Time.com Launches Dramatic Redesign
The much-delayed multimillion-dollar redesign of Time.com finally debuted Wednesday night. The top-to-bottom renovation, which was first expected to be complete last year, is showcasing a panoramic photo taken from near the top of One World Trade Center, a shot that also serves as a wraparound cover on the print edition that hits newsstands tomorrow. (The yearlong project also includes a softcover book, a behind-the-scenes look at the historic construction of 1 WTC.) The redesign comes as Time.com is hiring a staff of 35 people in hopes of kindling growth as it prepares for its Q2 spinoff from Time Warner. “I think it is the most dramatic overhaul of our structure we’ve ever seen in Time Inc.’s history,” said Time managing editor Nancy Gibbs. “We have new editors covering national affairs, international affairs, society—pretty much for every area that we cover, I have a new leadership team in place.” Early returns on the enhanced content that’s been on the original website are encouraging. The site had 22M unique visitors in February, up more than 100% from a year earlier, per ComScore. That still puts Time in the back of the pack among news sites, and that battle is likely to intensify. Time.com has been part of the CNN Network, which has the No. 3 site, with 116.7M uniques. When Time Inc. is spun off, its link with CNN will disappear. The #1 news site, Yahoo!-ABC News Network, pulls in 126M uniques across all platforms. Print remains Time Inc.’s dominant revenue stream, but its digital performance will influence its reception by Wall Street after its spinoff.
Bauer Hires Perel as Editorial Director of In Touch, Life & Style
Following his surprise exit from American Media Inc. last August, David Perel has landed at rival Bauer Publishing as editorial director of In Touch and Life & Style. Bauer makes most of its money at the newsstand and has been a latecomer to digital. In a statement, Bauer said that one of Perel’s main tasks will be building In Touch and Life & Style’s digital business. “[Perel’s] strong relationships in the entertainment industry as well as his success in developing digital platforms will be invaluable to our business efforts moving forward,” said Bauer Publishing EVP Sebastian Raatz. In addition, Christopher Yates, a former digital VP at Time Inc., will join Bauer Media Group, the company’s ad sales arm, as its new VP, digital.
Men’s Health Launching Cover Model Contest
In a first for its U.S. edition, Men’s Health is running a nationwide “Ultimate Men’s Health Guy” contest to select a non-model, non-celebrity subject for the cover of its November issue. Men can submit their entries on mhguysearch.com or present themselves in person at Macy’s flagships in New York City’s Herald Square and Los Angeles’ Glendale Galleria on April 12. Subsequent auditions will take place in Houston, Atlanta, Chicago, Dallas, Washington, Miami, San Francisco and Boston. In July, the top three finalists will be flown to New York for a cover shoot and to make their final pitch for the gig. The entrants will be weeded out by a search committee and then handpicked by a small panel of judges that will include editor-in-chief Bill Phillips and designer Kenneth Cole. Cole’s company is sponsoring the contest, which will kick off the April launch of its newest fragrance, Mankind. “We don’t know how readers are going to react to this on the newsstand,” said Phillips. “Celebrities and athletes work for us, but I’ve said this before, celebrities’ projects don’t matter to the reader, it’s their stories. Whether the issue sells or not is not quite relevant.” WWD adds that the last point is debatable, noting that perhaps MH “is hoping Everyman outsells Hugh Jackman on the newsstand.” MH has run contests and featured the winners in some international issues, apparently with success.
Newsweek returns to newsstands Friday with a small press run (70,000), but it’s hoping to make a big impact with its cover story, which claims to have actually tracked down the elusive Satoshi Nakamoto, the man credited with inventing Bitcoin. Nakamoto doesn’t open up much except to say that he’s not involved in Bitcoin anymore, but senior staff writer Leah McGrath Goodman wrote a nearly 3,400-word profile of the California man, who’s described as rumpled and unkept and living in a modest home, despite having a fortune estimated at $400M. Newsweek editor-in-chief Jim Impoco, who had to pull together the issue at breakneck speed in three months, is enjoying the moment. “The [U.K.’s Sunday] Times had a 7,000-word story trying to find the inventor of Bitcoin and didn’t,” he says. “The Telegraph tried to find the founder and got nothing. The New Yorker, Fast Company, they followed the trail, and the trail went cold. And we found him.” Adweek reports that the magazine’s front pages feature full-page photography and medium-length articles, and that the overall article mix is “provocative and international.” First issue has 68 pages total; just six advertisers.
Playboy to Pay $6M in Whistleblower Case
Playboy Enterprises must pay $6M to a former accounting executive who was wrongfully terminated, a federal jury in California decided Wednesday, and may have to pay more when punitive damages are decided later this week. According to the suit filed in the U.S. District Court in California, Catherine Zulfer, a former controller at Playboy, reported to company management “actual and suspected frauds and improprieties” after refusing to prepare $1M in bonuses for top executives without proper approvals. The jury found that Zulfer was unlawfully fired in retaliation for reporting alleged fraud within the company, in violation of federal whistleblower protections provided by the 2002 Sarbanes-Oxley Act. The jury also determined that Playboy Enterprises discriminated against Zulfer on the basis of age, as part of the company’s plan to reduce costs by firing older employees. Zulfer was 56 at the time of her termination in 2012. “We strongly disagree with the jury’s decision,” a company spokesperson said in a statement. “Playboy stands behind the conduct of its management team and our corporate governance practices. We will assess the pursuit of all available options, including an appeal and overturning the verdict.” The $6M compensatory damages verdict is thought to be the largest award ever under Sarbanes-Oxley. The jury decided the company acted with “malice, fraud or oppression,” so Zufer’s case will proceed to a punitive damages phase on Friday.
Hearst Exec Says Banner Ads Will More or Less Die Out
“The banner ad will be hugely disrupted over the next 12 to 18 months,” said Hearst Corp. SVP Lincoln Millstein, speaking at a Digital Hollywood conference. “Brands, advertisers, agencies are taking back control of creative.” Two decades after the visual Internet went live, Millstein declares that the banner ad remains the “worst performing advertising vehicle ever made.” Banner ads won’t completely disappear, but they’ll drop to the lowest common denominator, he says. The “smart money” will go to native advertising in social and compelling video formats.
Condé Nast Britain Hires Tech Mogul as Head of Digital
Wil Harris, co-founder of YouTube network ChannelFlip, has been hired as head of CN digital in U.K., replacing Jamie Jouning, who will become publisher of Glamour U.K. later this month. ChannelFlip is one of Europe’s largest video networks. Harris was previously editor-in-chief of Dennis Publishing’s online tech magazine Bit-tech.
Q&A with InStyle’s Editor
Ariel Foxman says knowing a magazine’s reason for existence, understanding which platforms readers want to experience it through; and having a voice that differentiates it from competitors are the keys to success. Knowing his audience, Foxman is able to take risks–like breaking the “rule” against using green on covers.
Opinion: A Publisher’s Perspective on the State of Fulfillment
Katelyn Belyus, audience development and digital marketing manager for The Nation Magazine, says fulfillment service bureaus “have been around for a long time because they’re good at what they do, and they have a lot of smart people working for them. They make my life infinitely easier. But I also know they can be better.” She suggests that they use their volume and clout to help clients get better deals not only from the USPS, but other types of vendors; and get better at facilitating knowledge sharing among clients. She also argues that the big bureaus need to get beyond the limitations of legacy systems and expensive workarounds. “The big FSBs need to change fast if they want to stay viable, because the first time a big publisher moves from a large FSB to a small one, an exodus will follow,” she writes. “If the big guys don’t move quickly, those little guys are going to outpace them triple time.”
Opinion: Time to Reinvent the Magazine Subscription
Mag+ chief creative officer Mike Haney argues that to increase engagement and renewals, content makers of all types—whether or not they come from a print legacy—need to start reconceiving digital subscriptions less as pre-purchases of bundles of issues and more as an opt-in to a community. ”Think about all the content and value your brand has to bring, and then think about how those assets can be packaged into an offering,” he writes. “Stop thinking of these apps as issue delivery vehicles and start seeing them as content hubs. Adding more frequent content doesn’t have to be hard, technologically or time-wise. Use push notifications or built-in newsfeed or HTML windows in your app to deliver it. Pull the content from your website or your archives and set it up in an RSS feed. It doesn’t matter that this content might have been seen before or is available elsewhere—the value is that you’re delivering it to me on my device now.”
Opinion: Yahoo Wants to Be Vogue? Fat Chance
Michael Wolff notes that Yahoo CEO Marissa Mayer, ”gave an extraordinary interview“ to The New York Times last week in which she said that magazine pages were better for advertising than digital space. Referring to Vogue and InStyle, she said: “The ads in those magazines are as interesting as the photo shoots and the articles.” Wolff writes that Mayer seems to think that creating similar reader connections with ads should be easy for Yahoo, but she’s wrong. “Digital media has a fleeting and shallow effect on people,” he says.
Harlequin’s Sales, Earnings Fell in 2013
With sales of print books declining and the growth of e-book sales slowing, Harlequin had declines in sales and earnings in 2013, parent company Torstar reported. Revenue fell 6.7%, to C$397.7M, and operating earnings were down 29%, to C$52M. One reason for the flat digital performance was increased competition from low-priced books, including those produced by self publishers. Overseas, growth in digital revenue was not enough to offset declines in print. Digital revenue accounted for 24.1% of global revenue (C$95M), vs. 20.7% in 2012 (C$85M). Torstar expects Harlequin’s results to be relatively stable in 2014.
HMH Trade Sales +9% in 2013
Sales in Houghton Mifflin Harcourt’s trade division rose 9% in 2013, to $170.7M, and adjusted EBITDA irose to $29M from $24M in 2012. For all of HMH, total sales +7%, to $1.38B, as sales in the education segment rose 6.5% to $1.21B. Adjusted EBITDA for total company rose to $325M from $320M, although the net loss rose to $111.2M from $87.1M in 2012. Improvement in the trade group was led by sales in the young readers and cookbook categories. Adult bestsellers included “How Children Succeed” and ”The Essential Scratch & Sniff Guide to Becoming a Wine Expert.” E-book sales accounted for 22% of overall adult sales in the year. HMH expects total 2014 revenue to increase 5%-8%, driven by gains in the education group.
OTHER NEWS OF NOTE:
Kroger Reports Earning Gain; Said to Be Complicating Cerberus’s Bid for Safeway
Kroger Co.’s adjusted fiscal Q4 income grew 9.7%, and its identical store sales rose 4%. Total sales -3.7% to $23.22B, but up 4.8% when last year’s extra week in period is adjusted for. Profit was $422M, or 81 cents a share, down from $462M or 88 cents a share year earlier. Excluding last year’s extra sales week and other items, per-share earnings were 78 cents, up from 71 cents. Kroger said its response to adverse weather in the quarter helped boost sales. Kroger is reportedly considering a bid for all or part of smaller rival Safeway. This is said to be complicating Cerberus Capital Management LP’s bid for Safeway, said to be $9B+, which Cerberus had reportedly hoped to “sew up” this week. But Cerberus still expected to be the victor in the negotiations, in part due to antitrust considerations if Kroger were the buyer, say WSJ sources.
WSJ (Kroger financials)
WSJ (Cerberus vs. Kroger for Safeway)
USA Today (Cerberus vs. Kroger)
Costco Q2 Profit Falls 15%
Profit fell 15% for Q2 ended Feb. 16. Costco blamed the lower earnings on weaker sales and profits from certain nonfoods merchandise categories, particularly during the four-week holiday season; weaker profits on its fresh foods business; and lower international profits, resulting from the weakening of foreign exchange rates. The company’s sales growth has slowed recently, in contrast to other discount clubs, which have been a bright spot in retail as shoppers seek to save money by buying in bulk. It reported a profit of $463M, or $1.05 a share, vs. $547M, or $1.24 a share, year earlier. Year-earlier quarter included a tax benefit of 14 cents a share. Total revenue rose 6% to $26.3B. Analysts polled by Thomson Reuters had expected earnings of $1.17 a share and revenue of $26.65B. Revenue from membership fees rose 4.1% to $550M, while merchandise costs rose 5.8% to $23B. Total sales from stores opened more than a year grew 5% for the period, excluding currency fluctuations. In February, same-store sales rose 4%, including a 4% increase in the U.S. and a 5% gain internationally, also excluding currency changes. “Despite the miss, we believe [Costco] continues to fare better than most,” Janney Capital Markets analyst David Strasser said. “We would look to buy on weakness, as the core model remains intact, and the worst of the margin pressure was holiday-related.”
Newly Merged SpartanNash Posts Q3 Gains
In its first time reporting as a merged company, SpartanNash said its sales and profits improved in the most recent quarter, excluding charges related to the merger. Adjusted earnings from continuing operations were $11.1M for Q3 ended Dec. 28, vs. $4.9M year-ago. Including one-time charges, the company posted a loss of about $14M for the 15-week quarter. Consolidated net sales up 69.1% to $1.3B, primarily due to $563.2M in sales from Nash Finch generated as a result of the merger, comp-store sales gains of 0.7% and the impact of new distribution customers, partially offset by $46.1M in sales for an extra week in the year-ago quarter. Excluding the impact of the extra week last year and contributions from the merger, sales would have increased about 3.8%. Retail sales were up 17.4% to $520.9M, due to $90M in sales generated as a result of the merger, as well as the previously disclosed acquisition of a grocery store and fuel center in the year-ago Q3 and the 0.7% increase in comps, excluding fuel–partially offset by $2.7M in fewer sales due to the closure of certain stores and $27.3M in sales for the extra week in last year’s Q3. Excluding the impact of the extra year-ago week and contributions from the merger, retail sales +3.5%. Distribution sales increased 63.5% to $565.8M, reflecting $224.6M in sales from Nash Finch, as well as new business gains, partially offset by the extra week of sales last year. Excluding the impact of the extra week last year and contributions from Nash Finch, distribution sales would have increased 4.3%.
Kroger Extends ‘Refresh’ Initiative to Southwest
Kroger Co. is lowering prices and enhancing the customer experience in its Southwest division, in an expansion of the ongoing “Refresh initiative” it has been implementing in divisions across the country over the last few years. The Southwest division includes 212 stores in Texas and Louisiana. Division president Bill Breetz said Kroger has made “a multimillion-dollar investment” to reduce prices across the store and reengage employees to offer more highly satisfying customer service. The initiative also involves opening more registers, especially during peak shopping times; and promoting a rewards program at participating fuel centers based on customer spending on groceries, pharmacy purchases and gift cards (offering points redeemable for up to $1 per gallon at Kroger fuel stations and 10 cents a gallon at participating Shell locations).
Target Launches Security Overhaul
Target announced that its CIO, Beth Jacob, is leaving as part of a major overhaul of its information security and compliance structure following its major data breach last year. Target will be conducting an external search for an interim CIO who can help guide the company through this transformation. It plans to elevate the role of its chief information security officer and hire someone from outside the company to fill the position, and it will begin an external search for a chief compliance officer. It has hired Promontory Financial Group, Washington D.C., to help evaluate its technology structure, processes and talent as part of the transformation of its security systems.