsstand, production, subscription -- and many, like the Crow in Aesop's fable, will believe any promises. Some of these smaller publishers may be justifiably wary of National Distributors or wholesalers or even consultants, but they have to wonder whether the promise of working with an organization that is bigger and without the same financial limitations will be able to deliver profitable and attainable results.
John Morthanos is a circulation consultant specializing in niche and
special interest publications. He was Vice President Specialty Sales at
Curtis Circulation Company, Vice President Single Copy Sales at Primedia
Special Interest Publications and Cowles Magazines, Circulation Director
at Viare Publishing, and Circulation Marketing Director at Ziff Davis