Wednesday, June 27, 2007

Media conglomerates in the past, panel says

Media conglomerates in the past, panel says
By Georg Szalai

June 27, 2007

NEW YORK -- Is the heyday of media and entertainment conglomerates behind us?

A panel of industry analysts and bankers discussed this and other deal making questions as part of a PricewaterhouseCoopers event here Tuesday, with several of them arguing that conglomeratization has no real benefits, especially in the digital age.

"Consolidation in the old media world destroys value," said Laura Martin, founder and CEO of Media Metrics LLC. "They are buying stuff (and audiences) because they don't know what else to do."

She argued that online and digital deals with a monetization rather than a traffic focus are key, citing Google as a firm that has made smart acquisition decisions, while signaling that media giants are often otherwise inclined.

Martin also said that the young technology entrepreneurs that make a difference in today's world want cool and hip work environments. "That's not the big media companies," she said.


Former Morgan Stanley entertainment and media analyst Richard Bilotti said that consolidation can at times create scale advantages, such as when News Corp. expanded its TV station group in recent years to reach duopolies and what he called "superb margins."

But he argued that the Walt Disney Co.'s acquisition of Pixar -- while strategically positive -- may have taken a form that didn't benefit Disney shareholders much. Bilotti argued the price paid was fairly high for the CG-animation studio. "CG looks like it is in the seventh inning," he said on a bearish note, suggesting Disney could have instead sold Pixar its own studio operation and then taken a stake in it.

Gamco Investors portfolio manager Lawrence Haverty said the Internet and cable and satellite TV spaces are all sectors where consolidation makes sense due to "natural economies of scale."

PwC is predicting continued merger, acquisition and alliance activity in the media and entertainment space.

"With content now distributed on multiple platforms, content producers/providers, distributors and technology companies are looking to expand their presence among the proliferating channels, resulting in an increase in merger and acquisition activity," PwC's latest "Global Entertainment and Media Outlook: 2007-2011," which was formally launched at Tuesday's event, states.

Last year, media and entertainment deal volume exceeded $70 billion, according to PwC.

And 2007 is "on track to be the greatest year in volume since 2001," when the AOL-Time Warner merger happened, Thomas Rooney, partner, transaction services at PwC, told attendees Tuesday. PwC expects more than 1,000 sector deals with about $167 billion in deal volume across various sub-sectors pending already.

However, Tuesday's panelists were also largely bearish on the value of partnerships, arguing that they limit companies' flexibility and create the risk of dysfunctional marriages.

The experts, however, differed in their takes on the increased role of private equity groups in recent media industry deals.

Haverty predicted that "we're heading for a train wreck" given the rise in leveraged buyouts that boost debt levels for the acquired firms and recent upticks in deal prices. "We've seen this movie before."

Bilotti though said he prefers such deals over ones that see publicly traded companies dilute their earnings by issuing a lot of stock to finance deals.

The PwC report simply highlights today's importance of PE players for the sector.

"Private equity is having a significant impact on the entertainment and media industry," Rooney said. Of deals announced year-to-date, 74, or 13%, involve PE firms, while they have a 54% share in deal volume where announced, he told event attendees Tuesday.



Links referenced within this article

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Study: Internet 2nd Most Essential Medium, But #1 in Coolness

Study: Internet 2nd Most Essential Medium, But #1 in Coolness
by Les Luchter, Wednesday, Jun 27, 2007 6:00 AM ET

THE INTERNET HAS PASSED RADIO to become Americans' second "most essential" medium and swapped places with TV as the "most cool and exciting medium" since the subjects were last studied five years ago, reported Edison Media Research.


Edison's "Internet and Multimedia 2007" study, conducted this past winter with Arbitron, reported that 36% of consumers age 12 and over chose TV as the "most essential" medium in their lives, followed by 33% choosing the Internet, 17% radio, and 10% newspapers.

In 2002, TV was also ranked "most essential" by 39% of respondents, followed by 26% for radio and 20% for the Internet.

Interestingly, the Internet also placed second when this year's respondents were asked to name the "least essential" medium, this time placing behind newspapers.

Here, 35% found newspapers "least essential," followed by 24% for the Internet, and 18% for both TV and radio. In 2002, the Internet had topped the "least essential" list, at 33%.

Finally, the Internet and TV swapped places in the category of "most cool and exciting medium," with the Internet getting this designation from 38% of respondents in 2007 versus 25% in 2002, and TV from 35%, down from 48% just five years ago.

Study: Internet 2nd Most Essential Medium, But #1 in Coolness

Study: Internet 2nd Most Essential Medium, But #1 in Coolness
by Les Luchter, Wednesday, Jun 27, 2007 6:00 AM ET

THE INTERNET HAS PASSED RADIO to become Americans' second "most essential" medium and swapped places with TV as the "most cool and exciting medium" since the subjects were last studied five years ago, reported Edison Media Research.


Edison's "Internet and Multimedia 2007" study, conducted this past winter with Arbitron, reported that 36% of consumers age 12 and over chose TV as the "most essential" medium in their lives, followed by 33% choosing the Internet, 17% radio, and 10% newspapers.

In 2002, TV was also ranked "most essential" by 39% of respondents, followed by 26% for radio and 20% for the Internet.

Interestingly, the Internet also placed second when this year's respondents were asked to name the "least essential" medium, this time placing behind newspapers.

Here, 35% found newspapers "least essential," followed by 24% for the Internet, and 18% for both TV and radio. In 2002, the Internet had topped the "least essential" list, at 33%.

Finally, the Internet and TV swapped places in the category of "most cool and exciting medium," with the Internet getting this designation from 38% of respondents in 2007 versus 25% in 2002, and TV from 35%, down from 48% just five years ago.

Tuesday, June 26, 2007

On the Record: They Aren't Just Like Us

On the Record: They Aren't Just Like Us
by Mike Bloxham
http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=61095&Nid=31735&p=204904

The very fact you are reading this article and this magazine is evidence that you are - in the nicest possible way - a freak of nature. That is not to impugn either you or the goodly publishers of Media magazine or my fellow contributors (all of whom are worthy, wonderful and intelligent people).

Rather, it is a fact based on the sheer amount of time we spend contemplating and working in the world of media in all its forms (and for those of you bridling at the very notion of being a freak for reading this, console yourselves with the contemplation of what that makes me, the author of this piece). In short, this single-mindedness makes us so unlike the people we dedicate ourselves to reaching, moving, engaging, motivating, persuading and influencing that we are - in comparison - decidedly abnormal (freakish).

Consider for example, your average work day (probably at least eight hours and generally more). For all of that time you will be rigorously focused on planning, executing and evaluating campaigns. You'll be buying or selling media. You'll be pitching new business or being on the receiving end of pitches. The list goes on, and all the while you will be dipping in and out of the stream of online articles dropping into your inbox to inform your ever-evolving perspective of the fast-moving media landscape and all that takes place within it.

Your Media Day is very much made up of the business of media itself (as well as whatever content you consume via your channels of choice). For your consumers, however, the Media Day almost certainly involves a great deal of media, but they are all about content, not the business end of things. They care more about last night's ball game, the reality show of choice and the day's morning news. They also care about their kids' education, their prospects at work, their retirement and what the family holiday will be this year.

In short, they don't really care about media itself - just what it does for them. We, on the other hand, care a lot. And that's how it should be. It's the willingness to focus so much effort and time on the business of media that makes you good at what you do. The catch, though, is that it also helps to create a divide between practitioners and consumers that can be almost impossible to bridge.

Too often one hears statements from the media community that suggest an implicit belief that consumers are "just like us" - as well-informed and equally motivated to engage with media as those of us that are paid to. How many times have you heard that "everyone" is using a Blackberry incessantly, watching videos on their iPods, blogging, spending half their lives in virtual worlds, etc? If these kind of statements had been true, then the on-demand world would already be all-encompassing, every household would have a DVR, TV would be interactive from top to bottom and most retail outlets would have become a thing of the past.

Those with a vested interest in these things happening want to find evidence for them doing so. But we have to avoid the mass delusion of the dot-com bubble. As so many more platforms and capabilities emerge and reach a potential audience, we must strive to avoid falling into the trap of believing that the simple fact of availability will lead to inevitable and habitual large-scale use.

A case in point is the video-capable iPod. In a story in this magazine a few months ago, various commentators expressed surprise that a piece of Nielsen research found only 2 percent of a sample of 400 iPod users watched video on their device. Doubt was cast on the methodology, partly because the number of video downloads from iTunes would logically indicate iPod-based viewing. But consumers are inconvenient in their habits and as research will show, many of the movies downloaded from iTunes never make it off the pc or Mac, where they are viewed without the need for a further file transfer. To many users, this is a convenient route to what they want (the movie), while the iPod still performs perfectly well as an audio device.

Though there's unprecedented change happening in the media world now, it's not all happening at the same rate. While new devices and capabilities seem to come through almost every week and companies rush to commercialize, consumers don't always follow at the desired pace. Sometimes they even adopt unexpected patterns of use that leave companies playing catch-up. It's our ability to empathize with consumers that will enable us to turn expertise to practical advantage rather than be bogged down by our own perceptions.

Mike Bloxham is director of insight and research at the Center for Media Design, Ball State University. (mbloxham@bsu.edu)

Are You Getting Any? Ad Spending From Billions To Trillions

Are You Getting Any? Ad Spending From Billions To Trillions


PricewaterhouseCoopers recently published a report entitled “Global Entertainment and Media Outlook: 2007-2011.” It anticipates the growth rate annually to be 6.4% resulting in $2 trillion dollars to be spent in 2011.

Internet advertising dollars are projected to surpass spending on newspaper publishing by 2009. PwC expects Internet ad spending to grow from $177 billion in 2006 to $332 billion in 2011, which predicts a 13.5% annual growth rate.

Although the United States has the largest industry, it is also the slowest growing market with a 5.3% AGR tapping $754 billion in 2011. Asia-Pacific is marked as the fastest growing currently holding a 13.5% AGR.

Over the next five years, the majority of the growth in the industry is to come from online and wireless digital media. Global advertising will increase at a 5.4% annual growth rate from an estimated $407 billion in 2006 to $530 billion in 2011. Five year projections show online/digital and mobile fields worldwide to increase to $153 billion. Broadband households will grow from 240 million to 540 million and wireless subscribers are predicted to increase from 2.3 billion to 3.4 billion globally.

PwC has said that in terms of regions, economic and media/entertainment growth will continue to foster the importance of India, China(BRIC), Brazil and Russia. “Content, distribution and technology companies need to aggressively seek out new relationships to accommodate the shift towards convergence,” said Jim O’Shaughnessy, global chairman of PwC’s entertainment and media practice

Asia-Pacific spending on distribution of TV programming on mobile handsets is expected to increase from $26 million in 2006 to $6.5 billion in 2011. At 14.7%this is three times the 5.5% growth rate projected for the rest of the world.

For papers, online's still a world apart

For papers, online's still a world apart

Media buyers want to see integrated ad packages

By Lisa Snedeker
Jun 25, 2007


For the longest time, newspapers were confused by the web, and frankly annoyed, irked that they were having to post stories for free that print subscribers were having to pay for.

But most publishers have moved a long way in understanding the longer-term strategic value of their web sites.

While they're still not sure how or whether internet advertising will ever make up for losses of print revenue, they know they must invest. They need to build up their online offerings, and they must also integrate them with their print editions, making them that much more attractive to advertisers.

Yet very few papers have yet to pull it off, just a handful. And the fear now is that time is running out.

A new JupiterResearch study on media consumption shows that people are spending more time online but they are doing so at the expense of newspapers. They are going elsewhere. The worry is that advertisers will follow.

The value of integrating print and web is in being able to offer advertisers combo deals that tie them into the paper. That means deals that are flexible, easy to understand, and priced in a way that makes them that much more attractive than anything the competition can come up with.

It's doable. The devil seems to be in the transition. All but a few papers continue to sell print and online separately, through different departments, each with its own rate card.

“I don’t know that newspapers have it 100 percent right yet. They are still trying to figure out structure and price to make those multimedia buys," says Randy Bennett, vice president of audience and new business development for the Newspaper Association of America.

And Bennett allows that there's a real need for it. “From the advertisers’ side, there’s particular interest in trying to change the media mix and moving money online,” he says.

A recent survey by the Newspaper National Network found that 74 percent of their customers felt newspapers should offer integrated packages. NNN sells advertising for more than 1,500 newspapers across the country.

A similar Media Life survey a year ago found much the same thing. Media buyers regarded them a top priority, and a far bigger story, way ahead of the circulation issues that dominate so much of the coverage of newspapers.

The absence of integrated ad deals was a major source of frustration for media buyers.

Little seems to have changed in a year.

“We are not being approached with combo packages as of now,” says Mike Monroe, vice president of media and advertising operations at Macy’s, which advertises in four dozen newspapers and is one of the Los Angeles' largest advertisers. “Frankly, more times than not, we are the ones pushing bundling a print campaign with their (newspapers) online property.”

There are exceptions, of course: The New York Times, The Wall Street Journal and The Tampa Tribune are among those cited for offering integrated advertising packages across print and online platforms.

Most newspapers continue to see online as value-added, something to tack onto a print buy. Print is where the big dollars are, and there's where the interest is too.

As Bennett suggests, the problem is working out the details of a truly integrated buy, in which media buyers could move and choose from column A and column B and shift dollars back and forth as plans changed.

That's a lot harder to create than a bundled package with a single price and no flexibility, which is exactly what buyers do not want, says Jason Klein, president and chief executive officer of the Newspaper National Network.

“The print and the online package should not be stapled together but rather built using elastic bands for flexibility," Klein says.

“There is pressure from consumers and the market that newspapers have to be integrated to build that, even if it means they have to retrain their work force,” Klein says. “Change is never easy, but it clearly needs to be done.”

But one buyer at a top agency believes things have improved. She's Jouette Travis, executive vice president and managing director of Dallas-based Carat USA.

“Newspapers are getting better about selling combined print/online packages, and we are responding by having our internal newspaper and online teams make joint evaluations,” she says. "This has resulted in some new programs and begins to pave the way for a migration to the future of newspapers. It's very exciting to see publishers getting into this marketplace."

Monday, June 25, 2007

Four in five printers working under capacity in disappointing quarter

Four in five printers working under capacity in disappointing quarter
Caitlin Fitzsimmons, printweek.com, 22 June 2007

The print industry had a tough start to the year, with spring failing to deliver the expected recovery in demand, a new report suggests.

Directions, the BPIF survey of industry trading trends, shows many respondents became too enthusiastic about the outlook for the industry after generally encouraging results in the autumn and winter.

Many respondents reported that the March-May quarter failed to meet expectations, while the proportion of firms working below capacity increased to nearly four in five (78%) from just over three in five (62%) the previous quarter.

Nearly one in four (24%) respondents said order books were worse than normal for the time of year, compared with one in five (21%) last quarter, while the proportion of firms reporting order books better than normal fell from 38% to 31%.

However, printers remain optimistic about the upcoming trading period and predict that ongoing consolidation in the industry - through both acquisition and weaker firms going into liquidation - will relieve the competitive pressure.

BPIF corporate affairs director Andrew Brown said the pace of change in the industry provided opportunities for progressive management.

"Although the results this time around were disappointing compared with the last two quarters, it is encouraging to see that printers are reasonably optimistic about the period ahead," he said.

"It is clear that rationalisation continues to take its toll on the industry, creating further opportunities for companies seeking mergers or acquisitions."

Many small to medium-sized general commercial printers signalled their plans to acquire other businesses, recognising that organic growth is difficult, but growth and economies of scale can be achieved through strategic acquisition.

Printers also plan to increase capital expenditure on plant and machinery in the coming year, with many companies either investing in digital for the first time or enhancing their digital capacity.

Ziff Davis Sheds Enterprise Group, Revamps as Web-Focused Publisher

Ziff Davis Sheds Enterprise Group, Revamps as Web-Focused Publisher
by Erik Sass, Monday, Jun 25, 2007 8:00 AM ET

INFORMATION AND TECHNOLOGY PUBLISHER ZIFF Davis is continuing to divest itself of some titles, with the sale of its Enterprise Group. In addition to print properties eWeek, CIO and Baseline magazine, it also sold online ones: eweek.com, webbuyersguide.com, cioinsight.com, baselinemag.com, Microsoft-watch.com, channelinsider.com and deviceforge.com. Plus, it included a valuable database of 3.5 million business technology users in the sale.


The Enterprise Group is being sold to an affiliate of Insight Venture Partners, a private-equity and venture-capital firm, for about $150 million. Ziff Davis CEO Robert Callahan observed: "Insight Venture Partners has exciting plans to continue to pursue growth opportunities in this rapidly transforming technology media environment."

The sale of the division is, in part, a continuation of earlier sales and closures of print and online properties Ziff Davis deemed less profitable or peripheral to its mission.

During the last five years, the company has cut costs and reformulated itself as a Web-focused publisher. In the last year, it has finally returned to profitability after enduring a several-year slump. The Internet's impact on publishing hit the company earlier than many consumer magazines because of its tech-savvy audience.

In the first quarter of 2007, Ziff Davis saw a 15% increase in earnings to $3.1 million. Earnings increased despite a total revenue decline of 12%, or $4.3 million, as the company wrapped up a period when it shed a number of unprofitable print publications. This is the fourth quarter in which revenue fell, but profitability increased.

The curious phenomenon of falling revenues paired with increasing earnings may be indicative of a general trend. Magazine companies that move aggressively to online-centered business models are likely to be smaller, but also more profitable, after the transition.

Sunday, June 17, 2007

Electronic paper is catching up with the real thing

Paper chase
Jun 15th 2007
From Economist.com
Electronic paper is catching up with the real thing





AN INVENTOR meets a venture capitalist in a bar. He pulls out of his pocket something that looks like a grubby handkerchief, straightens it out on the bar top, and begins his pitch for $10m of venture money.

It’s a video display that can be furled, folded or rolled up into a ball, the inventor enthuses. He shows how it can be viewed from any angle, is easy to read in bright sunlight, has a contrast ratio better than a laptop’s liquid-crystal display (LCD), is light and portable, and can run for months without being recharged. It will change the way we view the world, swears the wide-eyed inventor. “Naw, it’s all been done better and cheaper before,” says the unimpressed VC, as he crumples the newspaper he was reading and tosses it into the bin.

Ink on paper has evolved over the millennia to become the easiest medium to read and the most efficient means for conveying information. And despite all the talk about paperless offices, computers have contributed mightily to today’s deluge of printed material instead of helping diminish it. But that hasn’t stopped researchers around the world from trying to replicate print on paper electronically.

The one thing going for e-paper, which the dead-tree version can’t hope to match, is its programmability. Imagine a newspaper that could be updated as events developed during the day. Think of a book that could change its contents after you’d finished reading it. How about a laptop-sized screen that unfurled from your mobile phone so you could watch TV while strap-hanging to work? What if your tee-shirt could flash intimate messages to attractive passers-by?

Sony is the latest in a long line of gadget-makers to flaunt a paper-like electronic display. The flexible 2.5-inch display it demonstrated a couple of weeks ago was notable for two reasons: it offered full-motion video and was in living colour.

E Ink Corporation




In some ways, Sony is playing catch-up here. LG Philips, a joint venture between LG of South Korea and Philips of the Netherlands, has been showing off a 14-inch colour screen that’s flexible enough to wrap around a lamp post. Prime View International of Taiwan has something similar. So does Samsung of South Korea and both Seiko Epson and Fujitsu of Japan, as well as a handful of start-ups in Britain and America. But until recently, few of them were able to display colour video properly.

While making flexible displays in monochrome has been difficult, adding colours and making them switch fast enough for full-motion video has been a tougher nut to crack. The trick to making such furlable displays has been to fabricate the electrode arrays for switching the display’s millions of picture elements (“pixels”) from either conducting plastics or extremely thin metal foil. Fortuitously, the recent improvement in plastic electronics for ink-jet printers has invigorated the whole of the e-paper business.

Like real paper, e-paper has to be both highly reflective and passive—ie, it should need no juice for backlighting or for maintaining the image. The best way to do that is to use a medium that’s bi-stable. Like a tossed coin, a bi-stable material can flip between two possible states—and then remain stable, and require no energy, in one or the other state until flipped again.

The first attempts to devise a bi-stable ink were made 30 years ago at Xerox’s legendary Palo Alto Research Centre in California. Called Gyricon, the technology was based on a transparent silicone sandwich with millions of tiny polyethylene spheres floating in oil between the upper and lower surfaces. Each of the tiny beads, less than a hair’s width in diameter, was black on one side and white on the other, with each hemisphere carrying an opposing electric charge. When an external charge was applied to an electrode array on the upper surface of the sandwich, the beads floating beneath them rotated promptly to reveal either their white or black sides—spelling out words and images, depending on the pattern of surface electrodes switched on or off.

Nowadays, a Xerox subsidiary called Gyricon LLC sells its SmartPaper—the polarised-bead form of e-paper—as reprogrammable displays for draping inside retail stores, hotels, conference centres and colleges. The flexible signs are connected wirelessly to computerised databases so they can be changed with the click of a mouse.

The bi-stable technology that has progressed the furthest, however, is a refinement perfected at the Massachusetts Institute of Technology (MIT) in the early 1990s. This uses tiny microcapsules filled with electrically-charged particles of white titanium dioxide suspended in an oily solution of black dye. The capsules themselves are trapped in a liquid polymer that’s sandwiched between two arrays of electrodes.

When a negative charge is applied to individual electrodes, the titanium-dioxide particles move to the top of the microspheres and make that part of the display appear white. As with the Gyricon, the pattern of electrodes switched on or off determines the image on the display.

E-Ink, the company spun off from MIT to commercialise the idea, supplies such displays to electronics firms around the world, including LG Philips, Samsung, Motorola and Prime View as well as Sony. The first e-book reader launched by Sony in 2004 used an E-Ink display with electronics supplied by Philips.

Sony’s latest announcement promises to bring e-paper even closer to everyday use. This time the device appears to be a home-grown development. Unlike the electrophoretic displays used in E-Ink’s products, which rely on charged particles being physically moved by an electric field, Sony’s new imaging device uses an organic electroluminescence display (OLED). Such displays emit light in response to an electric current or field being passing through them.

OLEDs generally use a glass substrate, or backing material. But Sony has found a way of forming the organic transistors for switching the pixels on and off on a flexible plastic substrate. The 2.5-inch prototype is little thicker than a sheet of actual paper and weighs about the same without its associated electronics.

Don’t expect such a clever innovation to be wasted on something as prosaic as a portable reader for e-books. Apple’s multimedia iPhone may be the gadget du jour, but Sony may trump it with an all-singing-and-dancing gizmo, built around a foldable display for downloading television, which can run for days without recharging. Now that’s something not to be sneezed at.

Saturday, June 16, 2007

Publisher of Men’s Magazines Is Sold to Private Equity Fund

Publisher of Men’s Magazines Is Sold to Private Equity Fund

By RICHARD PÉREZ-PEÑA
Published: June 16, 2007
http://www.nytimes.com/2007/06/16/business/media/16mag.html?_r=1&oref=slogin

Dennis Publishing, the magazine company behind three of the most successful publications aimed at young men in the United States — Maxim, Stuff and Blender — was acquired for an undisclosed price by the private equity fund, Quadrangle Capital Partners II, Quadrangle said yesterday.

Kent Brownridge, an industry veteran, is a junior partner in the purchase and will be chief executive of the magazine group. Mr. Brownridge, 66, spent 31 years at Wenner Media — publisher of Rolling Stone, US Weekly and Men’s Journal — most recently as senior vice president and general manager, before leaving Wenner in 2005.

Dennis Publishing is the American arm of Dennis Publishing Ltd., a British company owned by Felix Dennis. It will retain one of its American magazines, The Week.

A spokesman for Quadrangle said the group would be renamed when the sale is completed, which is expected to be in the third quarter. Quadrangle was represented in the deal by Davis Polk & Wardwell. Dennis was advised by Allen & Company and Jones Day.

Maxim was a pioneer among the “lad magazines,” the upscale-but-raunchy publications, including Stuff and FHM, for young men. Blender, a music magazine, also appeals mostly to men under 35, a favorite target of advertisers.

Blender, Stuff and Maxim, all monthlies, have a combined paid circulation of 4.5 million in the United States, and together they average more than 400 ad pages each issue.

The deal includes the magazines’ Web sites, which attracted more than four million unique visitors during April, and other related ventures including the Maxim satellite radio channel on Sirius and Maxim-themed resorts and restaurants.

Quadrangle is a major investor in a number of media companies, including Cablevision Systems and Metro-Goldwyn-Mayer Studios. The company is led by Steven Rattner, the former deputy chairman of Lazard.

By RICHARD PÉREZ-PEÑA
Published: June 16, 2007\


Dennis Publishing, the magazine company behind three of the most successful publications aimed at young men in the United States — Maxim, Stuff and Blender — was acquired for an undisclosed price by the private equity fund, Quadrangle Capital Partners II, Quadrangle said yesterday.

Kent Brownridge, an industry veteran, is a junior partner in the purchase and will be chief executive of the magazine group. Mr. Brownridge, 66, spent 31 years at Wenner Media — publisher of Rolling Stone, US Weekly and Men’s Journal — most recently as senior vice president and general manager, before leaving Wenner in 2005.

Dennis Publishing is the American arm of Dennis Publishing Ltd., a British company owned by Felix Dennis. It will retain one of its American magazines, The Week.

A spokesman for Quadrangle said the group would be renamed when the sale is completed, which is expected to be in the third quarter. Quadrangle was represented in the deal by Davis Polk & Wardwell. Dennis was advised by Allen & Company and Jones Day.

Maxim was a pioneer among the “lad magazines,” the upscale-but-raunchy publications, including Stuff and FHM, for young men. Blender, a music magazine, also appeals mostly to men under 35, a favorite target of advertisers.

Blender, Stuff and Maxim, all monthlies, have a combined paid circulation of 4.5 million in the United States, and together they average more than 400 ad pages each issue.

The deal includes the magazines’ Web sites, which attracted more than four million unique visitors during April, and other related ventures including the Maxim satellite radio channel on Sirius and Maxim-themed resorts and restaurants.

Quadrangle is a major investor in a number of media companies, including Cablevision Systems and Metro-Goldwyn-Mayer Studios. The company is led by Steven Rattner, the former deputy chairman of Lazard.

Wednesday, June 13, 2007

Newspapers World's Second Largest Ad Medium

Newspapers World's Second Largest Ad Medium

According to the World Association of Newspapers Newspaper recent release, global newspaper sales were up 2.3 percent in 2006, and had increased 9.48 percent over the past five years. Newspaper sales increased year-on-year in Asia, Europe, Africa, South America, with North America the sole continent to register a decline.
When free dailies are added to the paid newspaper circulation, global circulation increased 4.61 percent last year, and 14.76 percent over the past five years. Free dailies now account for nearly 8 percent of all global newspaper circulation and 31.94 percent in Europe alone. Advertising revenues in paid dailies were up 3.77 percent last year from a year earlier, and up 15.77 percent over five years, WAN said.

Timothy Balding, Chief Executive Officer of the Paris-based WAN, said "Newspapers in developing markets continue to increase circulation... and in mature markets are showing remarkable resilience against... digital media... (while) newspapers are exploiting...the digital distribution channels to increase their audiences... It is remarkable that the press in print continues to be the media of preference for the majority of readers who want to remain informed."

Newspapers share of the world ad market held relatively steady with 29.6 percent, marginally down from 29.8 percent in 2005. Newspapers remain the world's second largest advertising medium, after television, with more revenue that radio, cinema, outdoor, magazines and the internet combined. When newspapers and magazines are combined, print is the world's largest advertising medium, with a 42 percent share, compared to 38 percent for television.

In addition, the 2007 World Press Trends report reveals:

Paid circulation, with free dailies added, daily circulation increased to nearly 556 million, a4.61 percent increase from the total of paid and free dailies in 2005.
The total number of paid-for daily titles was up 3.46 percent in the world in 2006 and up 17.67 percent since 2002 to a record 11,207 titles.
Newspaper advertising revenue increased 3.77 percent in 2006 from a year earlier, and was up 15.77 percent over five years.
Paid daily newspaper circulations were up in 31 percent of the countries surveyed in 2006, stable in half the countries and down in 19 percent.
The circulation of US dailies fell 1.9 percent in 2006 and 5.18 percent over five years. Most of the decline came in evening dailies, which saw a year-on-year circulation decline of 4.62 percent, compared with only 1.48 percent for morning dailies. Over the past five years, evening dailies declined 19.62 percent, compared with a 2.52 percent drop for morning newspapers.
Circulation sales were up 3.61 percent in Asia in 2006 over the previous year, up 4.55 percent in South America, up 0.74 percent in Europe, up +0.65 percent in Africa, up 2.11 percent in Australia and Oceania.
Seven of 10 of the world's 100 best selling dailies are now published in Asia. China, Japan and India account for 60 of them.
The five largest markets for newspapers are: China, with 98.7 million copies sold daily; India, with 88.9 million copies daily; Japan, with 69.1 million copies daily; the United States, with 52.3 million; and Germany, 21.1 million.
Newspapers in 10 European Union countries increased their total circulation in 2006. They were: Austria, Estonia, Ireland, Italy, Lithuania, Malta, Poland, Portugal, Romania, and Slovakia.
The number of paid-for newspaper titles in the EU climbed 0.41 percent in 2006, to 1,482, and was up 3.2 percent over five years. When paid and free titles are combined, the number of titles rose 2.57 percent over one year and 8.44 percent over five years.
Global newspaper advertising revenues have increased for four straight years and were up 3.77 percent in 2006.

BPA Eases Rules for Qualified Circ, Non-Paid Subs

BPA Eases Rules for Qualified Circ, Non-Paid Subs
Lucia Moses
http://www.mediaweek.com/mw/news/recent_display.jsp?vnu_content_id=1003597780
JUNE 12, 2007 -

BPA Worldwide has widened its definition of qualified continuous circulation, requiring that publications serve recipients at least three months in a row, regardless of the number of issues. Previously, publications with 14 or fewer issues per year had to serve recipients at least six months in a row. Along with that change, publications also may serve up to 5 percent of total qualified circ for less than three months without disclosing it.

The revised rule, which applies to both business and consumer publications, was approved recently by the BPA board and took effect in June.

The board also approved a new service, called a Distribution Audit, to verify distribution for non-editorial media products, like product listings and coupon publications.

In other changes, the board broadened the definition of non-paid subscriptions, ruling that a publication no longer has to be the official publication of an association to be a non-paid subscription that’s reported as a benefit of membership in the association. To qualify, the association must state that the publication is a membership benefit, though.

The board also allowed publications to report as nonqualified their digital copies that went to advertisers and ad agencies.

Tuesday, June 12, 2007

Study: Consumers Responsive To Junk Mail

Study: Consumers Responsive To Junk Mail
by Erik Sass, Tuesday, Jun 12, 2007 7:33 AM ET
IN THIS BRAVE NEW WORLD of digital communications, advertisers may be overlooking a valuable resource: junk mail.


Consumers are more responsive to junk mail, according to a new survey by International Communications Research publicized by Pitney Bowes. The ICR report has snail mail beating out email for certain kinds of communications, including confidential business information.

Per ICR, 73% of respondents prefer receiving new-product announcements via mail from companies they're already in contact with, versus just 18% for email. And 70% prefer mail for unsolicited information and offers telling them about products and services from companies that they don't engage with.

The most marked area of difference was confidential personal information. Eight-six percent of respondents prefer mail for things like bills, bank statements and financial reports, versus just 10% for email.

The survey also found that consumers aren't as likely to discard unsolicited mail containing product information, although they will trash email. Some 31% discard print mail versus 53.2% for email. This category includes products like brochures and catalogs.

Finally, consumers found mail offers less intrusive--i.e., less disruptive of daily activities--than both email and phone solicitations

Trade Shows Continue To Outpace Ad Pages, Grow 5.3% During First Quarter

Trade Shows Continue To Outpace Ad Pages, Grow 5.3% During First Quarter
by Joe Mandese, Tuesday, Jun 12, 2007 7:33 AM ET

TRADE SHOWS CONTINUE TO BE fueling the growth in the business-to-business media industry, according to the latest findings from American Business Media. Trade shows, conferences and events, a category the ABM has dubbed, "face-to-face media," took in $2.94 billion in revenues during the first three months of 2007, up 5.3% from the first quarter of 2006. During that same period, trade magazine ad pages fell 2.9%, and print advertising revenues declined 1.2%. Ad pages in the business press took an even steeper decline during March, dropping 5.1% from March 2006, with print ad revenues falling 2.6%.
Although magazine ad pages and revenues remain essentially flat, there are strong category performers for print, including the architecture/design/lighting category, with a year-to-date increase in ad revenue of 10.7%; professional services, which followed with a 9.4% increase; and the resources/environment/utilities category, with an 8.3% increase.

In recent months, the ABM has begun emphasizing the growth of new sources of B-to-B publisher revenues, especially online advertising and trade shows. Joe Mandese is Editor of MediaPost.

Friday, June 01, 2007

American magazine market towers over Britain

American magazine market towers over Britain
Dan Sabbagh: Analysis
http://business.timesonline.co.uk/tol/business/columnists/article1867868.ece

Visiting the headquarters of the world’s biggest magazine company, Time Inc, on New York’s Sixth Avenue, reveals plenty about the difference between British and American media. In Britain, television and newspapers rule, and magazines are a cottage industry. Yet one look at the vast reception and escalators in the atrium of the 1950s skyscraper, opened, naturally, by Marilyn Monroe, suggests that the balance of power is somewhat different in a country where there are only a handful of national newspapers. After all, Time Inc – home to Time, People, Fortune and Sports Illustrated – makes $1 billion (£505 million) a year, which is somewhat more than the £72 million that Emap ground out of the magazine market back home.

It helps, of course, that the United States is a country the size of a continent. A niche title in America can find a circulation of a few hundred thousand, and afford staffing to match, whereas in Britain three journalists and two production staff can easily chuck out a monthly. The great strength of the scrappy British culture is its innovation, thinking nothing of building titles on the back of boob jobs or high street fashion, but its problem is that it encourages a lack of ambition as the internet changes the rules of the game – which is partly what did it for Emap’s boss Tom Moloney, who was ousted last month.

In the States, magazine publishers such as Time have their eyes on television. Collectively, Time websites manage 19.3 million monthly unique users, not much behind Disney (which owns ABC, as well as Mickey Mouse) or CBS Corporation, at 22 million and 23 million respectively. The publisher believes that, on the net, its products could exceed the reach of competing television shows, and that ad dollars may follow. Why shouldn’t Sports Illustrated run a video interview with Tiger Woods, or put together a one-hour weekly show if that’s what people want to watch – or People take on the late night talk shows for audience: they have enough capital to be competitive.

It’s not immediately easy to imagine the same dynamic back in Blighty. Emap has pushed brands like FHM, Kerrang! and Mojo into television and/or radio, but brand extension is not about trying to dominate a category such as sports. Troublingly, even Time is not so sure – and it owns IPC, the Horse & Hound market leader in the UK. Back in New York, the parent company is asking whether British magazines have the reach to take on the BBC. That, in turn, hardly bodes well for IPC, which seems to have become a straight financial investment for Time Inc’s parent, Time Warner. We already knew that most magazines don’t travel internationally: Sports Illustrated’s swimwear issue (the swimwear is worn by women) may be racy enough for American tastes, but hardened readers of Nuts and Zoo would be underwhelmed. However, a diversion of strategy between Time and IPC could be wrong.

Internet economics shows that the spoils go disproportionately to the winner. The traditional game in magazines is to identify the right audience and exploit the gap, but the new model requires more ambition. Already the BBC has seized the consumer motoring audience with the transition of Top Gear online (although, fortunately, it can’t buy AutoTrader to control the car market as well). If magazines are to have a chance, the sector needs to cultivate more ambition: bet on winners and build audiences before the BBC snaffles them all. Or find new owners and managers who are willing to try.

— Six weeks from now, even the most hopeless Muggle will not be able to move for the outburst of Harry Potter mania. The fifth film – which will gross somewhere between $800 million (£404 million) and $1 billion, if previous form is anything to go by – will be followed just over a week later by the last book. Amazon.com has already passed 1.5 million preorders of the title globally; 12 milion copies have been printed in the States; small children will wear out overjoyed parents as they queue for the midnight release.

This, of course, is big business. The author J. K. Rowling is worth more than £500 million. She has helped to create an industry with some 200 spin-off titles and, even if the wizard does not survive the Deathly Hallows, he will live on in the remaining two movies, even more spin-offs and a theme park in Florida that ought to be sponsored by Eton, as Hogwarts is such a good advert for the British boarding school.

The curiosity with Harry Potter is that the books are so startlingly successful in the postmodern era. The usual refrain of commentators is to bang on about how audiences are fragmenting, how computer games and/or the internet are ruining reading, and corrupting supposedly innocent teenagers. Read Chris Anderson’s The Long Tail, with its emphasis on discovering there is money to be made on supplying niches, and you’d be forgiven for thinking that hits don’t matter so much any more.

Yet as shareholders in Bloomsbury, Rowling’s British publisher, can ruefully attest, profits slumped last year when there was no new book to be released. Audiences are fragmenting, but there are times when vast numbers of people want to consume the same thing, whether it’s the World Cup final, The X Factor, Spider-Man 3 or Harry Potter’s seventh and last story. Mass entertaintment is far from dead: and those who reach global audiences make super-normal profits.