Time Layoffs: Another Death Knell For Print Media?

It’s a good thing Alley Insider rummages through 10-K’s - so we don’t have to (then again, our full time job isn’t to, well, rummage through 10-K’s): turns out Time Warner’s (TWX) $5B revenue unit Time Magazines will be laying off about 100 people or so. Time is one of the most successful and profitable B2C print companies with 150 publications in the US and the UK.

Can the news get any worst for print?

Reed Elsevier (ENL), a leader in B2B publications, is getting out of the magazine trade altogether. According to the NYT (ironic, I know):

Variety, Publishers Weekly and dozens of other trade publications are going up for sale as the publishing company Reed Elsevier looks to get out of the uncertain advertising market.

The company, based in London and Amsterdam, announced Thursday that it intended to sell one unit, Reed Business Information, and acquire ChoicePoint, a provider of consumer information, for $4.1 billion.

The business information unit includes some relatively well-known titles (Broadcasting & Cable, Multichannel News, New Scientist) along with sector-specific publications (Custom Builder, Microprocessor Report, Home Textiles Today). Of the 400 publications, the most prominent is Variety, the Hollywood trade magazine.

Last year, the unit had revenue of $1.76 billion with an adjusted operating profit of $233 million. Most of the revenue came from advertising, and in a statement, Reed said it was seeking to reduce its exposure “to advertising markets and cyclicality.” The trade show business, Reed Exhibitions, will not be sold.

This isn’t anything new, it’s an acceleration of what we’ve been seeing, in two ways.

Reed Elsevier sold another publishing arm, Harcourt Education, last year. The company has sought to reorient itself as a provider of subscription-based online services, with products including science and health information and the LexisNexis databases of legal, news and business documents.

In that sense, we’ve seen companies like Thomson (TOC) reposition themselves from print to resellers of subscription-based online services.

We’re also seeing trade and consumer publications head for the doors at an alarming rate: Guardian Media and Apax Partners bought Emap’s publications last year for $2B.

You can run, but you can’t hide from reality. And the longer you run, the quicker you realize that you are running off a cliff.

Today, more numbers reiterating the writing on the wall:

Hours spent with media per week, per IDC (via Alley Insider):

All media: 70.6 hours
Internet: 32.7 hours (46%)
Television: 16.4 hours (23%)
Magazines and Newspapers: 3.9 hours (0.05%)

I’ll be the first to admit that the IDC numbers might skew favorably to the Web, granted, but Magazines and Newspapers: 3.9 hours (0.05%) is terrifying to see if you are a print executive.

What’s more terrifying is that the Web isn’t even garnering 10% of total advertising spending yet (it gets 7-9%). Once it does, who will remain to buy print assets?

Right now, private equity bankers are showing up (as they did for Maxim, who, had I known was really on the market I would have made a run for myself - with the help of my banker friends) because the absolute revenue figures are big enough to merit paying the interest expense. But in a higher rate environment, no private banker will be able to stomach the underlying metrics… and over time, as the Internet garners more and more of the absolute dollars in advertising, who knows, maybe print will in fact die?

Comments

[ERD]

Hard copy will never die and print is a long way from extiniction. To this day the computer revolution maxum "paperless office" has never materialized. In fact, computers have been responsible for generating more paper than ever before. In 1970 no one except writers and business people bought paper by the ream to today everyone does! No, sir, in 1970 they bought little plastic wrap stacks of 50 sheets for their typewriter work. Today no household is complete without a 3 in 1 Fax, Printer, Copier and burning back up of communications and data to CD-R and DVD-R is first nature. The media business, however, is changing as evident by the drop in commercial CDs and with on demand downloads, of which Amazon is a leader and I buy some that way, storing them on DVD-R in case my hard drive fries, the DVD will face a sales lag in the near future. Ipods have replaced the CD driven walkman and flash media has dropped in price from $60 a GB to $16 a GB in just two years. Everyone is going to have to adjust to a new way of doing things. Distant learning is on the rise, homeschooling is up over 8% and expected to double by 2020. Expect to see cable TV go extinct as internet TV takes over and I'm a fan. I watch NBC, CBS and ABC re-runs on demand on my computer when I want to and that's better and cheaper than TVIO.