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August 13, 2018

August 13, 2018

Publishing News

Q&A With Conde Nast CEO Sauerberg
Excerpts from a long Adweek Q&A with Condé Nast CEO Bob Sauerberg, following his announcement lastweek about the company's diversification strategy: "I want to expand our biggest brands and I want to be in a real leader in video, experiences and B2B in the top brands that I have. I felt like that was the best way for us to create value for the company. As I looked out five years from now, I didn’t like the trends that I saw with my business. I wanted to create a new outcome that set a very clear path for the company I wanted us to be, that is built to last. Not just to make it for the next few years. That’s what set the whole planning off. It isn’t just that this is the place you want to be if you’re a print expert, it has to also be if you’re a producer, if you’re an engineer who creates digital products. This place has to be the place you want to be. We needed some real focus on that, and we needed to really get the company to understand that… We’ve got to find a way culturally to really come together, around one plan with one focus and one mission.In the past, I had directional things, like we’re going to build a digital business. Now what we have here is a very specific approach, and I think our company needed it. This plan gives us a clear roadmap, clear accountabilities. We kicked it off with the company yesterday.' On the decision to put Brides, W and Golf Digest up for sale: 'We had two really key criteria. They had to be financially viable and big enough to matter and they had to meaningfully impact our ambition for our growth areas. The brands that are here passed those tests and the brands that aren’t didn’t pass those tests... Golf, in particular, we looked very hard at that golf asset. There may be that we end up maintaining some level of participation... If I can make Vogue twice as big, the energy and the investment and the time required to do that is going to be a lot easier than trying to make W 10 times as big"... On his strategy vs. Meredith's and Hearst's: 'Fewer, broader, bigger brands, different revenue streams and focus. Culture-defining. I’m finding growth in the disruption of our markets. The video is disrupting, so I’m an aggressor… I’m looking at the disruption of what’s happening, and I’m looking for growth areas to participate in that. That’s different than what others are doing."

Media Researcher On Reasons for Optimism Among High-End Magazines
The Guardian: "Condé Nast’s long-awaited enunciation of a strategy, along with Anna Wintour as 'indefinite' creative director, Interview’s relaunch, and an expansion of Dow Jones’ WSJ Magazine, speak to a measure of optimism at the glossiest end of the publishing business. 'In the magazine sector as a whole there has been enormous over-supply problem, and why we’ve seen such a car crash in the middle market where advertising has practically collapsed,' says Douglas McCabe, an analyst at media research firm Enders. 'But high-end magazines with a commitment to high-end editorial values, well-heeled demographics and a high-end supply of advertising have been living in a much less volatile market,' he says. Despite the slow pace of digital development at the company online ad sales surpassed print for the first time this year. McCabe believes that despite the ongoing erosion of high-end magazine advertising in the near term, it will remain 'more robust than is now being implied.' High-end advertisers are looking for the aspirational consumer, he says, and don’t find it through Google or Facebook. 'The decline will be much smaller and much slower in high-end magazines where the consumer can still be reached,' he says. Moreover, he says, the expensive failure of Condé Nast’s e-commerce play proved to the publisher industry it can’t compete in the retail sphere, as well as they know that they can’t compete with social media for traffic. At the same time, he says, luxury brands like Burberry “may be exaggerating in their minds what the direct-to-consumer opportunity really looks like. I suspect that the big luxury and fashion brands will realize over the next two or three years that high-end magazines are actually very important to them'... But since consumers have options, it makes sense that publishers seek a wider range of options to reach their brands’ core audience, including events and various digital manifestations. The objective then is to turn magazines into powerful brands with a magazine component. 'People who trust Vogue magazine, really trust it,' McCabe says. 'Peak social media has passed and people don’t trust it. So by switching strategy to focus on their core reader, and not just how many millions they can reach, and then developing services to engage them in specific terms, there’s no reason why some, but not all, should do well.'"

Meredith Expects to Sell 3 Titles Soon
TBN: In a call with analysts about Meredith's Q4 and full fiscal 2018 results last week, executive chairman Steve Lacy said: "We have made significant progress and anticipate agreements to sell Time, Sports Illustrated, Fortune and Money, along with our 60% equity interest in Viant in our early fiscal 2019." The company’s 2019 fiscal year started July 1.

Meredith Getting the Full Scoop on Readers Acquired from Time
AdExchanger: "Meredith prioritizes depth over breadth: The company posits that a limited number of deep relationships with core readers matter more than a larger number of shallow relationships. While advertisers prize scale, content that draws readers back again and again opens the door for new revenue streams such as commerce.The media company is bringing that mindset to Time Inc., which it officially acquired in February... Time’s new parent company is putting structures in place to engage consumers more deeply, by using tools like email newsletters.Take People, for example.During the royal wedding of Price Harry and Meghan Markle in May, the celebrity site saw 49 million readers enter through the home page. In May, 27% of users visited 10 times or more. “In this day and age, that’s an unusual thing,” said Will Lee, SVP and head of digital for the entertainment group, which includes People and Entertainment Weekly.Under Time Inc., People didn’t do much to cultivate those loyal readers. Central growth teams devoted most of their efforts to SEO, although they had started to experiment with email as well.Meredith takes a more structured approach to address each part of the consumer lifecycle: acquisition, conversion and retention. Team members work together as part of a central, functional group but are assigned to individual brands and report to a growth lead for each media brand. That approach allows Meredith to customize efforts for each brand while sharing insights and best practices that can be used across the entire organization.Within the group, the acquisition team develops strategies to bring in new readers – like those interested in a royal wedding – to the site. Conversion teams encourage those readers to sign up for a newsletter, for example, or take other steps to deepen their engagement with the brand. Retention teams look at how well newsletter content resonates with readers and tries to make that content stickier.Because one person is dedicated to each brand, the People retention expert can focus on email strategies that drive long-term engagement for celebrity-focused readers while sharing best practices across the entire retention team. 'We need to balance the scale of the platform and shared learnings with the fact that each site has a unique value prop with users. We want efficiencies without forgetting what makes each site great for audiences and users,' said Chief Digital Officer Matt Minoff… Under Meredith, People brands want to do a better job matching up content with audiences that are hungry to obsess over who got the rose. 'How do we become more essential to the audience, and more essential to them on a daily basis?' Lee said, summing up the challenge.Just a couple months post-acquisition, Meredith is still putting its plan in motion, doing unsexy foundational work like migrating all the brands onto the same email service provider so that all emails can go out from a centralized database. Because of its focus on deepening engagement with readers, Meredith has more sophisticated abilities around email capture that it’s starting to test on Time Inc. properties. For example, a different ad creative will encourage email signup depending on the content a reader is looking at, or whether the reader is coming from a search or from social media.'Big platforms talk about monthly active users and daily active users,' Minoff said. 'We are taking that mindset and looking at our audience in terms of cohorts we are trying to move down a continuum, from a less engaged user to a more engaged user.' Those direct relationships open the door for Meredith to sell its own products, like Cozi, its family organization app, or a home renovation organization tool from Better Homes & Gardens. They also enable it to maximize value from affiliate programs and direct commerce... 'The [focus on engagement] dovetails with our monetization strategy,” Minoff said, “as we move from selling display to more highly integrated and complex campaigns--what we call our ‘non-IAB product’ suite.'"

Harvard Business Review Paid Circ +5% in 1H
TBN: "Harvard Business Review has increased its overall paid circulation from 304,680 to 319,631--a 5% gain year over year--according to a recently released report from the Alliance for Audited Media.During the past 18 months, HBR shifted to a digital-first marketing strategy that promotes subscriber-only benefits. As a result, more subscribers are registered on than ever before.New initiatives in the last year include Women at Work, a podcast about gender and the workplace; and Dear HBR:, an advice podcast about work dilemmas. The brand also produced dozens of Facebook Live Whiteboard Sessions with top management experts; and offered deep dives into topics like CEO activism, artificial intelligence, and work after #MeToo through its Big Idea series. It is currently experimenting with subscriber-only video discussions of business case studies"...

HarperCollins Posts 23% Fiscal 2018 Earnings Gain
PW: "Capped by a blowout Q4, HarperCollins reported that earnings for the fiscal year ended June 30, rose 23% over fiscal 2017, to $244M. The jump in EBITDA came on a 7% revenue rise, to $1.76B. The sales gain included $28M from a sublicensing agreement with Amazon Studios for the J.R.R Tolkien Lord of the Rings trilogy, plus $25M from the positive impact of foreign currency fluctuations. Excluding foreign currency, sales were up 6% and earnings 22%. The Tolkien deal was finalized in Q4, which helped fuel a 20% increase in revenue over the comparable period last year. It also helped with the 82% jump in earnings ($21M of the $28M licensing fee for Tolkien went to HC’s bottom line). Brian Murray, CEO of HC, said the thing that pleased him the most about the year was that gains did not come from just one or two areas, but from many of the publisher’s various operations. The U.S. general books group 'had a great year,' Murray said, while HC Christian Publishing 'continues to power through' with strong sales of both frontlist and backlist titles. Additionally, he noted, HC U.K. 'had its best year ever.' International sales were solid, and sales of foreign-language titles accounted for about 10% of overall revenue, hitting a target that Murray had set last year"...

Paid Digital Pubs Wrestle With Password Sharing
Digiday: "As publishers try to grow subscription businesses, they have to figure out how to handle password-sharing, a phenomenon that subscription services like Netflix and Spotify have wrestled with for years... allowing flagrant password-sharing disincentivizes would-be subscribers, and it’s hard to limit it without aggravating your users. Password-sharing is a well-documented problem for subscription content companies, particularly in digital video. Reuters/Ipsos research released last summer found that more than one-fifth of 18- to 24-year-olds had used a login from somebody outside their household to stream content; overall, 12 percent of adults said they’d done so"...

100+ Newspapers Unite to Fight Trump's War on the Press
CNN Money: "The Boston Globe has been contacting newspaper editorial boards and proposing a 'coordinated response' to President Trump's escalating 'enemy of the people' rhetoric.''We propose to publish an editorial on August 16 on the dangers of the administration's assault on the press and ask others [regardless of their normal stance on Trump or his policies] to commit to publishing their own editorials on the same date,' The Globe said in its pitch to fellow papers. The effort began just a few days ago. As of Saturday, 'we have more than 100 publications signed up, and I expect that number to grow in the coming days,' Marjorie Pritchard, the Globe's deputy editorial page editor, told CNN. The American Society of News Editors, the New England Newspaper and Press Association and other groups have helped her spread the word. 'The response has been overwhelming," Pritchard said. "We have some big newspapers, but the majority are from smaller markets, all enthusiastic about standing up to Trump's assault on journalism.' Instead of printing the exact same message, each publication will write its own editorial, Pritchard said.That was a key part of her pitch: "The impact of Trump's assault on journalism looks different in Boise than it does in Boston,' she wrote. 'Our words will differ. But at least we can agree that such attacks are alarming.' Journalists have noticed an uptick in Trump's attacks against the news media in recent weeks. He has been using dehumanizing language like 'enemy of the people' more often. He has also been speaking to reporters less often, limiting the chances for questions to be asked... some media critics have urged the White House press corps to engage in acts of solidarity. There were cheers last month when reporters in the briefing room deferred to rivals who were trying to ask follow-up questions, and when numerous outlets stood up for CNN reporter Kaitlan Collins after Collins was told she could not attend a Trump event. The coordinated editorials may be another example of unity across the news business. Although there's a longstanding debate about the effectiveness of newspaper editorials, there is certainly strength in numbers: the greater the number of participants, the more readers will see the message"...

Report: Switch from 'Data-' to ID-Based Marketing Is Rapid
MediaPost: "It's no secret that the marketing industry has been shifting from "data-based" solutions to "identity-based" ones, but a new report published Thursday by the Association of National Advertisers indicates that it is expanding at a rapid clip. The report, which was developed by the DMA (recently acquired by the ANA) and The Winterberry Group, projects that identity solutions spending by U.S. marketers will expand form just under $1B this year to $2.6B by 2022. The report, which defines identity-based marketing as 'the effort to recognize and understand individual audience members (including customers, prospects and other visitors) across channels and devices such that brands can interact with those individuals in ways that are relevant, meaningful and supportive of overarching business objectives,' finds that the capability among U.S. organizations is mixed at best. Only about 15% of respondents to the study said they are actually able to identity their target audiences 'extremely well,' while nearly 34% said they could do so 'fairly well.'"

The Flourishing Business of Fake YouTube Views
NYT: "Inflating views violates YouTube’s terms of service. But Google searches for buying views turn up hundreds of sites offering “fast” and “easy” ways to increase a video’s count by 500, 5,000 or even five million. The sites, offering views for just pennies each, also appear in Google search ads.


Retail News

NRF Raises Retail Sales Forecast
CNBC: "Spending at retailers--excluding automobiles, gasoline stations and restaurants--is now predicted to climb at least 4.5%, The National Retail Federation says in its updated outlook for 2018. The prior forecast range was 3.8% to 4.4%. Retailers including Home Depot, Walmart and Macy's are set to report earnings later this week, which will offer a look at how these companies feel ahead of the all-important holiday season. 'Higher wages, gains in disposable income, a strong job market and record-high household net worth have all set the stage for very robust growth in the nation's consumer-driven economy,' NRF president and CEO Matthew Shay said. 'We knew this would be a good year, but it's turning out to be even better than expected.' Still, there is uncertainty around a trade war with China that could impact retail spending, the group said. President Donald Trump has proposed additional tariffs on $200B in goods from China, which would include a mix of consumer items. The proposal is expected to be finalized next month, following a public comment period. 'Despite this upgrade in our forecast, uncertainty surrounding the trade war and higher-than-expected inflation due in part to increased oil prices could make consumers cautious during the fall season,' NRF chief economist Jack Kleinhenz said Monday. Retail sales for first half 2018 were up 4.8% vs. a year earlier, NRF said. In the most recent three-months moving average, they have climbed 4.4% YoY"...

B&N: Riggio Takes Heat for CEO Turnover; Says He Has a Plan
WSJ: "Book-publishing executives expressed concerns to Barnes & Noble Inc. about continuing management instability at the retail giant and the direction of the business, in the wake of the sudden firing last month of Demos Parneros as CEO... [The next CEO will be B&N's sixth since 2013.]Publishers relayed their concerns in meetings with B&N in the weeks following Parneros’s exit, people familiar with the matter said. They indicated that they have a strong interest in B&N running a healthy and stable business, to counteract the clout of Inc. in book retailing. The invitations to the private meetings were extended by Leonard Riggio, B&N's executive chairman and largest shareholder... [One publishing exec] said: "Riggio promised new stores with a smaller footprint but didn’t indicate any plans to update existing stores. 'I get the logic of that if they can move forward at an aggressive pace,' the executive said"... NYT: In an interview, Riggio said that B&N will "close big, underperforming stores and open smaller ones in more highly trafficked areas. In the last decade, the chain has closed more than 150 stores and now operates 633. 'We have to move back to where the action is...We have to follow the population,' he said. But he disagrees with another diagnosis of the problem: that he’s a micromanager who doesn’t give his chief executives room to operate... 'I don’t micromanage anything,' he said. Some in the publishing industry see potential for B&N to solve its problems. They point to successful large chains in other countries, like Waterstones in Britain and Indigo in Canada, as potential models for how Barnes & Noble might turn itself around. Rather than a chain of homogeneous locations, Waterstones now operates more like a constellation of independent stores, said James Daunt, the company’s managing director, who took over in 2011. The individual stores vary widely in terms of size and title selection, and local booksellers are encouraged to tailor their stores to the surrounding community. Indigo, which is expanding into the U.S., has alternatively positioned itself as 'a book lover’s cultural department store,' with a cafe, toys, music and lifestyle products. 'There’s a lot of low-lying fruit out there that they can harvest,' said Richard Schottenfeld, an investment fund manager who has acquired a 5.7% stake in B&N and has met with Riggio and company executives to discuss operational strategy. He pointed to the company’s 'badly designed' website, the 'long overdue' debut of book clubs this spring and the company’s 'out of whack' operating costs. Riggio should focus less on where to close and open stores and more on how to convert browsing visitors into paying customers, Schottenfeld said. 'It’s not as much about the ideas as it is the execution of those plans--the company is mismanaging the opportunities in front of them,' he said. 'It seems like you can get more dollars out of people if you just figure out what they want to buy from you.' Some publishing executives privately express hope that B&N will be sold, perhaps to Indigo. Riggio didn’t rule out the idea of a sale, although he said he didn’t think 'this is the time to sell the company... We’ll be responsive to our shareholders. We always have to entertain offers that come along.' For now, though, it is up to him to lead the company. His supporters say he’s up to it, having proven himself adept at understanding retail trends"...

Aldi Reveals Next Assault Against Walmart, Amazon, Kroger
"Aldi is planning to expand grocery delivery services to all US stores, Aldi U.S. CEO Jason Hart told Business Insider. The company will start testing curbside pickup as well, Hart said. Aldi is slowly ramping up its investment in delivery and pickup amid fierce competition from Walmart, Kroger, and Amazon for consumers' online grocery purchases... Aldi started testing online grocery delivery in select cities last year through a partnership with Instacart. The service has expanded slowly and is still only available in a few markets, including Atlanta and Chicago. In an interview Wednesday, Hart said Aldi is planning to expand the partnership with Instacart and eventually offer the service at all U.S. stores... Walmart plans to offer grocery delivery from more than 800 stores by the end of the year, and it offers curbside pickup at more than 1,500 locations. Kroger is in a close race with Walmart: it's now delivering groceries from nearly 900 stores and plans to grow its curbside pickup locations by nearly 500 stores this year, from nearly 1,100 locations now. Amazon, meanwhile, is in the process off rolling out grocery delivery from Whole Foods stores across the US, and [last] week it announced it was launching curbside pickup at select stores in as little as 30 minutes from the time of purchase."

Ingles Sees 5% Q3 Sales Gain
SN: "Growth in customer volume and basket size helped lift sales at Ingles Markets for the fiscal 2018 Q3, ended June 30. Revenue rose 5.1% to $1.03B from $984.4M a year earlier, as sales grew in every retail product category. The Asheville, N.C.-based regional grocer noted that the 2017 Q3 benefited from extra Easter sales whereas this year the holiday sales bump came in Q2. Excluding fuel sales and the effect of the Easter holiday calendar shift, retail grocery same-store sales edged up 1.8% YoY. Customer transactions grew 0.6%, with the average transaction size up 1.8%"...

Hy-Vee Intros Fitness-Focused Grocery Concept
RetailWire: "Hy-Vee has opened a mini-grocer that features healthy foods along with a fitness boutique next door.The Hy-Vee HealthMarket in West Des Moines, measuring 15,700 square feet, is an expanded version of the HealthMarket in-store shops found in the chain’s larger stores. The Midwestern grocer’s stores typically range from 70,000- to 80,000-square-feet. The new location stocks 11,000 items, such natural and organic foods, Hy-Vee Short Cuts pre-cut vegetables and fruit, vitamins and supplements along with meat and other groceries. A sports nutrition area, a Basin beauty and baths products department and a “hydration station” offering nitro coffee, kombucha and infused water are also featured. The location also includes a full-service pharmacy, health clinic and a hearing aid center. Said Matt Pertzborn, store director at the West Des Moines Hy-Vee HealthMarket: 'Shopping for healthy lifestyle and personal care items while picking up your groceries has never been easier.' Randy Edeker, Hy-Vee’s CEO, told the Des Moines Register that the grocer explored the concept due to heightened competition from Fresh Thyme and Sprouts. He said, “I see us having 50 or 60 of these'"...

H-E-B to Turn Store Into Warehouse
MNB: "H-E-B announced that it plans to close one of its Houston stores next month “and turn the space into an e-commerce warehouse to support its home delivery and curbside pickup businesses,” the Houston Chronicle reports.According to the story, the 28K-sq.-ft. store has not been universally accepted by the neighborhood, as some have criticized it for being too small and with an inadequate selection. In fact, H-E-B has almost conceded that fact, saying that the economics of the location and store size simply did not work.Scott McClelland, H-E-B’s president, says that he is “committed” to bringing a better store to the zip code, but that in the meantime, it is important to develop capacity to service the growing number of customers taking advantage of the retailer’s e-commerce offerings."

Walmart Expected to Spend Billions on Streaming Service
THR: Walmart "has yet to make the rounds with its vision for the type of ?content it could bring to ?its streamer--and may not until it has a top programming executive in place, a ?position that one agency source says Walmart is seeking to fill. Although it is still early, Hollywood observers say Walmart has been considering streaming play for several years, and another insider says the feeling among potential partners 'is that they're here to play.' Starting a viable streaming business won't come cheap, and Walmart,? a studio source tells The Hollywood Reporter, is expected to spend a couple billion dollars to launch its service. Since it doesn't have a paid mem­bership model, the retailer will be starting from scratch. Rival Amazon, meanwhile, ?is projected to spend $4.5B on content ?this year for Prime members, of which there are more than 100M"...

Fresh Market Names Shein CFO
PG: The Fresh Market Inc. has named Oded Shein its CFO. Shein brings to his latest position more than a quarter-century of financial experience at a range of retail stores, including a recent stint as EVP and CFO at Houston-based Stage Stores Inc., an operator of 764 specialty department stores and 59 off-price stores in 42 states. He has also held senior financial roles at Belk Inc., in Charlotte, N.C., and Charming Shoppes Inc., in Bensalem, Pa. His appointment comes in the wake of The Fresh Market's decision to close 15 underperforming stores in nine states.

How Dollar General Took Over Rural America
The Guardian: "Dollar General is opening stores at the rate of three a day across the US. It moves into places not even Walmart will go, targeting rural towns and damaged inner-city neighbourhoods with basic goods at basic prices – a strategy described by a former chief executive of the chain as “we went where they ain’t”.The chain now has more outlets across the country than McDonald’s has restaurants, and its profits have surged past some of the grand old names of American retail. The company estimates that three-quarters of the population lives within five miles of one of its stores, which stock everything from groceries and household cleaners to clothes and tools.Not everything is to be had for a dollar, but rarely is anything priced above $10. But there is a cost. Dollar General’s aggressive pricing drives locally owned grocery stores out of business, replacing shelves stocked with fresh fruit, vegetables and meat with the kinds of processed foods underpinning the country’s obesity and diabetes crisis.Dollar Generals are frequently found at the heart of “food deserts”, defined by the department of agriculture as a rural community where one-third of residents live more than 10 miles from a grocery store selling fresh produce... “Dollar General is building just as fast as it can. Nebraska. The Dakotas. You see it,” [said Doug Nech, owner of a Haven, Kans. grocery store driven out of business by Dollar General]. “But somewhere down the line, as these small towns dry up, business for Dollar General is going to dry up just like it does for a grocery store. If there’s nobody new coming to town and your older population is dying off and they’re not getting replaced very quickly, who are they going to sell to?”


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