• by Erik Sass , July 29, 2009

Everyone in the magazine business knows that behind closed doors, many big publishers give substantial discounts to media buyers off their official rate cards, but no publisher will actually admit to it, for fear of further devaluing their inventory.

But with a little back-of-the-envelope math, you can still figure out the average discounts granted by publicly traded companies that have to give updates on their financial performance every quarter. Following are comparisons of second-quarter rate card figures and actual ad revenue figures for Time Inc., Meredith Corp., Martha Stewart Living Omnimedia, and McGraw Hill, the publisher of BusinessWeek. According to Time Warner's second-quarter earnings announcement, Time Inc. took in total ad revenues of $472 million, of which perhaps 10% ($47 million) was from online operations, leaving $425 million in print ad revenue. That's compared to $966 million in official rate card revenues reported by the Publishers Information Bureau for 22 titles from All You to Time, suggesting that -- on average -- Time Inc.'s magazines are giving discounts of 56%.

The average discounts are even bigger at Meredith Corp., publisher of titles like Better Homes & Gardens, Ladies' Home Journal and More. Although it's hard to know what discounts are being granted by individual titles, overall, the official rate card revenues for 14 Meredith titles totaled $628 million, according to PIB.

But the company reported actual publishing advertising revenues of just $134 million, of which perhaps 7% or $9 million came from online, leaving a total $125 million in print ad revenues. This suggests an average discount of 80% from Meredith's official rate card figures.

At Martha Stewart Living, total second-quarter publishing totaled $33.5 million, of which around $10 million probably came from circulation, including subscriptions and newsstand revenues. (Specific figures are not available for these, but first-quarter subs and newsstand sales totaled $12.6 million.) That leaves $23.5 million coming from print ad revenues. Compared to official rate card revenue figures of $65.4 million for four magazines, including Martha Stewart Living and Everyday Food, that suggests an average discount across MSLO titles of 64%.

Finally, McGraw-Hill is telling prospective buyers that BusinessWeek is on course to take in a total $135 million in revenues in 2009, equaling about $33.7 million per quarter. (In 2007-2008, the second quarter accounted for about 25% of the total year's revenues.)

Subtracting subscription revenues of $8.5 million -- presuming 850,000 subs, with an average cost per issue of $0.77 and 12 issues in the quarter -- and newsstand sales of $2 million, based on ABC figures from the second half of 2008, that leaves about $23.3 million of actual print ad revenue. Compared to official rate card revenues of $43.9 million reported by PIB, this suggests an average discount of 47%.