Bosacks Speaks Out: On Newsstand, Rate Base and the Magazine Industry

By Bob Sacks on July 21, 2016

We are at an interesting crossroads in the magazine industry. Not all business plans are, if you will pardon the expression, on the same page.

There is a large set of business focused on the of selling of magazines on the newsstand. There are thousands of people and hundreds of businesses dedicated to the shipping, selling, coordinating, and returning of magazines in the retail supply chain. Their salaries depend on the success of the newsstand.

It is a complex process that thousands have devoted their careers to. In this mix not only are the newsstand organizations, the supply subgroups, but also actual magazines that live and die on the newsstand alone as their main source of revenue.

 Then there is another group.  I affectionately call them the Olympians. The Hearst's, The Conde` Nast's, Time Inc, and the Meredith's. They, too, sell magazines on the newsstand. But their business model is no longer, as it once was, contingent on that part of the industry. They have their own business plans that from the outset weren't about protecting or sustaining the newsstand business.

 They are focused on revenues and profits en masse. They have TV stations, Radio stations, Web sites, Cable channels, major and minor events businesses and, oh yes, they also sell newsstand magazines. They have chosen to use rate base as a system to maximize their profits, and guess what, it works very well for them.          

Now, let me be clear. I have been in the business since 1971, and I have always hated the smoke and mirrors of the rate base system. I still do. But my 'feelings' and everyone else's for that matter don't matter a whit to another company's decision to conduct business as they see fit. It is their job, like it or not, to get revenue as they see best. They are not in any way, nor need to be, responsible for the success of the newsstand. And as I see it they have abandoned for the most part their focus on the newsstand process. Let me clear about that, too. I wish they would extend their vast fortunes and energies to sustain the newsstand business. But as the saying goes, "If there's a single lesson that life teaches us, it's that wishing doesn't make it so."

 From my observations businesses are responsible for their businesses and their particular bottom lines. If they choose to do one thing or another, they do so because, after careful research, they decide it's the best revenue path that makes sense to them for their particular business.

 Let's move on to discounted subscriptions which have a direct negative impact on newsstand sales for the titles that practice it. The discounts are a boon to the public and the long arm of rate base.  Are discounted magazines good for the entire business? Decidedly no. Are they good for those that do it? Decidedly yes, or they wouldn't do it after decades of practice.  And there is the rub. Should a business, any business, take the noble statesmen's approach and do good for the many or should they focus on the one, their own. 

Most people's perspectives on these topics are directly related to where they stand in the food chain.  One thing is absolutely clear to me: the newsstand has to be re-envisioned without the majors. Let's move on as if they don't exist. Continuously expecting to get their attention and their war chests to fix the sliding side of the newsstand industry does not seem to be happening. 

Let's move on without them. Is that an irrational proposition? Is there a business model without the big guys focus? Maybe yes and maybe no. But I feel strongly in suggesting that they aren't going to abandon rate base, and that means they aren't going to change the status quo. The top selling titles have lost newsstand sales for over 9 years. If they haven't changed their business models by now, they aren't going to.           

This is a sober discussion and I'm open to your thoughts, ideas and opinions. Facts are facts and every year we sell as an industry fewer magazine titles then the year before.  Does anyone think next year we will sell more magazines than the year before? How about the year after that? 

I believe that there are still billions of dollars left in print and the magazine newsstand and will be for at least 5 to 10 more years. Will newsstand continue to diminish? Yes. Will there be room for the extraordinary niche and enthusiast titles to make more than fair profits? Yes, I think so.  

What do you think about my analysis? If I am missing something, please let me know.  

By Bob Sacks| July 21, 2016

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Bob Sacks

Bob Sacks

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