The magazine industry continues to reel as traditional advertisers cut their print budgets and consumers spend less on subscriptions and at the newsstand.
WWD has learned that employees at Hearst Magazines were told Thursday that the company is tightening budgets across the board. There is also a hiring slowdown and sources indicated that job cuts could follow later this year. Insiders noted that Elle magazine has been hit particularly hard.
“We’ve had a great first half following a great 2014 and 2015,” Carey said. “But we’re watching the state of American retail with some concern. We are asking our teams to be especially careful about their discretionary spending.”
The executive cited the state of retail today and the slowdown in spending. This week, WWD reported that Ralph Lauren was pulling back its fall print advertising in magazines. Sources indicated that other fashion companies, such as Gap Inc., had also decreased its print advertising.
Carey noted that the publisher’s travel and entertainment budgets were to be monitored closely by all of its titles. He also said there isn’t a “hiring freeze,” per se, but more of a “chill.” He explained that the policy of Hearst is an economical approach, in which it takes time hiring to make sure if that job is truly needed.
When asked whether job cuts could ensue by the end of the year, he said: “It’s hard to say. We’ve had no broad-based layoffs at Hearst during my time.”
Carey, who joined the company in 2010, said there had been a reconfiguration of business and editorial structures. For instance, Hearst has combined some publishers in groups and editorial teams such as Seventeen and Cosmopolitan.
Although most traditional magazine and newspaper publishers have slashed costs in order to build up digital, Carey said that wasn’t the reason for the budget cuts for the balance of the year, as Hearst’s digital and magazine divisions have separate profit and loss reports.
The news follows the closing of the publisher’s September issues. For fashion magazines, September is the biggest print revenue driver of the year. Hearst, which owns several titles that rely on luxury advertising, including Harper’s Bazaar, Elle, Marie Claire, Town & Country and to a lesser extent Esquire and Cosmopolitan, the month is important, to say the least.
But Hearst isn’t the only one feeling the effects of the turmoil at retail and in fashion. Rival Condé Nast owns Vogue, Glamour, GQ, W and Vanity Fair and sources there are said to be nervous about impending cuts, too. In the last few years, Condé has taken both a pick and an ax to its budgets around the late summer/early fall period.
While it’s somewhat difficult to get a sense of the business as both Condé and Hearst are private companies, one need look no further than Time Inc. for an indication of the health of the magazine industry. The public company has spoken openly about the waning print advertising market and this week laid out its plan for “transformation.” The plan included a kind of de-layering of its corporate structure, as well as a reorganization of the sales teams.
Although Time Inc. chairman and chief executive officer Joe Ripp said the changes were not budget-related, he did note that the reorganization was needed to make the company more competitive to meet market demands.
During an investors’ day in May, Ripp touted print as a “cash machine,” while also revealing that revenue from print was slipping. He said in 2016, Time Inc. would bring in two-thirds of its revenue from print advertising and circulation and the rest from digital advertising. A year earlier, the company’s total revenue was $3.1 billion, of which 76 percent of sales came from print and 24 percent from digital. Ripp projected a 1 percent to 5 percent increase in revenue in 2016 at the time.