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Hearst Magazines’ President, Troy Young, To Samir “Mr. Magazine™” Husni: “Established Media Brands Are Rising Again.” The Mr. Magazine™ Interview…

December 30, 2019

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

Deeper. One word the president of Hearst Magazines, Troy Young, uses to define the focus for the company in 2020. A deeper relationship with consumers. According to Troy, a deeper understanding of what the customer wants and how Hearst Magazines is serving them is vital for the future. Hearst magazine brands are strong across all platforms, Troy emphasized, but video and affiliate partnerships are bringing in new revenue and strengthening the company even more.

However, he also believes that evolving with the digital times does not necessarily mean a business model change. Advertisement remains important, along with all the other added streams of revenue the company is enjoying. It’s a process of adapting and evolving, but without disallowing advertisement, which he believes will continue, along with a more consumer-driven focus.

So, please enjoy this conversation with Troy Young, president, Hearst Magazines, as Mr. Magazine™ continues his series with the magazine and magazine media executives that make the industry world go-round.

But first the sound bites:

On his assessment of the future of magazines and magazine media: What magazines represent to readers, which is point of view, passion and perspective, that’s not going away. Magazines play an important role in the information ecosystem. Certainly, the Internet has changed how that information gets to the consumer. And it has changed the tools that we have to tell stories, but I don’t think that category of information is any less vital than it has been in the past.

On adding the word “media” to the mastheads of some of the Hearst titles: Well, we make all kinds of media, but it’s still definitely defined by magazines.

On any success stories he can share from 2019: I’m really happy that we keep evolving our business and through that evolution we’re hitting our financial goals. I love that we’ve created a more collaborative organization across print and digital. That’s enabling us to tell more ambitious stories. A few years ago video wasn’t as important to our work as it is today. We have dozens of series in production, which make up a significant part of our revenue. It’s just enabling us to become more ambitious storytellers.

On his biggest challenge for 2019 and whether he overcame it: We’re all working to overcome the fundamental changes in our business model, which is managing a decline in print advertising by growing new sources of revenue in areas like video and partnerships and affiliates. And I think that’s what everyone in the industry is doing. And it’s really forcing everyone to look at how you can become a stronger consumer business.

On how Hearst is seeing the evolvement of the business model, such as with higher cover prices, SIP’s on newsstands, memberships or something else: To me those aren’t business models. I don’t think the business model really changes. I think it’s still going to be advertising-dependent, and depending on the title, more or less will come from the consumer. Inevitably, more of our media business is shifting toward consumer revenue, but advertising will play a huge role, particularly in categories like fashion and luxury. The type of advertising that we generate through our media brands evolves, it shifts to video and data and more services. So, there’s a shift in where the money comes from, but it’s still advertising that’s a really big part of your revenue.

On whether he thinks the way magazines are viewed has changed over the years: Traditionally, magazines served as a format to deliver information and advertising that was really well-understood. I think as we introduced digital platforms, suddenly magazines meant not just print but all the ways that you could express these brands digitally, including video, podcasting and social media. We’ve always had very powerful consumer brands, so that was the real allure of creating new content for new channels, because consumers loved those brands and they wanted to interact with them in these new platforms.

On whether he believes social media is friend or foe to magazine media today: It’s allowed our brands to be bigger than ever. If you look at all of our brands, we touch more consumers today than we ever have because of how we live across social platforms. More people, across more generations experience our brands today because of social media. So, I’m positive on that account.

On whether the honeymoon stage is over for him now since he’s been on the job for a little over a year: Well, there’s a lot of work to do. And I put a lot of pressure on myself to build on the incredible legacy of Hearst Magazines. Every day when I come into the office, that’s my goal, to make sure that these brands are stronger tomorrow than they were yesterday.

On the one word he would use to sum up magazines and magazine media for 2020: Deeper.

On anything he’d like to add: I think that we’ve done an amazing job with building very large audiences. The next chapter in building stronger relationships with the consumer is to go deeper in our understanding of what the audiences want and how we’re serving them. And that really is an important next focus for our company.

On whether he thinks magazines have done a good job in promoting their own success stories or they can do better: I think that we can do better. The world went crazy about digital, but we had incredibly powerful brands. New media brands that were built through this digital transition got more attention. And I think what’s happening now is these established media brands are rising again.

On what keeps him up at night: Sugar. I’m not kidding.

And now the lightly edited transcript of the Mr. Magazine™ interview with Troy Young, president, Hearst Magazines.

Samir Husni: As we approach 2020, what’s your assessment of the future of magazines and magazine media?

Troy Young: What magazines represent to readers, which is point of view, passion and perspective, that’s not going away. Magazines play an important role in the information ecosystem. Certainly, the Internet has changed how that information gets to the consumer. And it has changed the tools that we have to tell stories, but I don’t think that category of information is any less vital than it has been in the past.

You have an industry that’s redefining itself for a new distribution system and a new set of storytelling tools, but consumers still want to connect around their passions and around their points of view. And they want the curatorial expertise of an editor.

I think what is happening though is the Internet or digital is, in some ways, ruthless in terms of forcing media companies to really earn attention every day with the consumer. It means that our magazine media brands need to be more meaningful than ever to consumers to earn their attention and earn a place in their lives every day.

That means we have to be really clear about what we’re creating and the audiences that we serve. And when we do that, we’re also able to find new revenue streams beyond the traditional advertising stream that magazines have. It also forces us to get more of our revenue from the consumer. And to me that’s the evolution that our industry is going through right now.

Samir Husni: I noticed on the mastheads of some your titles that you’ve added the word “media” to Hearst Magazines, was that part of this evolution?

Troy Young: Well, we make all kinds of media, but it’s still definitely defined by magazines.

Samir Husni: Can you name three accomplishments or successes for 2019 that you’re happy about?

Troy Young: I’m really happy that we keep evolving our business and through that evolution we’re hitting our financial goals. I love that we’ve created a more collaborative organization across print and digital. That’s enabling us to tell more ambitious stories. A few years ago video wasn’t as important to our work as it is today. We have dozens of series in production, which make up a significant part of our revenue. It’s just enabling us to become more ambitious storytellers.

So, I would say those three things: evolving the business, collaboration across our print and digital groups, and the evolution of video in our company.

Samir Husni: What would you consider to be the biggest challenge you faced in 2019 and did you overcome it?

Troy Young: We’re all working to overcome the fundamental changes in our business model, which is managing a decline in print advertising by growing new sources of revenue in areas like video and partnerships and affiliates. And I think that’s what everyone in the industry is doing. And it’s really forcing everyone to look at how you can become a stronger consumer business.

Samir Husni: The business model for magazines at one time was almost 90 percent dependent on advertising, but of course those days are gone. How is Hearst Magazines changing that model and how do you foresee the future of that magazine business model? Some companies are telling me they’re going the membership model, some the SIP’s on the newsstand, higher cover prices. How is Hearst seeing the future of the business model?

Troy Young: To me those aren’t business models. I don’t think the business model really changes. I think it’s still going to be advertising-dependent, and depending on the title, more or less will come from the consumer. Inevitably, more of our media business is shifting toward consumer revenue, but advertising will play a huge role, particularly in categories like fashion and luxury. The type of advertising that we generate through our media brands evolves, it shifts to video and data and more services. So, there’s a shift in where the money comes from, but it’s still advertising that’s a really big part of your revenue.

Also how we sell media changes. We are now helping people leverage and really understand our audiences, so that they can deliver targeted offers to them. And we can help them do that in more meaningful ways with content and by leveraging data.

I think that there’s an important new revenue stream that a lot of people will talk to you about, which is commerce revenue or affiliate revenue. In my mind, that’s a new type of performance advertising. And the revenue that a lot of us are getting from different platforms is becoming almost a “new” newsstand.

In some ways the business model hasn’t changed much. We get paid for our content from consumers, partners and we sell advertising.

Samir Husni: Do you think the view of what magazines used to be and what they are today has changed much over the years? And if so, how are you reflecting that at Hearst Magazines? I was speaking with Krifka Steffey, the magazine buyer for Barnes & Noble, and she was telling me that today she views magazines as luxury items. Hearst fits perfectly with that luxury item definition, but you also have a lot of service journalism for men and women.

Troy Young: Traditionally, magazines served as a format to deliver information and advertising that was really well-understood. I think as we introduced digital platforms, suddenly magazines meant not just print but all the ways that you could express these brands digitally, including video, podcasting and social media. We’ve always had very powerful consumer brands, so that was the real allure of creating new content for new channels, because consumers loved those brands and they wanted to interact with them in these new platforms.

And as a result of that, the understanding of what magazine media is really varies generationally. People who grew up with magazines understand magazines in a very specific way defined by print and I think younger people see a brand like Cosmopolitan as being a very different thing. It’s still curated; it’s still very driven by a very specific point of view, but it lives in different places and it creates different types of content. And there’s an informality to it.

I really think it ends up being generational and magazines fortunately can mean a lot of different things, which is really exciting.

Samir Husni: Do you think social media, in its many different platforms, is friend or foe to magazine media today, and why?

Troy Young: It’s allowed our brands to be bigger than ever. If you look at all of our brands, we touch more consumers today than we ever have because of how we live across social platforms. More people, across more generations experience our brands today because of social media. So, I’m positive on that account.

Samir Husni: Is the honeymoon stage over for you now at Hearst? You’ve been president now for a little over a year; is the changing of the guard complete or is it an evolving process?

Troy Young: (Laughs) Well, there’s a lot of work to do. And I put a lot of pressure on myself to build on the incredible legacy of Hearst Magazines. Every day when I come into the office, that’s my goal, to make sure that these brands are stronger tomorrow than they were yesterday.

Samir Husni: If you were to sum up magazines and magazine media in one word for 2020, what would that word be?

Troy Young: Deeper. Deeper relationships with our audiences.

Samir Husni: Is there anything you’d like to add?

Troy Young: I think that we’ve done an amazing job with building very large audiences. The next chapter in building stronger relationships with the consumer is to go deeper in our understanding of what the audiences want and how we’re serving them. And that really is an important next focus for our company.

Samir Husni: Many magazine media executives are telling me that a deeper relationship with the audience is their focus. And magazines do have very large audiences, more than most of the social media outlets. Do you feel that magazines have done a good job in promoting their own success stories or they can do better?

Troy Young: I think that we can do better. The world went crazy about digital, but we had incredibly powerful brands. New media brands that were built through this digital transition got more attention. And I think what’s happening now is these established media brands are rising again.

Samir Husni: What keeps you up at night?

Troy Young: Sugar. I’m not kidding.

Samir Husni: Thank you.

Next up. Andy Clurman, president & CEO, Active Interest Media (AIM).

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Condé Nast’s Global CEO, Roger Lynch, To Samir “Mr. Magazine™” Husni: “Condé Nast Is Fortunate In Having Leading Brands That Consumers Trust And Are Willing To Pay For.” The Mr. Magazine™ Interview…

December 26, 2019

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

Condé Nast’s first global CEO, Roger Lynch, is stepping into 2020 with opportunity on his mind. Roger believes that today’s magazine media companies are missing the boat if they’re not seeing the bigger picture: their creative talents and the consumers’ appetite for high quality content. And when you have tried and true content, trustworthy through many years of dedication, as Condé Nast does with all of its iconic brands, the future looks very bright indeed.

Mr. Magazine™ invites you to enjoy this conversation with Roger Lynch, global CEO, Condé Nast, as we continue to delve into the world of magazine and magazine media, with the people who make the industry we all love go-round.

©Nicol Biesek

But first the sound-bites:

On his assessment of the future of magazines and magazine media: I think companies that think of themselves as magazine companies are missing the broader opportunities. These companies are creative companies with really talented journalists and storytellers. The technology and media that are used by consumers to engage with this content will continue to change over many years. What will never change is the appetite and need for the highest quality content. Condé Nast has a huge opportunity in front of us to define what it is to be a modern global media company, and to actively shape the future of our industry.

On any accomplishments Condé Nast realized in 2019: We launched new editions of Wired in the Middle East and South Korea, brought La Cucina Italiana to the U.S. and Serbia and launched new editions of Vogue in Greece and Hong Kong. We introduced unique resources for industry audiences like AD Pro and Vogue Business and Vogue Business in China.

On what he considers the biggest challenge he failed to overcome in 2019: 2019 was a year of transition for Condé Nast, and 2020 will bring even more change. So the challenge for us is to navigate that transition and it’s ongoing.

On his approach to the future business models for the Condé Nast brands: With so much free, and even misleading, content available today, I believe consumers are increasingly looking for sources they can trust. I also believe that they are willing to pay for certain types of content that they value and know they can trust. Condé Nast is fortunate in having leading brands that consumers trust and are willing to pay for. I believe our opportunity lies in engaging with consumers on the platforms that they want to engage with us on, and in providing the highest quality content.

On whether he considers social media a friend or foe to magazines and magazine media: Magazines used to provide one of a very limited ways for brands to reach their consumers. Social media has dramatically expanded the number of ways brands can reach their consumers. Magazines without high quality and highly differentiated content have undoubtedly suffered from the growth in social media and the access to all kinds of content that it enables. I do believe social media can be a friend to companies who produce high quality and highly differentiated content if these companies use social media as a new way to broaden their audience reach. Social media needs companies that produce this high quality content and content companies need social media to reach larger audiences and promote their content.

On whether the honeymoon stage is over now after all these months on the job: It’s actually only been eight months! The honeymoon is just beginning! We announced our new global structure back in August, and have announced a number of new executive appointments within the last month. It’s a pretty even split of existing and new leaders, and I’m excited to see what new ideas begin to surface once we start working together in the new year.

On whether all the travel he has to do for his job was what he expected: This actually isn’t the most travel I’ve ever had to do for a job — years ago, I was commuting from L.A. to London every other week! But I’ve loved having the opportunity to meet our teams in different markets, learning about how they run their business, and gaining a better understanding of the complexities inherent to each region.

On what keeps him up at night: Jet lag from all the travel!

And now the lightly edited Mr. Magazine™ interview with Roger Lynch, global CEO, Condé Nast.

Samir Husni: As we approach 2020 what is your assessment of the future of magazines and magazine media?

Roger Lynch:  I think companies that think of themselves as magazine companies are missing the broader opportunities. These companies are creative companies with really talented journalists and storytellers. The technology and media that are used by consumers to engage with this content will continue to change over many years. What will never change is the appetite and need for the highest quality content. Condé Nast has a huge opportunity in front of us to define what it is to be a modern global media company, and to actively shape the future of our industry. And we have  an exceptional arsenal at our disposal to help make it happen: a portfolio of iconic brands, world-class content creators, exceptional video capabilities, immense global scale and loyal and influential audiences that consistently and regularly interact with us in new and evolving ways.

Samir Husni: What are three accomplishments or successes from 2019 at Condé Nast?

Roger Lynch: We launched new editions of Wired in the Middle East and South Korea, brought La Cucina Italiana to the U.S. and Serbia and launched new editions of Vogue in Greece and Hong Kong. We introduced unique resources for industry audiences like AD Pro and Vogue Business and Vogue Business in China.

In video, we created 100 digital pilots in the U.S., launched Bon Appetit’s OTT channel and GQ Sports and introduced new concepts across 50+ channels in 11 markets.

We’ve also made significant progress in reorganizing ourselves to better facilitate our evolution into a modern media company, we’ve created new ways of working together globally, and we’ve put talented leaders in place to help us continue our transformation. We’ve only just begun to tap into what’s possible when we work together as one global team, and the opportunity ahead has never been greater.

Samir Husni: What do you consider the biggest challenge that you failed to overcome in 2019, if any?

Roger Lynch: 2019 was a year of transition for Condé Nast, and 2020 will bring even more change. So the challenge for us is to navigate that transition and it’s ongoing.

Samir Husni: Magazine Media folks keep on talking about the need to change the revenue business model for magazines and magazine media. What is your approach to the future business model of magazines and magazine media?

Roger Lynch: With so much free, and even misleading, content available today, I believe consumers are increasingly looking for sources they can trust. I also believe that they are willing to pay for certain types of content that they value and know they can trust. Condé Nast is fortunate in having leading brands that consumers trust and are willing to pay for. I believe our opportunity lies in engaging with consumers on the platforms that they want to engage with us on, and in providing the highest quality content. If we continue to do this well, consumers will be increasingly willing to pay to engage with brands like ours. This will enable us to have a more balanced mix of consumer and advertiser revenue.

Samir Husni: Do you think social media (in its many different platforms) is a friend or a foe to magazine media and why?

Roger Lynch: Magazines used to provide one of a very limited ways for brands to reach their consumers. Social media has dramatically expanded the number of ways brands can reach their consumers. Magazines without high quality and highly differentiated content have undoubtedly suffered from the growth in social media and the access to all kinds of content that it enables. I do believe social media can be a friend to companies who produce high quality and highly differentiated content if these companies use social media as a new way to broaden their audience reach. Social media needs companies that produce this high quality content and content companies need social media to reach larger audiences and promote their content. I do believe this symbiotic relationship between content companies and social media will need to continue to change so that the economics provide a better balance for the value these content companies provide.

Samir Husni: After nine months on the job, is the honeymoon, if there was one, over with the team and have we seen the last of the changes of the guard?

Roger Lynch: It’s actually only been eight months! The honeymoon is just beginning! We announced our new global structure back in August, and have announced a number of new executive appointments within the last month. It’s a pretty even split of existing and new leaders, and I’m excited to see what new ideas begin to surface once we start working together in the new year.

©Nicol Biesek

Samir Husni: You are on the road most of the time, is that what you imagined the job to be and what are some of the “hidden” surprises (both pleasant and unpleasant) that you have discovered on the job?

Roger Lynch: This actually isn’t the most travel I’ve ever had to do for a job — years ago, I was commuting from L.A. to London every other week! But I’ve loved having the opportunity to meet our teams in different markets, learning about how they run their business, and gaining a better understanding of the complexities inherent to each region.

Samir Husni: What keeps you up at night?

Roger Lynch: Jet lag from all the travel!

Samir Husni:  Thank you.

Next up, Troy Young, president. Hearst Magazines.

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LSC Communications’ Chairman/CEO/President, Tom Quinlan, To Samir “Mr. Magazine™” Husni: “I’m Still A True Believer In The Power Of Print To Deliver Content In A Convenient And Engaging Way.” The Mr. Magazine™ Interview…

December 23, 2019

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

Tom Quinlan, chairman/ CEO/ president of LSC Communications faces the future of printing with set goals in mind. While 2019 brought the company and Tom many challenges, he faced them the only way he knew how: straightforward and with a strong belief in the printed product.

Today, the cloud of uncertainty with the merger of LSC and Quad is over and Tom’s vision for the company has been refocused once again on the job at hand. Assessing what the New Year and the fresh decade will bring, Tom is determined to get the costs where they need to be to propel LSC forward and into a very bright future. And with his firm faith in the products he produces and the people he works with, both client and employee, Tom is positive things will be on the right path for the years ahead. But don’t take Mr. Magazine’s™ word, get it straight from the printer’s mouth.

And now the Mr. Magazine™ interview with Tom Quinlan, chairman/ CEO/ president, LSC Communications as Mr. Magazine™ continues his series with the magazine and magazine media executives that make the industry world go-round.

NOTE: The conversations with the magazine and magazine media executives are going to be published chronologically as they took place.

But first the sound-bites:

On how he would assess the future of magazine printing and print in general as we move toward 2020: I think magazines will continue to thrive. There are more titles out there than ever before, but the quantities of many of those titles are not what the industry is used to. By that I mean, it’s the high single-digit or low double-digit mean count runs, and those are few and far between today. The targeting and the specific customer focus has resulted in magazine publishers shifting to smaller runs, but to a more engaged audience, which translates into a more profitable audience.

On how he is positioning LSC to meet all of the changing demands of 2020: When you think about us, I could probably roll into what our accomplishments were. When you think about, what I’ll call, the innovations that we’ve brought forward in mailing, what we’ve made in cooperative mailing; we’ve brought dramatic changes, reductions, to postal costs, especially to our magazine and catalog customers. We’ve developed even better optimization tools within our call-mail, high density program. We want our magazine customers to achieve lower postal per piece cost than what they have in the past. And in this program magazine customers claim carrier route, high density piece discounts and carrier route pallet bundle and pallet discounts. Most magazine customers in the past have never seen such rates, because they haven’t had this service, so we’re excited about that.

On accomplishments the company has had for 2019: In 2019, staying focused on the needs of our customers during the Quad transaction, and then after the transaction was terminated, those were obviously, for the first seven months of the year, times of great change. Change that was supposed to take place, but which can cause individuals to get distracted. But our employees really stepped up and continued to deliver on behalf of our customers. So, I’m really grateful for all of their hard work, perseverance and continued pride in what they do. That was a big part of the first seven or eight months in 2019.

On whether he considers the failed merger with Quad the biggest challenge he faced in 2019 or he’s put it behind him: I would definitely not say it’s behind me. First of all, if the transaction had went forward, I wasn’t going to be a part of the combined company. I was going to be out of a job. And quite frankly, that uncertainty hung over every person at LSC, whether they would be employed going forward. And obviously when the transaction was terminated, that was lifted.

On whether he sees bookazines and specialty magazines impacting the printing business in a positive way: I think it’s a mixture of good and bad for a printing company, definitely not indifferent. We have to keep pace with the changing magazine media model. Our model is always changing as well. The bet is that the industry is losing the business of larger magazines that are folding as you said, and the tough decisions that we have to make internally to align and optimize our operations to remain competitive is there. The good is that the specialty magazines or niche/enthusiast, however you want to look at them, are a sweet spot for us. And they have been for years, so we have to continue to keep them a major focus.

On whether he sees social media and digital as friend or foe to print: It depends on how well the magazine is using social media and digital. If it’s used strategically, it’s a friend and enables such a thing as, to me, more hyper targeted content and the ability to adjust content based on feedback for deeper engagement with the reader. And the ability to expand that content with video and images, platforms to communicate directly with readers. However, if the magazine is simply using it to have a presence and not effectively to create an enhanced and unique experience for the reader, then it’s going to be a foe. To me, the rise of visual media has led magazines to have to overcome the challenges of just content saturations. In order for people to want to engage with magazine content, it needs to have the right balance of strategy and creative content to stand out from the competition since the competition is no longer limited to just magazines. All brands are now creators of content as well.

On whether he sees the magazine media cup fuller today than a few years ago: I would say as it relates to magazines, I didn’t see a significant drop  that came in 2019. I continued to believe that there would be a three to five percent down, from a volume standpoint as an industry. Obviously, there was a step-change in 2019 that has taken place, so I think that there’s a reset that’s taken place within the industry. And as we look forward into 2020 and 2021, is it going back to those types of numbers or is it going to be a continued elimination of printed products? Again, I think as some of the large ones go out to backfill those titles that had the number of copies that you indicated earlier, it’s going to be really difficult.

 On why he thinks that happened: I think technology right now is catching people’s attention. There’s chief marketing officers where the dollar is being spent on advertising on an electronic standpoint. And that is now well-above what is being spent on a physical standpoint. I believe there will be a balance there, but we as an industry, publishers and printers, have to prove to the CMOs that the printed product is a good product for them to get a return on. Again, people with good content , it helps with good brand, can make the argument that there are many successful titles out there that magazine publishers have.

On anything he’d like to add: The increased pace of the transition of the content from print to digital is going to continue. We’ll see how fast it continues to occur in this new decade coming up. I’m still a true believer in the power of print to deliver content in a convenient and engaging way. It’s up to us in our industry, the print industry, to make that paper as interactive as we can. And we have to continue to do that as we move forward.

On his upcoming acceptance of the 2020 Franklin Award for Distinguished Service: Thank you very much. I’m deeply honored and touched that I will be a recipient of the award.

On what keeps him up at night: Our balance sheet. I have to fix our balance sheet. As soon as I can fix the balance sheet, in my mind the stock price will react accordingly. Customers and vendors then won’t be asking us about our financial shape. It’s been a tough year from the standpoint of not being able to react as quickly as we wanted to on the cost side, so we have to make that up. And again, once we start to do that, once we start to see that, then I think our balance sheet will get more in line and we’ll be back to where we used to be. What keeps me up right now is just making sure that we get a balance sheet in the next decade that will allow us to continue to be around for many more decades to come.

On his plan to attack that balance sheet: Getting the cost infrastructure to match what the revenue base is will be key. As you can see, we unfortunately made the announcements already about our Reno facility during this time frame. Again, we have to continue to adjust our platform which was built for the days when those publications, each one that you mentioned, with the counts that they had were out there. We have to adjust our size to reflect more of what’s going on today. That, combined with having a tremendous distribution network is going to put us in a unique place within the industry to continue to serve the industry at the level they expect us to be at.

And now the lightly edited transcript of the Mr. Magazine™ interview with Tom Quinlan, chairman/CEO/president, LSC Communications.

Samir Husni: As we approach 2020, what’s your assessment of the future of magazine printing and print in general as we move toward a new year?

Tom Quinlan: I think magazines will continue to thrive. There are more titles out there than ever before, but the quantities of many of those titles are not what the industry is used to. By that I mean, it’s the high single-digit or low double-digit mean count runs, and those are few and far between today. The targeting and the specific customer focus has resulted in magazine publishers shifting to smaller runs, but to a more engaged audience, which translates into a more profitable audience.

These smaller runs could be a count of a few hundred thousand, so it’s not as if they’re 500, 600, or a 1,000, they’re large, but again, they’re not what we’re used to seeing out there. More and more content from magazine publishers falls under the heading “niche enthusiasts.” This type of content forces community and all of us want to be in a community, belong to a community, so we believe that there’s bright days ahead there. We all know that print has been impacted by technology, but that disruptive technology is now starting to assist the printed product as opposed to destroying it. People want a break from the addictive screens and iPhones.

The point is we have to continue to do some vibrant products that differentiates the physical content from the electronic content. I think when you see brands and retailers that are started purely online that are now looking to include print in their engagement with customers, the magazine bodes well for the future in 2020.

The book market is what I would call “choppy,” from that standpoint. I think in education, book publishers are managing their inventory differently than they have in the past. I still think K-12 physical content will lead the way. Higher-read electronic content will lead the way, with physical content following.

The trade is going great. The demise of the book market because of the E-Reader a number of years ago has not occurred, will not occur. As long as the content is out there, the book market will continue to do well. And I also believe catalogs will continue to be a main part of retailers. Our job is for printers to continue to lower their distribution costs as they look to enter the marketplace.

Samir Husni: How are you positioning LSC to meet all of these new changing demands in 2020?

Tom Quinlan: When you think about us, I could probably roll into what our accomplishments were. When you think about, what I’ll call, the innovations that we’ve brought forward in mailing, what we’ve made in cooperative mailing; we’ve brought dramatic changes, reductions, to postal costs, especially to our magazine and catalog customers. We’ve developed even better optimization tools within our call-mail, high density program. We want our magazine customers to achieve lower postal per piece cost than what they have in the past. And in this program magazine customers claim carrier route, high density piece discounts and carrier route pallet bundle and pallet discounts. Most magazine customers in the past have never seen such rates, because they haven’t had this service, so we’re excited about that.

We’re excited about our cooperative mailing program to include inline polybagging, which is going to enable magazine customers to polybag inline during the actual call-mail process. Customers can now receive advertisement onserts that legacy call-mail services would traditionally not accept.

As I think about what we have to offer to the marketplace that differentiates LSC from others is what we can do, savings-wise, for people on the distribution side.

Samir Husni: What other accomplishments have you had in 2019?

Tom Quinlan: In 2019, staying focused on the needs of our customers during the Quad transaction, and then after the transaction was terminated, those were obviously, for the first seven months of the year, times of great change. Change that was supposed to take place, but which can cause individuals to get distracted. But our employees really stepped up and continued to deliver on behalf of our customers. So, I’m really grateful for all of their hard work, perseverance and continued pride in what they do. That was a big part of the first seven or eight months in 2019.

We’re square in the niche/enthusiast magazines. I’ve eliminated the name short-run/long-run from our vocabulary here at LSC. You know, we’re the largest printer of such titles. And we’re winning in key verticals, the universities, the co-ops; those are just two verticals that we’re making a pretty big impact on.

And then I would say, again, I think we’ve taken distribution to another level. We’ve integrated Farrington, Clark Group and R.R. Donnelley’s logistic business into LSC and I think we’re just starting to see the benefits of that as we move toward 2020.

Samir Husni: Any residuals left from that merger with Quad or lack of merger with Quad? Do you consider that your biggest challenge that you failed to overcome in 2019, or you’ve put it behind you?

Tom Quinlan: I would definitely not say it’s behind me. First of all, if the transaction had went forward, I wasn’t going to be a part of the combined company. I was going to be out of a job. And quite frankly, that uncertainty hung over every person at LSC, whether they would be employed going forward. And obviously when the transaction was terminated, that was lifted.

Having clarity is always a good thing and from October 2018 through when the deal was terminated in July 2019, we operated underneath the interim operating covenant of the purchase agreement, so we were limited in the actions that we could freely take.  Once those restrictions were lifted, we commenced taking the actions that you’ve seen and continue to see to get the company’s cost structure in line with the environment that we’re operating in.

Nine months is a long time to run any business, especially one in our industry, under such conditions. But again, it’s our customers and the dedication and attitude from our loyal employees during this time that was tremendous. Again, I can’t thank the employees enough for continuing to provide exceptional quality and service to our clients as all of this was unfolding during 2019.

Basically, as the magazine market was getting hit harder this year than any other year past based on declines, we weren’t able to act as quickly as we normally would have, so we’re making up for that now and getting ahead of it.

Samir Husni: You mentioned that you’ve eliminated short-run/long-run terminology from your vocabulary at LSC, but you’re seeing a lot of specialty magazines and bookazines. And while we do still have AARP with 23 million copies, the giants such as the TV Guide of yesterday with 18 million and National Geographic with 11 million, those days are gone. Do you see that new business model impacting printing companies in a positive way? Is your source of revenue going to change?

Tom Quinlan: I think it’s a mixture of good and bad for a printing company, definitely not indifferent. We have to keep pace with the changing magazine media model. Our model is always changing as well. The bet is that the industry is losing the business of larger magazines that are folding as you said, and the tough decisions that we have to make internally to align and optimize our operations to remain competitive is there. The good is that the specialty magazines or niche/enthusiast, however you want to look at them, are a sweet spot for us. And they have been for years, so we have to continue to keep them a major focus.

Brands have been built overtime with a consistency of presence in front of loyal subscribers, so we’d like to keep strong brands front and center regularly and consistently, that’s very important. Again, the bookazines and the SIPs have been healthy for the business, but having those core products, those core brands out there on a consistent basis is also important for us.

In addition to our platform being a perfect fit for those specialty magazines, there’s absolutions that satisfy the more holistic needs of the industry, which services video and photography and services through our internal creative agency, Hudson Yards, and again, going back to our highly differentiated logistics offering.

Samir Husni: Do you think all of these new technologies, including social media, are friend or foe to print?

Tom Quinlan: It depends on how well the magazine is using social media and digital. If it’s used strategically, it’s a friend and enables such a thing as, to me, more hyper targeted content and the ability to adjust content based on feedback for deeper engagement with the reader. And the ability to expand that content with video and images, platforms to communicate directly with readers. However, if the magazine is simply using it to have a presence and not effectively to create an enhanced and unique experience for the reader, then it’s going to be a foe. To me, the rise of visual media has led magazines to have to overcome the challenges of just content saturations. In order for people to want to engage with magazine content, it needs to have the right balance of strategy and creative content to stand out from the competition since the competition is no longer limited to just magazines. All brands are now creators of content as well.

From a business perspective, we’re always looking at new ways to seamlessly connect the printed page to the digital world and vice versa. The magazine publishers have so much data themselves, to me, that as soon as they can unlock that powerful tool that they have, they know their customers better than anybody else. They know what their likes are, they have the interaction with them. So again, I do echo probably what some of the other people that you’ve spoken to have said, that using technology can be of greater assistance than harm.

Samir Husni: If you look at the last three or four years of the print industry as a whole, do you see the magazine media cup fuller today than then?

Tom Quinlan: I would say as it relates to magazines, I didn’t see a significant drop  that came in 2019. I continued to believe that there would be a three to five percent down, from a volume standpoint as an industry. Obviously, there was a step-change in 2019 that has taken place, so I think that there’s a reset that’s taken place within the industry. And as we look forward into 2020 and 2021, is it going back to those types of numbers or is it going to be a continued elimination of printed products? Again, I think as some of the large ones go out to backfill those titles that had the number of copies that you indicated earlier, it’s going to be really difficult.

On the flipside, I do think that people are more apt to start out something that may have 100,000 subscribers or 50,000 subscribers and then try and see if they can work their way up as they go through it. But at the same time, our industry has to be ready from an equipment standpoint; from a distribution standpoint, to adjust to the new volumes that are going to be for magazine publishers.

Samir Husni: Why do you think that happened?

Tom Quinlan: I think technology right now is catching people’s attention. There’s chief marketing officers where the dollar is being spent on advertising on an electronic standpoint. And that is now well-above what is being spent on a physical standpoint. I believe there will be a balance there, but we as an industry, publishers and printers, have to prove to the CMOs that the printed product is a good product for them to get a return on. Again, people with good content , it helps with good brand, can make the argument that there are many successful titles out there that magazine publishers have.

Our industry like every other industry in media like to talk about the downfall and how bad things are, but on the flipside there are still a lot of successful content out there, which ranges from all sizes of magazine publishers.

Samir Husni: Is there anything you’d like to add?

Tom Quinlan: The increased pace of the transition of the content from print to digital is going to continue. We’ll see how fast it continues to occur in this new decade coming up. I’m still a true believer in the power of print to deliver content in a convenient and engaging way. It’s up to us in our industry, the print industry, to make that paper as interactive as we can. And we have to continue to do that as we move forward.

Samir Husni: And I’d like to congratulate you on the 2020 Franklin Award for Distinguished Service that you will soon receive. It’s very well-deserved.

Tom Quinlan: Thank you very much. I’m deeply honored and touched that I will be a recipient of the award.

Samir Husni: What keeps you up at night?

Tom Quinlan: Our balance sheet. I have to fix our balance sheet. As soon as I can fix the balance sheet, in my mind the stock price will react accordingly. Customers and vendors then won’t be asking us about our financial shape. It’s been a tough year from the standpoint of not being able to react as quickly as we wanted to on the cost side, so we have to make that up. And again, once we start to do that, once we start to see that, then I think our balance sheet will get more in line and we’ll be back to where we used to be. What keeps me up right now is just making sure that we get a balance sheet in the next decade that will allow us to continue to be around for many more decades to come.

Samir Husni: Does that mean there will be some bitter pills that you have to swallow or they’ll be sugarcoated? What’s your plan to attack that balance sheet?

Tom Quinlan: Getting the cost infrastructure to match what the revenue base is will be key. As you can see, we unfortunately made the announcements already about our Reno facility during this time frame. Again, we have to continue to adjust our platform which was built for the days when those publications, each one that you mentioned, with the counts that they had were out there. We have to adjust our size to reflect more of what’s going on today. That, combined with having a tremendous distribution network is going to put us in a unique place within the industry to continue to serve the industry at the level they expect us to be at.

Samir Husni: Thank you.  

Next up, Roger Lynch, global CEO, Condé Nast.

Editor’s Note:  Wishing you a very happy holiday season and looking forward to a prosperous new year.  Mr. Magazine™ Conversations will resume after Christmas.

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Bauer Media Group’s President & CEO, Steven Kotok, To Samir “Mr. Magazine™” Husni: “Where Magazine Media Can Best Serve The Reader, Magazines Will Continue To Thrive.” The Mr. Magazine™ Interview…

December 20, 2019

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

Bauer Media Group’s president and CEO, Steven Kotok, uses a positive barometer when facing the future. With the New Year approaching, and with change the only constant in everything magazine and magazine media, he firmly believes that where magazines best serve the reader, they will continue to thrive.

Woman’s World and First for Women are number one and number two respectively on newsstands, so Bauer Media is definitely best-serving its demographic, women. So, obviously, knowing your target audience has never been more important. And as Steven said, with 90 percent of the company’s revenue coming from its readers, engagement with the audience is Bauer’s life blood. But what better to flow through its veins?

So, please enjoy this most informative interview with Steven Kotok, president and CEO, Bauer Media Group as Mr. Magazine™ continues his series with the magazine and magazine media executives that make the industry world go-round.

(The conversations with the magazine and magazine media executives are going to be published chronologically as they took place).

But first the sound-bites:

On his assessment of magazines and magazine media in 2020: People today are more engaged with media of all kinds than ever before. And where magazine media can best serve the reader, magazines will continue to thrive as Bauer has. Ninety percent of our revenue is from readers, so that engagement is our life’s blood. But I don’t think there’s a blanket answer, it’s really different audience segments and different types of products that are going to really continue to engage readers. And then others may be better-served in other media.

On which segments of magazine media he thinks will thrive: We focus mainly on our own, and we’re really serving women over forty. So, our psychographics do still engage with magazine media. They find a lot of value in it. I think it’s also the type of products that people are putting out or where they’re earning money. From that product, I think you see some of the ad-supported titles that may not be as engaging to the consumer and they may have trouble, whereas others do better. But we feel strongly about our own.

On any success stories he can share from 2019: I’d say for us, we had traditionally been a newsstand-focused business and we made a big investment in growing our subscription revenue stream. And we did it with premium pricing, higher than a lot of our competitors, and we earned positive ROI from that investment. So, we grew our total subscription revenue and that was a really big win for us. We did it with some great marketing and some smart investment, but also because Woman’s World and First for Women continue to really engage our readers as much as ever. We have a great editor and a great team and they’re still number one and number two on newsstands in sales, so we know we’re doing the right thing in our traditional channel. But it’s been great to build additional revenue in the subscription channel, especially because it was a significant investment for us.

On any challenges he faced in 2019: There were definitely some challenges. (Laughs) The challenges are built-in. Your traditional question of what keeps you up at night, that’s kind of our days now. We used to worry about things happening, I think it’s all happened now. I think we’re all in. A lot of the challenges that maybe were concerns 20 years ago are now part of our daily lives. But on the Bauer front, every year we set ourselves a goal. For 2019, our biggest goal was really to execute an acquisition within the company, and we actually fell off with that goal. As much as those three achievements are great and made us a stronger business at the end of the year than we were at the beginning of the year, by our own measure of are we doing our core mission of serving the readers, or on a financial basis, there are a lot of moving pieces that have to come together to make an acquisition happen and make it make sense for us and for someone willing to part with something that we value. And it was just tough to make it happen this  year. But we hope that will be one of our 2020 successes.

On whether Bauer is interested in more acquisitions: Definitely. And in the last 24 months, Bauer has made something like 20 or so acquisitions around the world. We’re a very acquisitive company generally, but each market kind of has its own challenges, which makes it easier or harder.

On why he thinks magazine media companies are slow to jump in and change their business models: I don’t think it’s just magazine media, you see the same in digital, where you find a lot of digital brands trying to build subscription or membership revenue models. I don’t know whether people are slow to jump in, sometimes companies are accused of being too fast to jump into something. I think looking at any media, whatever media products that exist now were developed and evolved over years to align with a really particular business model. You can’t wake up one morning and just say, “I want to start earning money from these other people,” because the people’s people with their money, whether that’s consumers or advertisers or event sponsors, ecommerce shoppers or whatever, they’re going to have something to say about what they do with their money.

On how he sees the magazine media glass, half-full, three quarters full or 50/50: I know your job is to look at the whole media landscape, but those of us who are operators are really just running around show. Where we saw the glass might not have been half-full or we thought there had to be some consolidation to make it more than half-full, and there were actually some assets that we thought were going to be more valuable grouped together with other similar assets. For us, what we have, are women’s brands that are number one and number two at the newsstand and growing their subscription and ad revenues. To us that’s ninety percent full of something. Obviously, we wake up or start January 1 and just think about all of the stuff that isn’t done yet or took longer than we wanted it to. That’s the focus, that 10 percent to us is like 100 percent, it’s kind of the stuff that consumes us.

On whether he feels social media is a friend or foe to magazine media: I don’t know if different media are foes to each other, I don’t believe social media is a foe any more than TV is a foe. All the different media, we’re all competing for people’s time. People have a finite amount of time and we’re all competing to make good use of that time. I don’t think they’re foes. On one hand, magazines have built great audiences on social media the same as magazines can build and publicize their brands on TV, put your editor on TV or something. And by the same token, there is a lot of crosspollination among the different media, so I don’t know that there are foes, but we are all competing.

On anything he’d like to add: The rules in general don’t change, even if the mediums change. If you’re providing value to someone and you do it well, you’re going to find a way to make a buck and to keep on doing what you’re doing. That rule hasn’t changed, even with the environment changes.

On what keeps him up at night: What I said before I believe is true, a lot of the things that used to keep us up at night are now part of our daytime reality. But it’s part of the fabric of the world. It’s really about what to do next. We’re pretty happy with our business; we’ve done a lot to transform it. There’s always more to do, as I said, it always feels like you started at zero. But it really is what to do next; what else can we do to grow this business, whether through acquisitions or launches… or whatever, but it’s less of a defensive thing. It’s all factored in, priced in, all of these challenges. So, it’s really what’s the next thing that can grow.

 And now the lightly edited transcript of the Mr. Magazine™ interview with Steven Kotok, president & CEO, Bauer Media Group USA.

Samir Husni: As we approach 2020, what’s your assessment of the future of magazines and magazine media?

Steven Kotok: People today are more engaged with media of all kinds than ever before. And where magazine media can best serve the reader, magazines will continue to thrive as Bauer has. Ninety percent of our revenue is from readers, so that engagement is our life’s blood. But I don’t think there’s a blanket answer, it’s really different audience segments and different types of products that are going to really continue to engage readers. And then others may be better-served in other media.

Samir Husni: From your point of view, what are the segments that you think are going to thrive?

Steven Kotok: We focus mainly on our own, and really we’re serving women over forty. So, our psychographics do still engage with magazine media. They find a lot of value in it. I think it’s also the type of products that people are putting out or where they’re earning money. From that product, I think you see some of the ad-supported titles that may not be as engaging to the consumer and they may have trouble, whereas others do better. But we feel strongly about our own.

 Samir Husni: Having that strong feeling and knowing that 90 percent of your revenue is coming from readers who engage with your products, can you name three accomplishments or successes for 2019 that you’re proud of?

Steven Kotok: Yes, I’d say for us, we had traditionally been a newsstand-focused business and we made a big investment in growing our subscription revenue stream. And we did it with premium pricing, higher than a lot of our competitors, and we earned positive ROI from that investment. So, we grew our total subscription revenue and that was a really big win for us. We did it with some great marketing and some smart investment, but also because Woman’s World and First for Women continue to really engage our readers as much as ever. We have a great editor and a great team and they’re still number one and number two on newsstands in sales, so we know we’re doing the right thing in our traditional channel. But it’s been great to build additional revenue in the subscription channel, especially because it was a significant investment for us.

Number two; in our traditional newsstand channel we’ve put out a bunch of new products, continued to grow our SIP business, and those traditionally have been one-offs, but we’ve started doing more products that we’re going to repeat. We did Whoa, Wait for Walmart, which is available exclusively at Walmart, and that has been a big success. We plan on doing four of those next year. We also started a great series of inspirational content that has been a success called Everyday Faith, in partnership with DaySpring. We’ve been really happy that we can grow revenue in the newsstand channel as well.

And I’d say the third thing, and this might be first at some publishers, but it’s definitely third at Bauer, because anything that has to do with the readers comes first, but we were the only major publisher to grow both ad pages and ad revenue in 2019. And we’re most proud of that because we didn’t do it by changing the products to become a “better ad environment.” We really reinvented our messaging to the ad community to try and better articulate what the product does for the reader. We started with a deep reader study and really talked to the readers themselves, we did focus groups in multiple cities. So, we started with the readers to articulate to the advertisers why we are number one. That really led to a big turnaround in growth in ad revenue.

Bauer is still very much a bottom-line company and I think all three of those are tied to revenue growth, but I think all three of those also start with getting things right with the reader.

Samir Husni: Are you saying that 2019 was a walk in a rose garden for you, or you had a few challenges along the way?

Steven Kotok: No, there were definitely some challenges. (Laughs) The challenges are built-in. Your traditional question of what keeps you up at night, that’s kind of our days now. We used to worry about things happening, I think it’s all happened now. I think we’re all in. A lot of the challenges that maybe were concerns 20 years ago are now part of our daily lives.

But on the Bauer front, every year we set ourselves a goal. This is my third full year here; 2017 was really like optimizing the operations, which we did and we improved the bottom line for the first time in a while. In 2018, the goal was really to divest some of our assets and to focus on the women’s group for the long-term and that really improved our margins.

For 2019, our biggest goal was really to execute an acquisition within the company, and we actually fell off with that goal. As much as those three achievements are great and made us a stronger business at the end of the year than we were at the beginning of the year, by our own measure of are we doing our core mission of serving the readers, or on a financial basis, there are a lot of moving pieces that have to come together to make an acquisition happen and make it make sense for us and for someone willing to part with something that we value. And it was just tough to make it happen this  year. But we hope that will be one of our 2020 successes.

Samir Husni: While others are selling, Bauer is in the market to buy?

Steven Kotok: Definitely. And in the last 24 months, Bauer has made something like 20 or so acquisitions around the world. We’re a very acquisitive company generally, but each market kind of has its own challenges, which makes it easier or harder.

Samir Husni: As you look at magazine media in general, not just Bauer, and you’ve been in magazines for years now, why do you think magazine media companies are slow to change their business models? Why are they so slow in jumping in?

Steven Kotok: I don’t think it’s just magazine media, you see the same in digital, where you find a lot of digital brands trying to build subscription or membership revenue models. I don’t know whether people are slow to jump in, sometimes companies are accused of being too fast to jump into something. I think looking at any media, whatever media products that exist now were developed and evolved over years to align with a really particular business model. You can’t wake up one morning and just say, “I want to start earning money from these other people,” because the people’s people with their money, whether that’s consumers or advertisers or event sponsors, ecommerce shoppers or whatever, they’re going to have something to say about what they do with their money.

So, adding a new revenue stream to an existing product, I just don’t think that’s how we all got to where we were in the first place. Most of the successful media products out there didn’t start out trying to think about a revenue stream and then develop something for it. They really started with a problem they could solve for someone, some great idea that they felt would really have value to someone else. And then from there, obviously you have to do your math and ask, “Can I deliver this to people in a way that it makes more money than it costs to do?” And as we know, there’s a lot of great ideas that can’t generate more money than they cost to execute.

But where that’s possible is where people can be successful, taking an existing product that’s evolved to make its money a certain way and then adding a revenue stream to it. I just don’t think it’s ever going to get people where they need to go. I believe they have to go back to how they were successful in the first place, which was solving a consumer, or in some cases, an advertiser need and starting from there.

So, I guess I question the premise that people have been slow to do it, but I do think that you’re not going to be successful starting with adding a revenue stream to an existing product. You have to deliver value to the folks whose money you want.

Samir Husni: You’ve always been on the positive side of things and you’ve worked with very successful companies, so do you see the magazine media glass as half-full, three quarters full, or 50/50?

Steven Kotok: I know your job is to look at the whole media landscape, but those of us who are operators are really just running around show. Where we saw the glass might not have been half-full or we thought there had to be some consolidation to make it more than half-full, and there were actually some assets that we thought were going to be more valuable grouped together with other similar assets.

For us, what we have, are women’s brands that are number one and number two at the newsstand and growing their subscription and ad revenues. To us that’s ninety percent full of something. Obviously, we wake up or start January 1 and just think about all of the stuff that isn’t done yet or took longer than we wanted it to. That’s the focus, that 10 percent to us is like 100 percent, it’s kind of the stuff that consumes us.

I think for each medium or each brand or company, it’s really a different answer, and the answer may be different from people on the outside than on the inside. People on the inside are clearly investing their time and their careers in that company and they see an opportunity and they’re probably the best ones to run those companies. So, I think it really differs.

In general, as I said in the last question, if you’re delivering value to someone who’s going to pay for it in one way or another, whether it’s a consumer or an advertiser, you’re going to be in a good place. And when you can’t provide value or where you’re trying to get by with a trick or something, that’s not a great long-term plan. It really differs by company. A lot of us are just focusing on what we have in front of us. I assume most people feel good about the companies they’re running or they would hopefully find someone else to do it who had a more optimistic vision.

Samir Husni: Do you think social media is a friend or foe to magazine media?

Steven Kotok: I don’t know if different media are foes to each other, I don’t believe social media is a foe any more than TV is a foe. All the different media, we’re all competing for people’s time. People have a finite amount of time and we’re all competing to make good use of that time. I don’t think they’re foes. On one hand, magazines have built great audiences on social media the same as magazines can build and publicize their brands on TV, put your editor on TV or something. And by the same token, there is a lot of crosspollination among the different media, so I don’t know that there are foes, but we are all competing.

When you look at some categories, obviously, with Instagram, anything that’s built around famous people, famous people used to need to reach their audience through a third party media platform. Now with something like Instagram, a social media platform can serve that need for them. So, I think in that case, for people with a finite amount of time they can spend looking at celebrities, I would have to think that engaging directly with celebrities through social media has cut into the other thing.

I believe it’s one giant ecosystem and different subcategories, different brands, different businesses are always rising and falling. Seinfeld and MASH, the most popular shows ever aren’t on TV anymore. So, I think there’s always going to be rising and falling, but I don’t know that it’s a foe. I don’t know that social media is somehow damaging magazine media in some unique way other than the fight for attention for people’s time that all the different media engage in.

Samir Husni: Is there anything you’d like to add?

Steven Kotok: The rules in general don’t change, even if the mediums change. If you’re providing value to someone and you do it well, you’re going to find a way to make a buck and to keep on doing what you’re doing. That rule hasn’t changed, even with the environment changes.

Samir Husni: What keeps you up at night?

Steven Kotok: What I said before I believe is true, a lot of the things that used to keep us up at night are now part of our daytime reality. But it’s part of the fabric of the world. It’s really about what to do next. We’re pretty happy with our business; we’ve done a lot to transform it. There’s always more to do, as I said, it always feels like you started at zero. But it really is what to do next; what else can we do to grow this business, whether through acquisitions or launches… or whatever, but it’s less of a defensive thing. It’s all factored in, priced in, all of these challenges. So, it’s really what’s the next thing that can grow.

Samir Husni: Thank you.

Next up, Tom Quinlan, Chairman/CEO/President, LSC Communications Inc.

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Trusted Media Brands President & CEO, Bonnie Kintzer, To Samir “Mr. Magazine™” Husni: “I Believe The Credibility Of Our Brands Will Drive The Demand For Content.” The Mr. Magazine™ Interview…

December 18, 2019

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

President and CEO of Trusted Media Brands, Bonnie Kintzer, recently shared her views about the future of magazines and magazine media with Mr. Magazine™ and from Bonnie’s perspective the news is positive and promising. While she isn’t one to wear rose-colored glasses when it comes to the realities of the magazine industry, she also doesn’t believe in naysaying the optimistic points of view either. An important factor in Bonnie’s magazine mantra is the credibility of Trusted Media’s brands. For generations many of the titles in her portfolio have been the go-to resources for trusted and proven information. And in this day and age, being able to trust and depend on the source of one’s content is vital.

Trusted Media Brands has also had many pluses for 2019 and Bonnie believes in saying them loud and proud. And her thoughts for 2020 are leaning toward the same positive challenges. And that’s exactly how she views the New Year – challenging, yes, but always with a positive outlook.

So, please enjoy the next installment of the Mr. Magazine™ series with industry leaders – Bonnie Kintzer, president and CEO, Trusted Media Brands.

(NOTE): The conversations with the magazine and magazine media executives are going to be published chronologically as they took place…

But first the sound-bites:

On her assessment of the future of magazines and magazine media, especially in 2020: I feel very positive. I think that we’ll continue to see strong customer revenue-based brands, which we are. And I believe we’ll continue to see business models evolve. I feel like we started that path a few years ago to really strengthen the relationships with consumers, with magazines being a very important part. And also introducing other services or products that consumers who love those brands are really interested in. I also believe that the credibility of our brands will drive that; we are a reliable source of information and inspiration. That credibility is really what drives the demand, both for content in print, digital and new products. So, I’m optimistic.

On how she views the future of Trusted Media Brands’ legacy media: I think Reader’s Digest will be here forever. When you look at the renewal rates, circulation and economics of Reader’s Digest, I never worry about Reader’s Digest. I read letters from our readers all the time and you can see that this is a brand that passes down generations in a single family and it’s a really beautiful thing. We definitely treat each of our brands differently. If you look at Taste of Home, we’ve launched a subscription box, because we felt that for people who love to cook and bake, they wanted more hands-on products, so we launched the cookware and the bakeware. That’s much more a focus for Taste of Home than our other brands.

 On three successes the company has had in 2019 that she is proud of: Number one would probably be the fact that we’ve been able to launch new products and services that consumers are paying for. We’re really excited about that. Whether it’s our branded products like the cookware and bakeware, or it’s DIY University, or the growth of the Taste of Home subscription box, I think all of those things are so important. We’ve always been a consumer-driven company, as you know, and the idea that we can now go into all of these new product areas and get positive feedback, as in people are paying for it, is huge.

On whether she has heard that almost 98 percent of cookbooks are sold in print: I’m not sure about that, but it wouldn’t surprise me. Also, QVC has been good for us. We’re the largest non-celebrity cookbook seller on QVC with Taste of Home. So, that’s been great. And we did our first non-cookbook, a religious book: Reader’s Digest Who’s Who in the Bible on QVC that did really well. So, we’re excited that we’ve been able to branch out of cookbooks. QVC has been a great partner for a long time.

On any challenges she had in 2019: There are always challenges. (Laughs) I think the biggest challenge – well, there are a couple, but one would be for the advertising partners to see us as a media company and not only magazines. We’re very proud of our print, but we feel like our digital engagement is exceptional. And our numbers are very strong. So, we’d like to be seen as a brand, as a brand for our partners to work with. I think that’s a challenge for all magazines and definitely one for us.

On why she thinks magazine media professionals are always talking about change, yet they’re hesitant to actually change their business models: I imagine they make quite a lot of money. We were never one of those companies. I know there was a management team here at some point that wanted to be more ad-driven, but the company was still always making more money from consumers, they just made it out of marketing correctly. So, you’d have to ask those other companies, but they make a heck of a lot of money, so I assume that’s hard to walk away from.

 On being consumer-driven and does she see splitting that revenue moving forward: Digital advertising for us in the last two years has been exceptional. We have had exceptional growth and far exceeded industry growth on digital advertising. That is for sure. And that will continue to grow. Seventy-five percent of our money comes from consumers; will we ever be 50/50? I don’t know. We love that consumers pay for our content; we think it’s a very healthy business. We’re delighted to see the growth in our digital advertising. And like we say, let’s grow the pie and not worry about the percentages. (Laughs) And we’re doing that. That’s an amazing thing for this particular company, to see topline growth. We’ve had bottom-line growth since I’ve been here, but to see topline growth is a great turn of events for us.

On whether she feels all of the digital and social media platforms are friend or foe to magazines and magazine media: I think the digital platforms are both; we do a lot on Facebook and Pinterest and Instagram is growing for us. We think it’s a great way to engage with consumers. We know that our consumers are there; we drive a tremendous amount of traffic from those platforms, so that’s a very strong positive and trend. Obviously, on the not-so-friendly side, they get to change their algorithms without notice or rationale. And that puts a strain when that happens.

On whether she views the magazine media cup as three-quarters full or half-full: I think three-quarters full, I do. I’m definitely much more optimistic than I am pessimistic about the platforms.

On anything she’d like to add: This is really always a war of talent. And when I look around our company I continue to be inspired by the people who we have here. And having almost half of our employees in the Midwest gives us tremendous advantage to understand what’s happening in this country and to really know what’s important to people, which is cooking great meals, doing their own projects, and being inspired by the stories of their neighbors. And I think that’s what keeps us all very grounded; knowing who we serve every day.

On what keeps her up at night: There’s just so much change all the time. And making sure that you’re staying on top of all of those changes and being very disciplined in what does and doesn’t matter in those changes, because you can read a lot of things and get swept up, but some stuff doesn’t really matter for my business. And I think we do that. My team is very well-read, but also very grounded about what is a priority and what isn’t. And so I think it’s a constant review of your prioritization of your time and resources. And that’s probably what keeps me up – are we doing it right? So far the results would say yes, but no one here is so bold to say that it’s an automatic.

And now the lightly edited transcript of the Mr. Magazine™ interview with Bonnie Kintzer, president and CEO, Trusted Media Brands.

 Samir Husni: As we approach 2020, what’s your assessment of the future of magazines and magazine media?

Bonnie Kintzer: I feel very positive. I think that we’ll continue to see strong customer revenue-based brands, which we are. And I believe we’ll continue to see business models evolve. I feel like we started that path a few years ago to really strengthen the relationships with consumers, with magazines being a very important part. And also introducing other services or products that consumers who love those brands are really interested in. I also believe that the credibility of our brands will drive that; we are a reliable source of information and inspiration. That credibility is really what drives the demand, both for content in print, digital and new products. So, I’m optimistic.

Samir Husni: Is there a difference in the brands that you have? You have from the legacy brand like Reader’s Digest, which is almost 100 years old, to almost a quarter-century with Taste of Home, and then Family Handyman; how do you view the future of “legacy” magazine media?

Bonnie Kintzer: I think Reader’s Digest will be here forever. When you look at the renewal rates, circulation and economics of Reader’s Digest, I never worry about Reader’s Digest. I read letters from our readers all the time and you can see that this is a brand that passes down generations in a single family and it’s a really beautiful thing. We definitely treat each of our brands differently. If you look at Taste of Home, we’ve launched a subscription box, because we felt that for people who love to cook and bake, they wanted more hands-on products, so we launched the cookware and the bakeware. That’s much more a focus for Taste of Home than our other brands.

For Family Handyman where our content is so valuable and valued, we have a lot more digital-only products where people pay for our content, whether it’s DIY University or Family Handyman Insider, or where we’ve digitized all of our project plans which people are now paying for. And we didn’t see any decline in volume of downloads once people started paying. So, that’s wonderful, that people understand this content is worth something. We’ve created these plans over 75 years and they’re worth something. In that way, I feel like each brand is on the path dependent upon the content and the competitive landscape.

Samir Husni: I heard you speak at the most recent FIPP Congress in Las Vegas and you sounded very positive about the accomplishments the company has achieved in 2019. Can you name three of those accomplishments that you’re most proud of and consider total successes for Trusted media?

Bonnie Kintzer: Number one would probably be the fact that we’ve been able to launch new products and services that consumers are paying for. We’re really excited about that. Whether it’s our branded products like the cookware and bakeware, or it’s DIY University, or the growth of the Taste of Home subscription box, I think all of those things are so important. We’ve always been a consumer-driven company, as you know, and the idea that we can now go into all of these new product areas and get positive feedback, as in people are paying for it, is huge.

And on the consumer and subscription side, we’ve seen great growth in our digitally-sold subscriptions and that’s very good for us, it’s very healthy for our business, in terms of the relationship with the consumer, bringing in consumers who are very comfortable paying with a credit card and buying digitally. Alec (Alec Casey – chief marketing officer) and his team have done a phenomenal job with growth there.

The other thing is the growth of our book business. How incredibly exciting is that? We’re launching more books and they’re doing really well. And of course, the data shows that more people are going a little bit more toward print than digital eBooks. We’re really happy to have that.

All of our brands have books; Taste of Home has quite a lot of cookbooks, Reader’s Digest, of course, has select editions, but Reader’s Digest also launched a mystery book series and a puzzle and game series. Family Handyman has its annual edition, they also have a number of DIY books and books on how a house works, so I think we’ve done a great job of understanding what the consumer wants in the book area. And by selling it primarily through DTC (direct-to-consumer), although we do have a trade business as well, it becomes very profitable.

Samir Husni: I was told once that almost 98 percent of all cookbooks are sold in print?

Bonnie Kintzer: I’m not sure about that, but it wouldn’t surprise me. Also, QVC has been good for us. We’re the largest non-celebrity cookbook seller on QVC with Taste of Home. So, that’s been great. And we did our first non-cookbook, a religious book: Reader’s Digest Who’s Who in the Bible on QVC that did really well. So, we’re excited that we’ve been able to branch out of cookbooks. QVC has been a great partner for a long time.

Samir Husni: Would you tell me that 2019 was a walk in a rose garden or did you have some challenges throughout the year?

Bonnie Kintzer: There are always challenges. (Laughs) I think the biggest challenge – well, there are a couple, but one would be for the advertising partners to see us as a media company and not only magazines. We’re very proud of our print, but we feel like our digital engagement is exceptional. And our numbers are very strong. So, we’d like to be seen as a brand, as a brand for our partners to work with. I think that’s a challenge for all magazines and definitely one for us.

On the cost side of the magazine business, as you know, it’s a constant cost battle. Again, Alec and his team are amazing people and they have been able to overcome some, but it’s constant, in terms of whether it’s fulfillment, postage or paper; there’s just always something to be dealt with, on top of just the regular course of business.

I’d say those have definitely been challenges in 2019. I look on the advertising side; we’ve won some amazing pieces of business. So, I’m very encouraged going forward.

Samir Husni: You’re known for, number one, taking the company out of bankruptcy. Two, you changed the name from Reader’s Digest Association to Trusted Media Brands, and you converted back to the old consumer-driven business model. Why do you think magazine media professionals keep talking about change, yet they’re hesitant in actually changing their business models?

Bonnie Kintzer: You mean changing away from being an ad-driven model?

Samir Husni: Yes.

Bonnie Kintzer: I imagine they make quite a lot of money. We were never one of those companies. I know there was a management team here at some point that wanted to be more ad-driven, but the company was still always making more money from consumers, they just made it out of marketing correctly. So, you’d have to ask those other companies, but they make a heck of a lot of money, so I assume that’s hard to walk away from.

Samir Husni: I know you’re generating a lot of revenue from consumers, but as you move forward, how do you envision that split in revenue, if you can share those numbers with me?

Bonnie Kintzer: Digital advertising for us in the last two years has been exceptional. We have had exceptional growth and far exceeded industry growth on digital advertising. That is for sure. And that will continue to grow. Seventy-five percent of our money comes from consumers; will we ever be 50/50? I don’t know. We love that consumers pay for our content; we think it’s a very healthy business. We’re delighted to see the growth in our digital advertising. And like we say, let’s grow the pie and not worry about the percentages. (Laughs) And we’re doing that. That’s an amazing thing for this particular company, to see topline growth. We’ve had bottom-line growth since I’ve been here, but to see topline growth is a great turn of events for us.

Samir Husni: Do you think all of these digital and social media platforms, and even the TV platforms, such as you mentioned with QVC, are they friend or foe to magazine media and why?

Bonnie Kintzer: I think the digital platforms are both; we do a lot on Facebook and Pinterest and Instagram is growing for us. We think it’s a great way to engage with consumers. We know that our consumers are there; we drive a tremendous amount of traffic from those platforms, so that’s a very strong positive and trend. Obviously, on the not-so-friendly side, they get to change their algorithms without notice or rationale. And that puts a strain when that happens.

We’ve done a very good job of overcoming those, but the idea that somebody is changing something and you don’t know what it is or when it’s coming is obviously not something a friend does. Being able to have direct access to audiences is always a challenge as well, but we’ve been very pleased with our relationship with the platforms. But we understand that it’s critical for us to have direct relationships with our consumers and we never lose sight of that. So, that’s always our goal, to get the audiences to our own sites so that we can get them to sign up for our newsletters and we can collect names and continue the relationship.

Samir Husni: Do you view the magazine media cup as three-quarters full then? Or halffull?

Bonnie Kintzer: I think three-quarters full, I do. I’m definitely much more optimistic than I am pessimistic about the platforms.

Samir Husni: Is there anything that you’d like to add?

Bonnie Kintzer: This is really always a war of talent. And when I look around our company I continue to be inspired by the people who we have here. And having almost half of our employees in the Midwest gives us tremendous advantage to understand what’s happening in this country and to really know what’s important to people, which is cooking great meals, doing their own projects, and being inspired by the stories of their neighbors. And I think that’s what keeps us all very grounded; knowing who we serve every day.

Samir Husni: What keeps you up at night?

Bonnie Kintzer: There’s just so much change all the time. And making sure that you’re staying on top of all of those changes and being very disciplined in what does and doesn’t matter in those changes, because you can read a lot of things and get swept up, but some stuff doesn’t really matter for my business. And I think we do that. My team is very well-read, but also very grounded about what is a priority and what isn’t. And so I think it’s a constant review of your prioritization of your time and resources. And that’s probably what keeps me up – are we doing it right? So far the results would say yes, but no one here is so bold to say that it’s an automatic.

Samir Husni: Thank you.

Next up, Steven Kotok, president & CEO, Bauer Media Group USA.

h1

Hoffman Media’s President & Chief Operating Officer, Eric Hoffman, to Samir “Mr. Magazine™” Husni: “We’re Deeply Committed To High Quality Print.” The Mr. Magazine™ Interview…

December 16, 2019

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

Hoffman Media’s president and chief operating officer, Eric Hoffman, faces 2020 with solid goals and realistic expectations as many wonder what the New Year will bring. Hoffman Media’s brand portfolio is strong, with titles such as Bake From Scratch, Southern Lady, and Cooking with Paula Deen, but as Eric talks about the challenges of the future, newsstand and distribution of magazines are high on his agenda. The question remains what awaits magazines and magazine media in 2020?

So please grab your laptop, iPhone, or pen and paper and be prepared to take notes as Mr. Magazine™ delves into the world of CEO’s, COO’s, Presidents, and other corporate magazine media leaders and asks them to put on their futuristic cap and share with him their predictions for 2020.

The conversations with the magazine and magazine media executives are going to be published chronologically as they took place…

Up first on Mr. Magazine’s™ list, Eric Hoffman, president and chief operating officer, Hoffman Media.

But first the sound-bites:

On his assessment of magazines and magazine media for 2020: I think it’s going to continue to be really difficult for magazine publishers; in particular those that have exposure to the newsstand. Hoffman Media is probably one of the more unique publishers in the country because we have an outside exposure to the newsstand, just because of our balance-revenue model between subscription, single copy and advertising. It sort of all runs independently. One favorable piece to the economics this year is it looks like paper prices are coming down a little bit, which 2018 put a lot of headwind out there for publishers that had heavy print exposure. I think those prices coming down a little bit is a good thing. Maybe it will provide a soft landing for some other sides of the business that maybe have increased in cost.

On any success stories from Hoffman Media for 2019 that he can share: We bought an event business away from F+W before they filed bankruptcy. And that business is The Original Sewing & Quilting Expo. It’s eight expos that we do around the country. We got a fairly attractive evaluation on that business. We have our first full year results coming up and frankly, I think it’s going to contribute about 30 percent of our profit this year. One highlight is this is certainly an opportunity to expand, especially when you have niche markets with passion-based customers that are willing to go with you wherever you go and will value the experience that you offer them.

On whether his biggest challenge for 2019 has been newsstand: Absolutely. If you look back at the newsstands for 2015. 2016 and 2017, they were three consecutive years of growth for us at a time when the industry really started to demonstrate some substantial downward pressure. And 2018 was sort of the year when the trend line caught up with us. We grew the business, almost doubled it from 2015 to 2017; I think we cracked the Top 10 in Magnet rankings for single copy volume. And not just topline, we were making it work from a profit perspective. And 2018 was also a substantial change, paper prices being high and newsstand was going through some substantial changes that caught up with us. So, we started to pull back in 2019 and I think you’ll continue to see that trend in 2020.

On why he thinks the magazine industry can’t come up with a new business model: Publishers are going to have to face the realization that rate base is… and again, there are exceptions, but for the most part it’s an outdated business model. I think publishers actually look smart in reducing rate base and thinking more about the quality of their customer base and focusing on endemic advertising that reaches their audience in an intentional way. If you want to buy a lot of advertising and you want to buy it cheap, it’s programmatic to solve that for the world. You can buy a lot for not a lot of money.

On whether he feels social media is friend or foe to the magazine business: I really think it’s your friend. Social media is a powerful way to reach new audiences, for sure. But it also gives you some tools in the bag to work with advertisers in a different way. We’re doing a lot of custom content developed for our audience and for influencers that relate to our audience and to our brand. We’ve been able to execute really interesting advertising campaigns across that platform.

On what keeps him up at night: What keeps us up at night is despite our intentional effort around running our business that’s subscription focused, balanced with single copy, focused on high quality, high-priced customers; I worry about the broader industry, that vendors are pressured and about the economics from the vendor side, fulfillment, printing, newsstand distribution, that there may be pressure there as well. Coupled with the fact that a lot of the larger publishers in our industry are also troubled right now. So what does that mean?

And now the lightly edited transcript of the Mr. Magazine™ interview with Eric Hoffman, president and chief operating officer, Hoffman Media.

Samir Husni: As we approach 2020, what’s your assessment of magazines and magazine media?

Eric Hoffman: I think it’s going to continue to be really difficult for magazine publishers; in particular those that have exposure to the newsstand. Hoffman Media is probably one of the more unique publishers in the country because we have an outside exposure to the newsstand, just because of our balance-revenue model between subscription, single copy and advertising. It sort of all runs independently.

We run our newsstand business as its own P&L. We have liked the single copy business; we still like it, but I’ll tell you that with Curtis selling to Comag, or CMG, with national distribution, wholesale and newsstand analytics and data all sort of wrapped up under one company, admittedly I think that it makes a service. Not to name names, I’ve talked to several other publishing executives and I think there’s a consensus that it’s become a very difficult business.

One of the things that probably keeps most of us up at night is just the undue amount of fees that keep coming down the pike from the distributors and wholesalers, which frankly, just makes the economics of the single copy business almost impossible. When you look at the amount of money you’re spending on promotion, meaning checkout placements, merchandising opportunities, and trying to do those and do those right, it becomes counterproductive when you’re trying to offset more and more fees every year.

And just retailers. At the end of the day, anybody can just walk into any grocery store or bookstore and see our magazines in somebody else’s rack, their magazines are in our rack, so there’s an execution problem unfortunately, and I think that’s a wide issue that we have to get our hands around.

And what you’re going to see including coming out of Hoffman Media is a pullback in the single copy piece of the business, because the ROI is just not what it used to be. And I think that should be a scary proposition to the industry, because if Hoffman Media can’t make the single copy business work like we’ve historically been able to do, then that should be pretty indicative of where the industry is headed. We’ve always been at the forefront of the SIP business and just really managing high quality content across the newsstand. So, that’s one headwind that I think has to be addressed. And I’m not really sure what the answer is.

Second to that, I believe the printer consolidation question still exists. Quad and LSC, obviously, combined would create an odd pressure for publishers in that there becomes sort of a lack of options other than maybe a Fry or a couple of other nice, independent printers. But what does that mean in terms of the industry’s health if they don’t get a deal done? So, I think there are some questions there.

One favorable piece to the economics this year is it looks like paper prices are coming down a little bit, which 2018 put a lot of headwind out there for publishers that had heavy print exposure. I think those prices coming down a little bit is a good thing. Maybe it will provide a soft landing for some other sides of the business that maybe have increased in cost.

I tend to look at the advertising business at little bit different than most, just because most of our advertisement is very endemic; it’s a lot of relationship selling and frankly, we’re not winning a bunch of business because we’re responding to RP’s or meeting some sort of metric requirement from national advertising. We’re actually growing on the advertising side, this year we’ll be up actually almost 20 percent topline in our advertising business. A lot of that is driven by people understanding that the circulation model for our industry has been broken for a long time and Hoffman Media has always managed against the quality of our subscription file and not the quantity of it. I think now more than ever that is resonating with media buyers and with advertising clients.

Our advertising business has really been growing as a function of great custom content. If you’re good at creating content, I think that’s a way to leverage your business and grow. As an industry, I’ll tell you in total, a lot of people have their eyes on Meredith, just trying to get a look under the hood to see if they’re able to do with the Time Inc. acquisition. So far, it looks like they have not been able to successfully play out a lot of the economics of that deal. Unfortunately, being public measure, I think that’s sort of a yardstick that a lot of people keep a look at.

And finally I think for people who want to do deals, people who are leaving the media business, it’s a pretty good time to be a buyer. I think there are a lot of good magazine brands that will need to do something, either because they’re private equity backed or they have become an orphaned asset. If you have a longer view on the media business, it may be a pretty attractive time to be buying.

The flip side to it is, certainly the private equity world is saying the word print as if it’s a bad word these days, but I think there are really good businesses that are still in our industry. We still believe in the business; we’re deeply committed to high quality print. We’re complementing that with our digital business, we’re growing our cyber business. Run the right way, there is still an opportunity for people to monetize and grow in our industry.

Samir Husni: I know there is some pessimism about the future of the newsstands and what’s going on with them, in terms of distribution and the changing retail environment. Can you share any success stories from Hoffman Media that took place in 2019? What if a buyer came to you and said they were interested in buying Hoffman Media, what would be three accomplishments that you could tell them that happened in 2019? Not that you’re for sale, but just in case.

Eric Hoffman: (Laughs) If you get a high enough price, Samir, we can talk. (Laughs again)

Samir Husni: (Laughs too).

Eric Hoffman: I’m kidding. We love the business. We actually just acquired a company at the end of 2018. We bought an event business away from F+W before they filed bankruptcy. And that business is The Original Sewing & Quilting Expo. It’s eight expos that we do around the country. We got a fairly attractive evaluation on that business. We have our first full year results coming up and frankly, I think it’s going to contribute about 30 percent of our profit this year.

One highlight is this is certainly an opportunity to expand, especially when you have niche markets with passion-based customers that are willing to go with you wherever you go and will value the experience that you offer them.

Our Bake From Scratch brand, honestly, continues to thrive. Brian, my twin and counterpart that helps run the company, has become the face of that brand. He’s had several national TV appearances. We’ve won some really great advertising partnerships as a result of just being best in class when it comes to baking. And as it dovetails into our digital business, Bake From Scratch will probably cross 500,000 followers on Instagram. An enormous following for a magazine of its size, but it just speaks to a level of the quality of our content. And that has really become a tent pole for us to build that out.

The event business is one, Bake From Scratch another, and then three, in a pretty tough environment we’ve been able to grow the advertising business in excess of 20 percent this year. And I think that’s a function of us having really great sales professionals that understand our business and understand how we’re different than a lot of our competitors. We’ve become experts in the verticals we’re in and so when we talk to clients about food or about travel and tourism, we know that business and we live that business every day. So I think that has also helped us grow.

And then overall, topliners for the company will be up between five and eight percent this year. And if you look at it over a longer window, since 2014 the company is up almost 45 percent in revenue. Newsstand is going to be down substantially. Our subscription business is actually holding up, it’ll probably be flat year over year, but we’re running that business the right way. We’ve got great renewal rates and practically all direct-to-publisher subscriptions at strong prices.

Samir Husni: I take it your biggest challenge in 2019 has been the newsstands, the single copy?

Eric Hoffman: Absolutely. If you look back at the newsstands for 2015. 2016 and 2017, they were three consecutive years of growth for us at a time when the industry really started to demonstrate some substantial downward pressure. And 2018 was sort of the year when the trend line caught up with us. We grew the business, almost doubled it from 2015 to 2017; I think we cracked the Top 10 in Magnet rankings for single copy volume. And not just topline, we were making it work from a profit perspective. And 2018 was also a substantial change, paper prices being high and newsstand was going through some substantial changes that caught up with us. So, we started to pull back in 2019 and I think you’ll continue to see that trend in 2020.

As I said, I think there’s a lot of uncertainty around the A and C deal. With Curtis being acquired, there are just a lot of questions over what the future is going to look like, so we’re really working hard to build the business in other ways, to the extent that we can. That being said, newsstand in 2020 will still be 30 percent of the revenue.

Samir Husni: Why can’t the magazine industry come up with a different business model? Are bookazines with no advertisement the answer? You go to newsstands everywhere and all you see are bookazines. Are they the salvation of the industry?

Eric Hoffman: I think part of the challenge is the magazine business – if you look at the printers, if you look at the fulfillment houses, if you look at the newsstand distributors, the reality is that the top five publishers in the country are probably driving a majority of the revenue for all of them.

To a large extent, and I’m not saying everyone, but to a large extent the business model has become ‘we’ll do whatever it takes to get our subscription business to remain the same or grow because we have a rate base we need to manage.’ Magazine publishers literally do three and four-year subscription offers for less than $10. So, if you know anything about the math of the business, the hurdle they have to jump from an ad dollar per subscriber number is fairly large and I just think that advertisers have so many places to choose on where to spend their dollars. And for the last 10 to 15 years, the magazine business, while we talk about changing and innovation, selling pages is still a pretty big piece of the business whether people will admit it or not.

Publishers are going to have to face the realization that rate base is… and again, there are exceptions, but for the most part it’s an outdated business model. I think publishers actually look smart in reducing rate base and thinking more about the quality of their customer base and focusing on endemic advertising that reaches their audience in an intentional way. If you want to buy a lot of advertising and you want to buy it cheap, it’s programmatic to solve that for the world. You can buy a lot for not a lot of money.

And as a result everything else is changing. When an advertiser says that they’re shifting budgets to more digital, the print side of the house for the most part says let us rework our rates. You’re down to where there’s remnant and there are direct response advertisers, which we carry a few of, it’s not that we don’t, but the CPM they’re paying is so low.

As more advertisers shift away from their print application, it’s going to make it increasingly difficult. And I think you’re seeing that when you see magazines shutting down, or they’re rethinking the whole model. I can think of some examples where they’ve gone truly to newsstand and shifted the subscription liability on to other magazines, just to sort of buy some time.

Samir Husni: You mentioned earlier that Bake From Scratch had hit half a million on Instagram; do you think magazine media publishers are utilizing social media in the right way? Is social media friend or foe? Or just something you have no control over?

Eric Hoffman: I really think it’s your friend. Social media is a powerful way to reach new audiences, for sure. But it also gives you some tools in the bag to work with advertisers in a different way. We’re doing a lot of custom content developed for our audience and for influencers that relate to our audience and to our brand. We’ve been able to execute really interesting advertising campaigns across that platform.

It’s also a part of the brand voice. Bake From Scratch is a perfect example, where high quality print, based on subscription and single copy, dovetails the podcast and Instagram and some television appearances. We’re doing conferences. In 2020, we’re launching a Baker’s Blog, Baker’s Influencer Conference.

Bake From Scratch led four baking adventure trips this year, we took a group of our fans to Paris; another group to Alaska; we made two trips to San Francisco. And these are people that are spending thousands of dollars to have a very VIP experience with our brands. And a lot of that is done through the marketing and brand reach we have across social media.

Samir Husni: What’s keeping you up at night these days?

Eric Hoffman: What keeps us up at night is despite our intentional effort around running our business that’s subscription focused, balanced with single copy, focused on high quality, high-priced customers; I worry about the broader industry, that vendors are pressured and about the economics from the vendor side, fulfillment, printing, newsstand distribution, that there may be pressure there as well. Coupled with the fact that a lot of the larger publishers in our industry are also troubled right now. So what does that mean?

Even if we can grow and squeeze out a decent year and continue to try and build our business, are there broader economic issues that as an industry we may have that could put pressure on everybody? And I don’t know exactly what that looks like, but I think there is some validity to that.

Certainly, if you go back and look a decade ago, at Anderson News going out of business, Source Interlink going out of business; the consolidation with TNG and Comag. And then ANC and Curtis, Publisher’s Press selling, and the overall consolidation with, basically now, Quad and LSC. You’re seeing consolidation as a survival tactic, but I think it’s also sort of scary.

On the retail side, do the retailers believe in the magazine business the way they used to? We’re losing shelf space as an industry. I think we have to do a better job of telling people why we exist and why we belong on the newsstand.

So, there’s a lot that keeps us up at night. But one of the things that helps me to sleep at night is our amazing team at Hoffman. We have some of the best in the business. Our commitment is to run our business the best way we can, to the extent that we can build it up and support the people around us. We are longtime believers in this industry. I’d like to think that a lot of these issues would get worked out. Unfortunately, I imagine there will be more magazines to fold and at the same time there will probably be more magazines launched. You just have to hope that both are positive for our business.

Samir Husni: Thank you.

Next up, Bonnie Kintzer, president & CEO, Trusted Media Brands.

 

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Mr. Magazine™ Presents: Magazines and Magazine Media in 2019 & The Industry’s Projections For 2020…

December 13, 2019

It’s that time of the year again where Mr. Magazine™ reflects on what happened in magazines and magazine media in 2019 and then projects what will happen in the upcoming New Year 2020.

And while Mr. Magazine™ can tell you exactly how many new magazines were launched in 2019 and others can tell you how many magazines folded, I feel as an observer and student of the industry, the best place to learn about what went on this year and what’s expected to happen in 2020, is to go straight to the horse’s mouth, so to speak, and talk with the ones who would know; the movers and shakers of the industry.

From printing to distribution, from retailers to the corporate floors, Mr. Magazine™ presents a new end-of-the-year series entitled:

Magazines and Magazine Media in 2019 & The Industry’s Projected Future For 2020

The five objectives I hope to achieve from these informative interviews:

  1. As we approach 2020 each individual’s assessment of the future of magazines and magazine media…
  2. Three accomplishments or successes from 2019 for each company…
  3. What each considers to be the biggest challenge they had to face or will face…
  4. What their approach to the future business model of magazines and magazine media might be…
  5. Whether social media (in its many different platforms) is a friend or a foe to magazine media and why…

And there would be no Mr. Magazine™ interview without the traditional question at the end of the interview, “What keeps you up at night?”

So please check back on Monday, December 16, 2019, for the first installment of this new series where Mr. Magazine™ will talk to the heads of the magazine media companies and many other media professionals about the current status and future of the industry…

Until then, hope to see you at the newsstands where Mr. Magazine™ will be rounding up the new magazine launches of 2019.

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