The numbers are in, and they are terrible: total newspaper revenues plunged 28.3% in the first quarter of 2009 compared to the same period in 2009 -- from $9.2 billion to $6.6 billion, according to the Newspaper Association of America. This meteoric drop reflects a 29.7% drop in print revenues, which tumbled from $8.4 billion to $5.9 billion, as well as a 13.4% drop in online revenues, which sank from $804 million to $696 million. In light of the latest figures, there can no longer be any doubt that -- at least at the level of big regional dailies and national newspapers -- the newspaper business is truly in a state of collapse, beset with double-digit revenue declines across the board. As in previous quarters, the retreat was led by classified revenues, which fell 42% from $2.5 billion in 2008 to under $1.5 billion in the first quarter of this year. Automotive was down 43.4%, to $333 million, real estate plunged 45.5% to $337 million, and employment cratered 67.4% to $205.4 million. Continuing a trend that began in 2005, both national and retail (local) ad revenues also experienced double-digit drops: national tumbled 26% to $1.13 billion, and retail almost matched it with a 23.7% drop to $3.33 billion. The year-over-year drop in online revenues -- while the smallest in both dollar and percentage terms -- is in some ways the most troubling, as newspaper publishers had long pinned their hopes for future growth and viability on Internet advertising revenues. However, the bulk of their growth in the earlier years of this decade was based on upsells from print classifieds; with the volume of print classifieds shrinking dramatically now, there are simply fewer opportunities for these online upsells. There's no question that the implosion of the newspaper industry is at least in part a reflection of broader economic woes. But it's just as clear that the medium is suffering a long-term decline, quite independent of macroeconomic cycles, due to competition from the Internet: print revenues began sinking in the second quarter of 2006, over a year before the recession began (government economists pegged the official beginning of the recession in the fourth quarter of 2007). In fact, this is the twelfth straight quarter to see print revenues fall, and the fifth straight quarter where they were joined by online. Since the first quarter of 2006, when they topped $10.5 billion, print revenues have fallen 44%, or about $4.6 billion.
A top McDonald's executive said Thursday the company is capitalizing on lower pricing to increase its advertising reach without much change to its budget. It is no surprise that much of that added exposure is coming in local markets, where TV and radio stations are struggling in light of the recession. President-COO Ralph Alvarez said "a drop in media rates" is allowing the restaurant chain to garner more gross rating points or added media weight this year for core offerings, such as Big Macs and its dollar menu. "We have not cut our advertising dollars, so we can use those extra weights in a significant way to drive the business," Alvarez said at an investor event. McDonald's spent some $823 billion in ad dollars in 2008, according to TNS Media Intelligence. Of that, $23 million was used during test marketing for the McCafé line in select markets. (Strip that out and spending was about on par with 2007.) About 60% of McDonald's advertising is spent in local markets, where pricing has dropped acutely. Alvarez admits it is a plus, saying the company is "benefiting." Beyond the additional heft behind McNuggets or Quarter Pounders, the recalibration in media pricing may separately be helping McDonald's with its new campaign for its McCafé premium coffees. The line of cappuccinos, lattes and mochas had been in test mode in about 2,000 restaurants over the past year, and is now being rolled out nationally. McDonald's says McCafé marks its biggest launch in 30 years -- a signal that it will be an active player in the upfront market. Last month, speaking in reference to the rollout, Alvarez said: "There's nothing like national advertising" in top prime-time shows as a venue to build awareness. "That only happens on national and always stronger than what you could replicate locally," he said on an earnings call. The McCafé line could prove to be a competitor to Starbucks. But Alvarez said Thursday that it may be more likely to expand the premium-blend category. He said the principal aim is "more frequency from our existing customers" -- getting them to visit McDonald's multiple times a day, rather than poach share from a Starbucks. Alvarez said Thursday that McDonald's is "very pleased" with the initial results since McCafé's May 5 national launch. "We're in this for the long haul." While McDonald's executives say customer benefits such as convenience are driving its business, others have suggested recent growth is a result of consumers being more cost-conscious in a bumpy economy. In the first quarter in the U.S., sales were up 4.7% and operating income 6% to $725 million.
A weak upfront marketplace? Not according to NBC Universal's Jeff Zucker. "This upfront will be stronger than people expect," said Zucker, president/CEO of NBC Universal, speaking at the Wall Street Journal's All Things D conference in Carlsbad, Calif. Concerning the advertising business, Zucker says: "We have bottomed out." Zucker added that overall TV usage and the TV advertising business will improve, although he didn't offer details. A wide range of media analysts are expecting that overall upfront dollars will be off anywhere from 5% to 10% for all broadcast networks, and possibly 3% less for cable networks. Broadcast networks are expected to sink to an overall $7.5 billion take, with cable hovering around the $7.0 billion level, according to some estimates. Looking at the key cost-per-thousand viewer prices (CPMs), media analysts are expecting pricing rollbacks of 3% to 7% for all TV networks versus CPMs of a year ago. But Zucker says "local TV is a slightly different story. It is under much more pressure in the same way all local [media] businesses are." Local TV ad sales are projected to sink 20% in overall revenue versus a year ago, according to many estimates. In previous interviews, Zucker stressed that the company's overall business -- especially its cable networks -- more than makes up for the problems at the NBC Television Network. Still, he says: "We want to be in first place because it's an important message to send. There is a perception if you have the best programs, you'll finish in first. We like to be most-watched network -- but we don't have to be."
Lionsgate, the production company with properties ranging from the "Saw" movie franchise to Showtime's "Weeds," has sold a 49% stake in its recently acquired TV Guide Network to a firm that had a previous deal to buy the channel in full. One Equity Partners, a private equity arm of JPMorgan Chase, had reached a deal last year to buy the network, but the agreement fell apart. Lionsgate then bought the network and TVGuide.com two months later for $250 million. One Equity is paying $123 million for the 49% stake, and the acquisition allows it "under certain circumstances" to buy an additional 1% and become a half-owner. One Equity's original purchase agreement, reached in December, included investor Allen Shapiro, the former owner of Dick Clark Productions, as a partner. And under the new arrangement, Shapiro will become chairman of the joint venture. He will co-lead the network's executive committee with Lionsgate CEO Jon Feltheimer. Shapiro had said he would invest heavily in the network, which is in 83 million homes, to build programming quality. Feltheimer said One Equity "shares our vision of building a dynamic entertainment channel driven by Lionsgate-branded content." In addition to the TV Guide Network, Lionsgate is a partner in coming pay-TV channel Epix and horror-genre venture FearNet. It is looking to add distribution operations to its production business, which includes AMC's "Mad Men" drama.
As the dominant players in classified advertising in the pre-Internet era, one might reasonably have expected newspapers to establish a dominant position online as well -- but just the opposite occurred, according to an April survey from the Pew Research Center's Internet & American Life Project. The Pew study, which documents the continuing transition to free online classifieds, foreshadows more online and print losses for newspaper publishers. One caveat: the study comes in the wake of controversy about the role of online classified sites like Craigslist in facilitating violent crime. Overall, online classifieds are thriving, with the number of patrons more than doubling in the last four years. In 2009, 49% of all Internet users say they have used online classifieds, versus 22% in 2005. This figure is especially compelling because the overall population of Internet users also increased in that period, according to Nielsen/NetRatings, from 203.8 million to over 220 million. Thus, the number of users of online classifieds increased from under 45 million to about 105 million. On a daily basis, 9% of Internet users (roughly 20 million people) go to an online classifieds site, versus 4% in 2005 (roughly 8 million). Craigslist is the most popular of the online classifieds services, with 42.2 million unique visitors in March 2009, out of a total 53.8 million unique visitors for online classifieds sites altogether. But recently, the site has also drawn criticism for enabling criminals to seek out victims and lure them into dangerous situations with deceptive postings and solicitations. The controversy exploded into front-page news in April with the revelation that Philip Markoff, a medical student in Boston, used the Craigslist "erotic services" listings to arrange a meeting with masseuse Julissa Brisman, whom he murdered. Earlier this month, Craigslist shut down its "erotic services" category, after the attorneys general of various states alleged it had essentially become a marketplace for procuring prostitutes. Craiglist is planning a new adult section that will reject ads for illegal activities, including prostitution. But law enforcement officials warn that illegal solicitations can be easily disguised as legal listings for an unpaid rendezvous. Such controversies notwithstanding, Craigslist continues to grow in popularity, which spells bad news for newspapers that maintain competing online classifieds sites. Earlier this decade, newspapers' online revenues posted double-digit percentage increases, thanks to the growth of their online classifieds business. However, most of this increase was due to upsells from print classified listings, in which online listings were offered at a discount to people buying print classified ads. This practice sustained online classifieds growth initially, but the steep decline in the real estate market -- followed by employment and automobiles -- has gutted both print and online listings. In 2008, total classified revenues decreased 30% to just under $10 billion, while total online revenues slipped 1.8% to $3.1 billion.
Lower subscriptions versus a year ago took a toll on TiVo as the digital video recorder company announced a fiscal first-quarter loss. A poorer economy was to blame as TiVo lost $4.13 million in its first-quarter 2010 fiscal year versus the first-quarter 2009 fiscal, when it earned $3.6 million. Revenues also took a tumble, dropping to $54.9 million from $60.8 million. TiVo-owned subscription gross additions for the first quarter were approximately 37,000 compared to 48,000 gross additions for the year-ago period. Overall, TiVo-owned subscriptions ended the quarter at 1.6 million. Cumulative total subscriptions -- including deals made with cable operators -- were 3.2 million by the end of April. During the period, TiVo also announced the launch of a local version of its Stop||Watch ratings service, which tracks the ways that TiVo users watch television shows and commercials that air during the programs. The service will debut this summer. For its national Stop||Watch service, TiVo said it will be expanding the sample size for the fall TV season -- from 100,000 to 300,000 TiVo subscribers. The company says that's 75 times larger than other existing DVR audience research sample sizes. As previously announced, TiVo said its deal with Blockbuster will add digital movie titles to its existing content later this year. Blockbuster will also sell TiVo DVRs at its stores nationwide as well as online.
Dwell Says' Make It Yours'Dwell, an independently published shelter title, unveiled a new special-interest publication about creative home design titled Make It Yours. The publishers hope the new brand extension will fill a previously unmet demand for do-it-yourself design in its particular style, strengthening its connection with Dwell readers. The book-magazine will be available on newsstands for three months beginning Sept. 22, and will be promoted with special displays in Barnes & Noble, Borders, Whole Foods, Lowe's and 400 airport news locations, among other locations. The book-magazine features the same elegant interior and exterior photography found in the magazine, which targets younger, design-conscious homeowners with fresh, forward-thinking shelter aesthetics. Text and photographs guide readers through DIY projects large and small, presenting hundreds of home design tips, makeover ideas and decorating strategies. Design suggestions, organized around photos from the Dwell archive, are divided into categories including kitchens, bathrooms, dining rooms, living rooms and home offices. Dwell Editor in Chief Sam McGraw said the ideas were chosen for "sustainability, cost-efficiency and style savvy," in cooperation with featured architects and designers. Make It Yours also presents shopping suggestions for products featured in various projects. The inspiration for the publication comes partly from the heavy traffic on Dwell's Web site, where visitors have shown a particular desire for home-improvement projects they can execute themselves. Michela O'Connor Abrams, the president and publisher of Dwell, explained: "With Make It Yours, Dwell provides a targeted resource designed to help our audience understand their choices and narrow down their design options in a hands-on format." Get Married Says, Get Married! Banking on women's enthusiasm for all things wedding-related, a new, free bridal magazine is being launched by Get Married, a multichannel wedding planning resource with platforms online and on television. With a circulation of 300,000 at launch, the first issue of the free, 8.5-x-10-inch glossy is scheduled to debut in October. The publishers describe it as a "new shopping and trend guide for the savvy bride." The print publication will complement Get Married's Lifetime television show of the same name, and its Web site Getmarried.com. Stacie Francombe, founder and president of Get Married and GetMarried.com, explained: "Get Married magazine rounds out our truly integrated approach to wedding planning, and will continue to capture the excitement of brides who watch, surf and read their way through designing every moment of their wedding celebration." The magazine's editorial team will be led by executive editor Stephanie Davis, formerly the editor of skirt!, and GetMarried Editor in Chief Jill Meister. BHG Gets Fresh LookBetter Homes and Gardens is getting a makeover beginning with its June issue, on newsstands now. The revamp, led by Editor in Chief Gayle Butler, makes the magazine, lighter, brighter, and easier to navigate. It also introduces a new front-of-book section, "Fresh," with an editorial focus on new, modern design and homemaking strategies that aim to appeal to younger women. Fresh includes content areas like Fresh Now, with timely things to do or try each month, Fresh Living, with seasonal ideas for entertaining, Fresh Tech, highlighting consumer and home tech products, and Fresh Finds, showcasing seasonal home products. The new BHG also features enhanced health coverage and new design treatments for signature fonts, visuals, and icons. Player Joins Afar Donna Player has joined travel mag Afar as its East Coast and Midwest sales director. Previously, Player served as sales development director at Hearst's Veranda magazine; before that she also spent seven years at American Express Publishing's Departures. Scheduled to debut in August, Afar is the flagship publication of a media company dedicated to bringing together experiential travelers from around the globe.
The battle of the returning summer shows has started, with Fox's "So You Think You Can Dance?" drawing first blood. The perennial big summertime show pulled in a healthy Nielsen preliminary 3.5 rating/10 share among 18-49 viewers for its two-hour showing, which was Fox's nightly average, leading all networks for Wednesday night. Strong competition came from ABC's "Wipeout," however, which also offered up a healthy 3.2/10 for the 8 p.m. hour, beating the first hour of "Dance." ABC couldn't keep up the good work for the rest of the evening, as its new animated comedy "The Goode Family" only took in half of "Wipeout" viewers, with a 1.6/5. Later in the night, ABC went further downhill for a remaining original comedy episode of "Surviving Suburbia," which took in a lowly 1.0/3. Another remaining episode of a midseason show, "The Unusuals," grabbed a 1.2/3 during the 10 p.m. hour. ABC had a 1.9/5 average for the night. CBS had some original programming of its own: a two-hour "George Strait: ACM Artist of the Decade All-Star Concert" registered a modest 2.2/6. CBS landed in second-place with a 2.1/6. NBC borrowed "Law & Order: Criminal Intent" from its sister network USA Network, running an original episode but getting a slim 1.1/4. NBC tied Univision for fourth place at a 1.5/4 for the night. CW was next with a 0.5/1 among 18-49 viewers and a 0.5/2 for 18-34 viewers for reruns of "America's Next Top Model" and "Hitched or Ditched."
After sparking concerns among media outlets doing business with Chrysler, agency BBDO is backing off a request to have them sign new agreements that would have shifted more financial liability onto the media as the automaker struggles to emerge from bankruptcy under a federally mandated plan. The plan, which was made public this morning in an advisory from media credit industry watchdog the Media Financial Management Association (MFM), would have bound any media outlet signing it to "sequential liability" terms for all past and future obligations by Chrysler. "They've started calling [media outlets] and said they've decided not to implement the program," Mary Collins, president-CEO of the MFM, told MediaDailyNews this morning, noting that the language of the agreements BBDO had been sending to the media was particularly troubling, because the new language would have created "sequential liability that went forward and backward" for any media doing business with Chrysler. Historically, the advertising industry -- especially members of the American Association of Advertising Agencies -- has sought sequential liability terms when purchasing media, a concept that makes agencies liable for paying media creditors only after the agency has been paid by their client, even if the client has defaulted. Many media outlets ignore that boilerplate in their insertion orders and purchase agreements, insisting on so-called "joint and several" liability terms that make both the agency and the client obligated for paying the media. A BBDO spokesman said the agency had no comment, but the agency is known to be among Chrysler's biggest unsecured creditors. According to the automaker's bankruptcy filing, the agency has a $58 million claim. According to the MFM's advisory, the new agreements contained other onerous terms for media outlets that would have signed them, including language that might have bound all locations and subsidiaries of a media company to the terms even if only one outlet or location were to have signed it.
As the dust settles on another upfront season, the old adage "content is king" risks being overthrown by a new one: "audience as kingdom." Many new programs are fairing reasonably well in the content arena, but our ability to market that content -- and to aggregate and creatively monetize an audience -- is the critical measure of success in today's entertainment industry. In short, when it comes to driving the business of entertainment, the marketer has dethroned content as king. With the proliferation of broadband connectivity, access to free, high-quality content has become ubiquitous. From no-budget, unexpected viral sensations to the premium production values of "Lost," the public is now in control of what they consider "quality content." They watch it when and where they want. More than ever, success in entertainment is a function of effective marketing. As marketers, we identify and aggregate like-minded people around our content -- and then devise new, creative ways to monetize it. This is the lifeblood of our business and increasingly, the responsibility of marketing executives to drive. Deciding how to effectively monetize content across multiple new media platforms is not easy, but the traditional model of ad-supported content is clearly going to need a makeover as the media landscape shifts. For this reason, advertisers are shunning antiquated network sales departments that desperately hold onto the status quo, looking to hock the next scattered 30. Advertisers identify with marketers; they share a lexicon and, like them, fundamentally understand audiences. Marketers know what makes their audiences tick. They know how to connect with them, how to speak them and how to engage them across myriad media platforms. Media has always been the mother tongue of marketing. That's why we're seeing marketing executives transition into roles of genuine leadership throughout the entertainment business. While it used to be that sales or programming were the paths to the top job, the number of powerful CEOs and heads of companies who came up through the marketing ranks is increasing. Take Judy McGrath, MTV Networks' chief executive, who got her start writing on-air promo. Under her leadership, MTV has led the charge to shape young people's consumption habits, rather than simply reacting to trends and trying to catch up. Rob Friedman climbed the ladder at Warner Bros. from the mailroom to president of worldwide advertising and publicity. In that role, he was directly responsible for the release of over 180 movies, including studio cash cows "Batman," "Batman Returns" and "Ace Ventura." He currently holds the Chairman and CEO position at Summit Entertainment, which has turned out such blockbusters as "Twilight" and "Babel." Other notable leaders offer further proof that a marketing background pays off. Evan Shapiro, who currently heads IFC and Sundance Channel, launched some of IFC's largest and most successful marketing campaigns as the company's senior vice president of marketing. Jason Klarman earned his stripes reaching a female audience as Bravo's executive vice president of marketing, and was later promoted to GM of Oxygen. The network has become the fastest-growing network among women 18-to-34 and is actually posting revenue gains while other networks are seeing major losses. Both Klarman and Shapiro will be addressing attendees at this year's Promax|BDA Conference (June 16-18) along with a heavy-hitting slate of top-tier entertainment executives. All will discuss the conference theme: "Leading the New Economy of Marketing and Design." These executives have parlayed marketing savvy into success for their companies and stellar careers for themselves. As they, and everyone else in the industry, grapple with changing economic realities and a shifting media landscape, I suspect more companies will turn to top marketers for the next wave of leadership. Content was once king, and may again be. In this golden age of marketing, I will concede that content remains royally important. But without a kingdom to rule, even the king gets canceled.