• by Joe Mandese  @mp_joemandese, December 24, 2008

At a time of year when big magazine publishers normally are locking down annual advertising rate increases for the coming year, demand for magazine advertising is proving as volatile as the overall economy, and media buyers expect corporate publishing deals to stretch on to early 2009. Amid this backdrop, a top Wall Street equities firm, Deutsche Bank, has reduced its outlook and downgraded the target price for shares of one of the biggest, pure-play publicly traded magazine publishers, Meredith Corp.

While Meredith's ad page volume trends were not "as bad as expected," Deutsch Bank analyst Matt Chesler cited "poor visibility into the calendar '09 magazine ad budgets," a well as relative weakness in Meredith's TV operations, as reasons for downgrading Meredith's stock. He however maintained a "hold" rating for the company.

Chesler said his team conducted a round of calls with print media buyers and other industry contacts over the past week, and has concluded that the outlook for 2009 magazine advertising demand is "awful."

"According to our media buyer contacts, the presently challenging environment is about to get even tougher for consumer magazines," Chesler wrote. "We heard that the first quarter of 2009 is going to be "disastrous" and "a write-off" for the industry, with "nothing uplifting" to talk about.

"The most encouraging comment was that the first quarter will be "bad but not so horrific that we should pack it up and go home."

In fact, the head of a large media buying agency that invests heavily in print, recently told MediaDailyNews that it has been conducting its 2009 magazine budget planning on the basis of which titles it thinks will actually "be around next year." The executive said he expects a significant amount of attrition to occur among consumer magazine titles, and that the agency doesn't want its clients to be stuck with ad commitments for magazines that cease publication.

"Most of our contacts believe that the problem is not the medium, but rather the economy," Chesler noted. "Advertisers have been holding back funds, canceling orders, and taking a firm stance on price despite lower volumes - and this is largely true across all marketing channels. That said, magazines are described as a "flexible" medium, thus the industry is disproportionately vulnerable (versus TV, for example, where commitments are made earlier in the year) when advertisers are looking to hold back on expenses and look to the medium that's most easily cancelable."