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In Hearst's Eyes, It's Quality Vs. Quantity

October 27, 1995|PAUL D. COLFORD | SPECIAL TO THE TIMES

Maybe you've seen the ads. The more familiar in the artsy series shows a trash can set against what appears to be a sea horizon. "REDEFINING magazines for the 21st century," the copy says. "Without the COMMITTED reader, you have NOTHING." Hearst Magazines, one of the largest publishers in the world, has been running the ads in leading newspapers and media publications.

In a classic example of adspeak, Hearst's praise for the "committed reader" masks the publisher's industry-jolting plans to cut the number of readers it will guarantee advertisers at its 13 wholly owned magazines, including Good Housekeeping, Harper's Bazaar, Cosmopolitan, Redbook and Esquire, while raising ad rates by 5% Nov. 1. In addition, the publisher already has hiked mail-subscription prices 7% to 13% and is phasing in newsstand prices higher by 18% to 33%. The circulation guarantee, or rate base, of Good Housekeeping is being cut by 500,000 copies, to 4.5 million. Redbook will be down 400,000, to 2.8 million, and Cosmopolitan by 250,000, to 2.25 million.

The moves appear to confirm that Hearst's circulation-hiking strategies in recent years (such as below-cost subscriptions) have proved too costly to maintain. Raising circulation can be unprofitable if a publication is spending more to print and mail subscription orders than it is charging, or if many of these new readers fail to renew their subscriptions, thereby forcing a publisher to dig even deeper to replace them. A mailing to 1,000 prospective subscribers can cost up to $500--with no guarantee that any of them will bite.

Hearst's retreat has dramatized the magazine industry's response to skyrocketing paper and postal prices, as well as declining readership. Instead of trying to pump up circulation figures to charge higher ad rates, especially when the hunt for new subscribers remains a costly frustration, Hearst has chosen to tout (and charge 5% more for) so-called quality circulations of "committed" readers who need no cajoling to read the magazines. According to this view, as expressed by Hearst Magazines President D. Claeys Bahrenburg, the committed reader is better educated and more likely to sample new products, making a more desirable target for advertisers.

Seizing on the garbage-can image in Hearst's ads, which suggests to some that the publisher is "trashing" its marginal readers, detractors have attacked the company's attempt at spin control.

"The simple truth is that if you choose to deliberately eliminate readers, your readership wasn't all that valuable to begin with," scoffed David J. Pecker, chief executive officer of the rival Hachette Filipacchi Magazines, in a full-page response to the Hearst ads that he ran in the Los Angeles Times, New York Times and Chicago Tribune. "We'll let the others drastically raise their prices. We'll just keep raising our standards."

Hachette's 27 titles include Woman's Day, Road & Track, Premiere, Elle and George.

"What do I think of the Hearst ads? Lame," said a non-Hearst publisher who asked not to be identified. "It's an attempt to look statesmanlike after looking like complete idiots. I don't think anybody's fooled."

To seasoned industry observers, Hearst's lower circulation guarantees recall what happened at Time. In the late 1980s, the news weekly ratcheted up its rate base to 4.6 million--remember the pocket calculators and other gizmos that were offered to new subscribers via TV ads? In the 1990s, Time recognized that its circulation had become inflated with marginal readers, many of them less likely to renew their subscriptions. The magazine scaled back--twice--to its present rate base of 4 million.

"Time, at 4 million copies, is a more efficient magazine," said Thomas R. Evans, publisher of U.S. News & World Report. "We print 11 billion pages a year. Time is up to around 20 billion. With postal rates up and paper costs up as much as 50% industrywide, you can be sure that the people at Time are glad that they are not up at 4.6 million anymore."

According to circulation expert E. Daniel Capell, the founder and editor of Capell's Circulation Report, an industry newsletter published by Vos, Gruppo & Capell Inc. in New York, Hearst's maneuvers underscore the continuing weakness of magazine circulation. Capell recently reported that nearly half the magazines that are members of the Audit Bureau of Circulation showed drops in circulation compared to last year. The industry's two biggest sources of new subscriptions, the direct-mailers Publishers Clearing House and American Family Publishers, had generated less business at midyear, compared to 1994, for 69% of the magazines surveyed by Capell.

Mediaweek magazine noted recently that newsstand sales of magazines have fallen 2.9% annually during the past five years while mail subscriptions have increased only .6% a year in the same period. The proliferation of other media--cable TV networks, online services--is among the factors believed to be eroding circulation numbers.

In this competitive climate, Capell argued, Hearst's scaled-back guarantees are "a smarter way to manage a circulation file." Capell also believes that Hearst has taken the pressure off other publishers that wish to follow its lead. In recent weeks, the mighty Ladies' Home Journal, published by Meredith Corp., announced it would shed 10% of its rate base, lowering the guarantee to 4.5 million.

"It's not that the sky is falling," said Roberta Garfinkle, director of print media at the ad agency McCann-Erickson. "It's a case of the magazines saying, 'Oops, we've got to be a lot smarter in the way we do business.' "

* Paul D. Colford is a columnist for Newsday. His column is published Fridays.

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