• by Erik Sass  @eriksass1, February 4, 2009

It's an open secret that magazine publishers offer advertisers substantial discounts from their official rate cards to move unsold inventory. Publishers are tight-lipped about the practice, but a comparison of the official rate card figures from the Publishers Information Bureau for 2008 with year-end results from publicly traded magazine publishers gives a general idea of how deep the discounts were.

(Privately held companies like Conde Nast and Hearst do not have to disclose the relevant financial data, so publicly traded companies have to serve as a proxy for judging the industry overall).

The biggest publicly traded magazine publisher in America is Time Inc., owned by Time Warner--which released its year-end financial results on Wednesday. According to the company, publishing advertising revenues--excluding online--were about $2.46 billion in 2008. That compares with $4.38 billion, according to the TNS Group Publisher's report, which is based on PIB data. Thus, on average, Time Inc.'s titles were giving discounts of 44% off their rate cards.

That's a substantial increase compared to 2007, when there was an average discount of about 25% ($3.5 billion in actual revenues, compared to $4.7 billion per TNS/PIB figures). The discounts also appeared to be deepening as 2008 ended, reaching 47% in the fourth quarter ($632 million actual versus $1.2 billion per TNS/PIB).

Next up is Meredith Corp., the women's lifestyle media company whose publishing arm includes Better Homes and Gardens and Ladies' Home Journal. Stripping Meredith's broadcast ad revenues from its total ad revenues gives a total of about $578 million in ad revenues for magazine publishing in 2008. That's just a fraction of the $2.36 billion from official rate card figures compiled by TNS and PIB, suggesting average discounts of just over 75%.

This figure is about the same as last year ($670 million in actual revenues, compared to $2.64 billion per TNS/PIB figures). Like Time Inc., however, the discounts deepened over the course of the year. In the fourth quarter, publishing ad revenues were $122 million compared to PIB figures of $670 million, implying a discount of 82%.

Hachette Filipacchi's French parent company, Lagardere SCA, has yet to release full-year results. However, in the first half of 2008, it said its North American publishing operations--which include magazines such as Elle and Car and Driver--provided about 14% of net sales of $1.67 billion, or about $240 million. That compares to $723 million from the TNS Group Publisher's Report covering January-June 2008, implying that Hachette titles were on average offering discounts of about 67%.

Finally, it's hard to pin down precise ad revenue figures for American Media, publisher of Muscle & Fitness and National Enquirer. But they usually run between 40% and 50% of total revenues, which also include its magazine distribution and retail marketing operations. In 2008, the company's total ad revenues probably totaled about $180 million, compared with $672 million per TNS/PIB--implying an average discount of 73% from the official rate cards.