Time Inc. Execs Warn of Layoffs; Call Spinoff on Track; People Magazine to Get Better Paper Stock
Ad Age: In a quarterly meeting yesterday of 300 Time Inc. top managers, chief content officer Norman Pearlstein was asked if there will be more layoffs. He answered “yes,” adding that the decision would be a difficult one. No more specifics. Contrary to a report by 24/7 Wall Street, the spinoff from Time Warner is still on track for Q2 2014, said Time Inc. CEO Joe Ripp. Ripp at least twice referred to a five-year strategic plan Time Inc. will soon put in place, and said that staff who weren’t on board with the plan might as well leave. Positive news: Execs said employees will receive merit pay increases in February (these were on hold under former CEO Laura Lang). Ripp also said People will soon be printed on higher-quality (hefty 38#) paper stock. Top execs also asked employees to think bigger in terms of possible investments the company could make. Group heads’ recent suggestions on that front were too small, they said. In a staff memo sent after the meeting, Ripp said “the collective excitement for our future” was starting to build. “We are also making good progress on selecting a board, finalizing our five-year strategic plan and acquiring the right talent to help us operate as a public company…We must reengineer how we operate our business, look at all our processes and see where we can be more efficient. Our revenue has declined 30% over the past five years, newsstand trends are not good and this company has been shrinking without investment for too long. We need to get ahead of the curve if we are going to attract a strong shareholder base.” Capital NY: Execs neither confirmed nor denied a report in the NY Post last week that the coming cuts will total around $125M. Separately, Adweek presents arguments pro and con for Time Inc. considering buying Forbes Media. Pros include: Forbes would add digital scale and the power of its sponsored content platform BrandVoice. Cons include: Business category is saturated; may not be room to continue both Fortune and Forbes print editions.
Adweek (Forbes buy pros/cons)
CEO: Meredith May Spin Off Broadcast from Publishing When Scale is Right
In a Reuters interview, Stephen Lacy said Meredith Corp. plans to aggressively grow its local TV station group through acquisitions that could eventually lead to a spinoff. “We are putting together a hit-list of (TV) properties and working with owners,” he said. Currently owns 13 TV stations; is targeting stations in top 25 markets with #1- or #2-rated local news broadcasts. The plan: Grow its broadcast revenue from $375M to about $500M. Revenues for its publishing division, including its marketing services business, currently $1.1B. Profit between the divisions is split about evenly. Once Meredith reaches that broadcast goal, it could potentially separate the broadcasting arm from its magazines. “The reason we are reluctant (now) is the scale,” Lacy said. “We talk about spinning a great deal.”
Fey, Poehler Guest-Edited Entertainment Weekly Issue
Comedians/actors Tina Fey and Amy Poehler, who will co-host the Golden Globes in January, guest-edited the EW issue to hit newsstands on Friday–its first guest editors. Issue will feature the two on its cover, and in a Q&A and other items, as well as an editors’ letter from them. EW editor Jess Cagle and staff also got Fey and Poehler to write the magazine’s “Must List” and “Bull’s Eye” columns, in addition to tasking them with assigning all the features and writers for the issue. Examples: Fey got “Mad Men” actor Jon Hamm to write a story on Ellie Kemper, whom Fey just cast in a new fall 2014 sitcom that she wrote and produced. Poehler, who is a fan of Netflix’s “Orange Is the New Black,” tapped EW staff writer Jessica Shaw to pen a story on Natasha Lyonne, who has a recurring spot on the show. “Tina and Amy did the whole issue in about two or three weeks–it was a pretty quick turnaround,” Cagle said, joking that he can already imagine readers demanding that the duo come on board full time. “Luckily for me, we can’t afford them,” he said.
Condé Nast to Share 1WTC with Army Officials
Condé Nast’s co-tenants in the new World Trade Center will include the U.S. Army Corp of Engineers, as well as the U.S. Customs and Border Protection agency and the federal General Services Administration. The GSA signed the lease last year, but it wasn’t previously known exactly which governmental units would occupy the space. In typical colorful fashion, Post declares that CN superstar editors Anna Wintour and Graydon Carter will share their “glamorous” new digs with “U.S. Army sandhogs.”
Opinion: TNG’s Fees
Publishing consultant Linda Ruth says she is troubled by several aspects to TNG’s new per-copy distribution fees. Among these: “The businesses most vulnerable to the consequences of these changes are the independent publishers. I have heard…comments made by some that this industry will become stronger, healthier, and more profitable by the removal of the ‘clutter’ of the little guys from the newsstand. The irony is that the growth and stabilization of revenues in our business over the last two decades or so has come from the rise of special interest publications.” Her other worries include that the fees are being applied, not negotiated; that publishers aren’t privy to the formula; and that publishers’ projecting revenue and costs will not be possible due to fees being recalculated every six months. On the flip side, the last point means that specific magazines’ fees might be reduced (or raised) each six months based on performance. Also argues that the fees are not enough to truly fix the system, address wholesaler financials for the long term: “They are viewed as a bridge, something to keep the distribution channel alive while the game is truly, finally changed.” She adds: “Some are going to go with TNG’s plan. Some will talk about alternative plans, ones that meet the goals of the suppliers as well as their distribution partners, ones that keep the balls in play for at least a while longer. And some are already speaking to book distributors, direct distributors, and retailers directly. Companies are going to disappear from the system as we know it. Most—but not all—will be publishers. One thing that will not change is that publishers will continue to produce quality content that people want to read. And they will continue to find a way to get it into their audiences’ hands.”
Opinion: Apple Lets App Newsstand Fall into Disrepair
D.B. Hebbard contends that the App Store “is falling apart.” He reports that it’s no longer possible to search for publications by category–and that this is just one of many problems with the store’s categorization, search and featuring practices. “What amazed me was that no one seems to think this is a big deal,” he writes. “The #1 outlet for digital publications does not work–so what. But when the next numbers come out for magazines, and the level of digital circulation is revealed, there are sure to be articles about how digital still represents a small portion of overall circulation. Will anyone mention how badly run the Newsstand is? Or how one cannot search effectively within the world’s largest digital retail outlet?” As a result, Hebbard says he’s changing his advice to publishers from “develop for iOS first” to “develop for all platforms at the same time.”
S&S Social Site Aimed at Explicit Romance Readers
Simon & Schuster U.K. has launched a genre-specific social media and blog site meant to entice avid readers of its New Adult and Romance titles. Called The Hot Bed and curated by an in-house team of four S&S U.K. staff, the site aims to be the source for news about S&S’s top-selling and best-loved romance authors, as well as a blog for those authors to make appearances.
OTHER NEWS OF NOTE:
Wal-Mart Names New International Chief
Wal-Mart Stores has promoted David Cheesewright to president and CEO of Walmart International, the company’s second-largest operating segment. Cheesewright, now president and CEO of Walmart’s EMEA and Canada region, will report to Doug McMillon, who will succeed Mike Duke as W-M Stores’ president and CEO. Both begin their new roles Feb. 1. Cheesewright’s replacement to be named at a later date.
Boer: ‘Connected’ Customer Key to Ahold’s Growth
In SN interview, CEO Dick Boer said his vision includes fresher stores, deeper customer relationships, and a very big bet on e-commerce. Said the “Reshaping Retail” strategy he introduced shortly after becoming Ahold’s CEO in 2011 is progressing as planned despite a sluggish economy on both sides of the Atlantic and slow-growing sales at its U.S. banners. Ahold’s big bet on online shopping–expanding its Peapod subsidiary–is one response to what Boer feels is a major shift in consumer behavior, brought about by the growing prominence of the Internet and mobile devices, and by changes in the food retail landscape resulting in greater competition for sales. These changes are sparking investment in Ahold’s online business and customer loyalty efforts, but also in the value proposition at physical stores, which to Boer means improved fresh departments, price reductions where necessary, and a tiered private-label strategy allowing customers to “shop with the wallet you have.” Among other initiatives Boer cites to SN, Ahold is experimenting with format tweaks, including a smaller Stop & Shop format offering a greater emphasis on fresh, and at least two S&S stores that have been “completely digitized” to allow shoppers to shop, scan and pay with their mobile phones.
Supermarket News (reg. req.)
Inside Catalina-Driven Mobile Targeting Push
Forbes explores how Stop & Shop and others are using Catalina’s mobile offer capabilities to deliver shopper-specific offers at POS that are hugely more effective than traditional mailed circulars–along with mobile payment, in some cases. Catalina has concluded that mobile self-bagging and checkout results in no higher rates of shrinkage than other means of payment. “Imagine grocery stores without checkout lanes and with 30% less advertising,” says Catalina VP marketing John Caron. Keeping a running tally of a shopping trip’s cost does not reduce spending–shoppers use the last dollars in the budget to splurge. Maximizing basket size requires integrating personalized offers, payment and loyalty, says Caron. Mobile payment most likely to be used when there is an incentive, and it’s integrated into the shopping experience: “You have your phone open, scan everything, then pay and walk out of the store,” he says.
Sobeys Announces Small-Format IGA Express
Montreal-based Sobeys has revealed a new small-format banner in Quebec called IGA Express, intended to serve time-constrained consumers. “IGA Express is a cross between a supermarket, convenience store and a fast food restaurant, designed to help Quebeckers eat better on the run. We went in search of what was working best in the world and came back inspired to develop this winning formula for our customers,” said Claude Tessier, president of Sobeys Quebec, in a statement. The stores will feature ready-to-eat meals and snacks, as well as a “Table ready in 20” section of 20-minute meal ideas with ingredients. Will also have Shell service stations. Sobeys is also working on a smaller version of IGA Express called IGA Mini for smaller locations. Independent retailers will run the IGA Express stores. Sobeys plans to open the first Express in Saint-Augustin-de-Desmaures this month.
Giant Eagle Acquires Specialty Pharmacy
Giant Eagle has acquired Rx21 Specialty Pharmacy, a move that will allow it to provide enhanced services to hepatitis C and organ transplant patients and providers under its Giant Eagle Specialty Pharmacy. “We greatly value the expertise gained with the new acquisition of Rx21, particularly at a time when two significant new hepatitis C treatments are becoming available,” said GE SVP of health and wellness Brett Merrell.
Sysco Buys US Foods to Create Food Service Distribution Giant
Sysco said it will buy second-largest food distribution services company US Foods for $3.5B. Merger would create a giant with about $65B in annual revenue and enhanced clout over purchasing by institutions including restaurants, hotels, hospitals and schools. Sysco has about 425K customers, and it and US Foods together collected about 27% of the revenue in the U.S. food-distribution market last year. The next-biggest national competitor is Performance Food Group Co. of Richmond, Va., which Technomic says has only a 5% market share. Much of the rest of the industry is fragmented among thousands of local players. Sysco CEO Bill Delaney said the deal will provide increased purchasing power, enhanced innovation ability and cost savings, even if parts have to be sold to satisfy antitrust authorities. He maintains the industry will remain competitive, with 15K-16K distributors in the U.S. Some customers that use both Sysco and US Foods may now look elsewhere to diversify their sourcing. As a result, combined market share is expected to start out around 25%. Some customers say they’re worried the merger will limit competition and drive up prices.
Analysis: Wal-Mart’s Urban Strategy
Long piece cites data, arguments pro and con in assessing W-M’s economic impacts when it enters urban areas. Notes that in Washington, D.C., W-M’s first six stores (two open so far) will be in “food deserts,” but it’s likely to expand to more prosperous areas–as it did, for instance, in Chicago. W-M continues to learn from each new expansion. MNB points out that controversy isn’t likely to deter W-M from pushing to expand into the urban areas that now represent its prime opportunities for growth.
Tops, Others Bringing Change to Rochester Grocery Market
Brighton Tops Friendly Markets, looking to increase its presence in the Rochester, N.Y. market that’s been dominated for decades by Wegmans, yesterday opened a larger supermarket featuring more produce and healthy items on Clinton Ave. Will also debut two smaller (50K sq.-ft.) stores in early 2014. Meanwhile, Wegmans announced plans to renovate and add space to its Perinton store. Earlier this year, it opened a massive expansion and upgrade at its East Ave. site, completely remaking the block. In recent years, Trader Joe’s and several Price Rites have moved into the Rochester market. “They all have to figure out how to compete against Walmart. Wegmans has done a good job of that, Tops probably less so, and Trader Joe’s absolutely,” said John Gardner, business professor at The College at Brockport’s School of Business Administration and Economics.
Retailers Turn Store Clerks into Web Shippers
Shipping online-ordered items out of stores is proliferating as retailers including Wal-Mart, Sears, Kmart, Macy’s push to compete with Amazon. Shoppers will buy from sites other than Amazon if they offer discounts or free/convenient shipping. UPS and FedEx are boosting their own businesses by offering retailers solutions for getting orders to customers, managing inventory across the country, avoiding stockouts.
OTHER NEWS OF NOTE: