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Hard-Pressed Magazines Push for New Image : Media: An advertising slump has led to the folding of several publications. Publishers are trying to change the perception that the industry is a 'has-been.'


NEW YORK — At Business Week magazine, consultants from Booz, Allen & Hamilton are so intent on scrutinizing costs that they are studying such once-sacrosanct questions as how long it takes writers to report stories.

At Victoria, the entire editorial staff consists of 11 people. They are equipped with Apple Macintoshes and produce a magazine that would have taken two or three times as many people to put out without automation.

And at the Magazine Publishers of America, officials boast about an ambitious new ad campaign to persuade marketers about the advantages of advertising in magazines. The tagline: "Magazines Make Things Happen."

These are just some of the ways that magazines are fighting back against the worst advertising drought the industry has confronted since 1975. Behind these moves lies the recognition that the challenges facing magazine publishers go beyond the general advertising recession that is afflicting all media except cable television.

"We are fighting a generalized perception that print is a has-been," said James R. Guthrie, the association's executive vice president of marketing development. He said magazines are well positioned for the future because of their almost unique ability to allow advertisers to target specific groups of customers.

Still, the perception that magazines may have seen their best day was reinforced in recent months by a list of high-visibility failures--among them Egg, Savvy, Fame, Taxi, WigWag and Men's Life--and speculation about more to come. "The large majority were ill-conceived, or poorly executed or capitalized, in the first place," said D. Claeys Bahrenburg, president of Hearst Magazines. Observers say that's especially true of the genre that attempted to appeal to hip urbanites.

Industrywide, the number of advertising pages in magazines fell 3.7% in 1990, but that was only the beginning. Ad sales in the first quarter of 1991 were disastrous, with total pages in monthly magazines off 8.7%--and with drops of 20% or more in such recently strong titles as Vanity Fair, Architectural Digest, Self and Metropolitan Home.

The industry has also been hit hard by a 22.6% increase in second-class mail rates, which has added hundreds of millions of dollars to its annual postal bill.

"The business, in general, is hurting big time," said Ronald A. Galotti, publisher of Conde Nast's Vanity Fair, one of the hottest books of the 1980s. "Advertisers who were running 10- or 20-page portfolios are running five or six pages this year."

"The books that held up a little bit better last year are taking a hit this year," said Paul DuCharme, vice president and director of print media at Grey Advertising.

Discounting by publishers is becoming pervasive, and "the wheeling and dealing that the desperate titles do is putting pressure on even the soundest books," said Reginald K. Brack, president of Time Warner's Time Inc. Magazine Co. subsidiary. Space buyers at major agencies say the panic among ad salespeople is palpable. "On the sales side, some people are getting hysterical," said Roberta Garfinkle, vice president and director of print media at the McCann-Erickson ad agency.

"I've been telling publishers: Get your people calmed down," Garfinkle added. "When things loosen up, we're going to remember the guy who called 42 times and made a general pest of himself."

In the meantime, "there is going to be a healthy shrinkage in the number of magazines," predicted veteran magazine editor Clay Felker. "You had too many magazines started up in the '80s. Once the euphoria evaporated, the economic support for them dried up."

"What we are seeing is a very natural contraction of the fringe or marginal businesses," added John J. Veronis, chairman and co-chief executive of Veronis, Suhler & Associates, an investment banking firm that specializes in the communications industry.

Veronis has been retained to handle the sale of up to nine of the titles owned by Rupert Murdoch's debt-laden News Corp. The magazines on the block include New York, Seventeen, Premiere, Mirabella, Automobile and European Travel & Life. Possible buyers include Hearst Corp. and Cahners Publishing Co., a unit of Reed International PLC of Britain. Murdoch has ruled out the sale of TV Guide, which he bought in 1988.

The prices at which magazines are trading hands are way down. Magazines that were selling a few years ago for 10 to 15 times cash flow command multiples today of between 6 and 8, according to industry observers.

"You've got a lot less capital out there," Veronis explained. "The European players who came into the U.S. market (as buyers) in a big way are more or less gone. The same can be said of the financial players. They had lots of money and drove prices up."

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