Memo To Time Inc. Journalists: Watch Out, The Consultants Are Looking Closely At Editorial

Philip M. Stone October 16, 2006

There is no more scarier corporate scenario for employees than seeing consultants running around the building looking for ways to make things run better. After all, the consultants have to produce a report in which the forecast savings makes the consultancy fee look like a mere pittance. Worst of all is when consultants ask for an interview and the first question is, “What do you do and how do you go about doing it?”
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And McKinsey, the consultants, have been roaming around Time Inc. for about six weeks now looking especially at editorial functions, particularly how to integrate online and print operations. And when they finally come out with their recommendations employees may well want to hang onto their chairs, literally, because seldom do such recommendations about converging print and online responsibilities not include staffing reductions.  

Just ask, for instance, the folks at Belo in Dallas, or at the Financial Times and the Daily Telegraph in London, all of whom have gone through integrating print and online.

There have already been a couple of culls at Time, Inc. this year with some 550 employees gone, and Ann S. Moore, Time Inc.’s chairman-CEO, has made it clear she believes the company needs to shrink some more in titles and employees in order to do digital right.

A McKinsey spokesperson explains what is going on. “They’re looking at the editorial process to see what could be reengineered to free up investment dollars for future growth. Secondly, they’re looking at how to further integrate online and print editorial functions.” That word “reengineered” should also put fear into those who don’t think their current job status is too secure.

Time Inc. has been on a rampage since late last year when advertising revenues took a sharp fall primarily due to major cutbacks by the automobile industry.  According to the Publishers Information Bureau (PIB), automobile magazine advertising in the US this year, through September, is down $165 million (-10.1%) over the same nine months of 2005. The number of pages bought is down 2 million (-12.7%), and taking into account that Time Magazine was the largest recipient of auto advertising of any generalist magazine then it’s easy to understand how things suddenly got very tight.

But it wasn’t just Time. Sports Illustrated advertising in 2005 was down 17% and Fortune was down 10%. There are some improvements this year, but the signs are clear that there are fundamental changes in the spending habits of magazine advertisers and that translates into some of that spend going to the Internet.

In addition to layoffs, Time Inc. has closed Teen People And has announced it is selling 18 of its 50 magazine titles including Popular Science, Field & Stream, and Yachting, magazines that cater more to particular niches rather than the general population. And niche products these days seem to be in real trouble.  Popular Science, for instance, had a 10.2% subscription drop in the first six months of the year compared to the same period last year, its ad pages are down 8% and overall revenue is down 11.2%.

Magazines like Time, People, and Sports Illustrated that appeal to the masses are secure and their digital presence will be enhanced even if the editorial numbers for the magazines and their accompanying web sites get reduced.

What’s happening in magazines is the same as for newspapers – the realization that print can no longer be a one platform product but must be multiplatform. In a staff memo announcing the sale of the 18 magazines, Moore said, “I am confident that the biggest brands in print, with our expertise and support, will develop into the biggest brands online.” She said that Time, Inc web sites already attract 1.5 billion page views per month.

Her problem, as with the newspaper industry, is that print is losing revenues faster than online can replace them at the present time. The company’s second quarter revenue was $1.3 billion, down 2%, with operating profit down 8%, hurt particularly by subscription revenue losses, particularly at the magazines she is now trying to flog.

In a recent interview with Advertising Age she said, “The days of selling a single media are seriously waning. Having a robust digital strategy is critical to every media brand.”

And she places a lot of belief on the power of the various Time, Inc. brands. “I believe in trusted content. I believe consumers will bookmark their favorite trusted brands. I believe that great advertising and marketing still works. There is much to be revealed and settled on the web. These are very unsettling but exciting times for our business.”

In an earlier interview, she told the New York Times, “We are going to have to make some painful cuts. I think it may well be true that I have to shrink Time Inc., in order to grow it, but it will grow again.”

Magazines in general are fighting just to hold on to what they already have. Through September ad pages sold for the year were up 0.7% over the same period last year, according to the PIB

It’s no wonder, therefore, that Moore is so keen on getting in those Internet revenues as quickly as possible, and as cheaply as she can.

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Time Inc., Cuts 289 Jobs Including 170 In Editorial - January 21, 2007

The hits were worse than expected – 289 jobs across its various titles including 179 editorial and several US bureaus are closed. Even successful magazines such as People didn’t escape – it lost 44 staffers and its bureaus in Washington, Chicago, Miami, and Austin. Time lost 50 staffers including downsizing the Washington bureau and closing Los Angeles, Chicago and Atlanta.

Ann More, chairman and CEO of Time, Inc., told staff that while the company fully intended to invest in its core magazines it also wanted to broaden its digital activities “to become a truly multiplatform publisher.”

The losses come on top of dumping 27 employees in the consumer marketing department just before Christmas. Before this latest announcement the company had fired 577 staff in the past 12 months and in December, 2005, it fired 105 staff. It also put up 18 magazines for sale last September and the company is now said to be reviewing those bids.

The culprit in all this is a weakness on the advertising side. Time Magazine ended the year with a 0.8% increase in ad pages, but People sank 2.9%, Sports Illustrated was down 3.5%, Fortune down 6.4%, Entertainment Weekly down 7.6% and Money down 9.6%.