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November 15, 2018

November 15, 2018

Publishing News


Penske Media Acquiring Art Magazines From Peter Brant
WWD: Penske Media Corp., "owned and operated by Jay Penske, is acquiring ARTnews and Art in America, founded in 1902 and 1913, respectively. The price is said to be between $20M and $25M. Both publications are some of the only notable remaining properties of Peter Brant, who acquired the titles in 2016 for an undisclosed sum from private management firm Skate Capital, owned by Sergey Skaterschikov, along with other titles in the holding company Artnews SA. Those include magazines Antiques and Modern, which are included in PMC’s acquisition. PMC is also the parent of WWD, which it acquired in 2014. The deal is the latest for Penske, who has cut several over the last year. At the end of December came a majority investment in Rolling Stone, followed a few months later by the acquisition of SheKnows Media and in July an investment in BuzzAngle Music. Early this year, PMC also got a $200 million investment from Public Investment Fund, the sovereign wealth fund of Saudi Arabia. Penske maintains 60 percent of his company. PIF has invested heavily in American and international companies, and recently more tech start-ups, in an effort to move its economy away from oil, but the fund has come under increased scrutiny with the apparent murder last month of Washington Post journalist Jamal Khashoggi in a Saudi consulate... 'This purchase continues PMC’s strategy of investing in businesses with great vertical depth and we plan to rapidly build upon their editorial foundation while extending their presence across the web, video and international markets,' Penske stated. In a memo on the acquisition, PMC noted that art media have a 'significantly fragmented audience' and that the company 'sees the opportunity to augment these exceptional brands with further investments in content and editorial, complemented by robust data and analytic tools.' PMC alluded to future development of a live media and event business for the brands (an extension also being developed at Rolling Stone, while other PMC brands are better established in these areas)...As for Brant, currently chairman of Art Media, he is not set to have any involvement with the titles going forward. Penske will fully absorb the magazines and effectively become chairman. The sale marks the end of Brant’s direct operation in media, which he’s been involved in to varying degrees for decades. Until recently, his best known property was Interview magazine, but Brant forced the 50-year old magazine into bankruptcy in an apparent plan to escape more than $3 million in debts to various freelancers and agencies. Through the wonders of corporate bankruptcy, Brant was able to repurchase Interview, debt-free, and the magazine has since relaunched under the full control of Kelly Brant, Interview’s president and Brant’s eldest daughter."
 
WWD 

Highlights from Magazines at Retail Canada Conference
MagazinesatRetail.ca summarizes sessions at this year's Magazines and Books at Retail (MBR) Canada conference in Toronto, held Oct. 23. Highlights included Jeff McNulty, VP of Presse Commerce, who stressed that magazines continue to take a central role at their retail stores and are important to consumers--but also that the category needs to find ways to celebrate and publicize its successes... Wholesaler CTC (Coast to Coast) reported that 588 Canadian magazines saw an increase in total retail dollar sales in 2017, and that on average, over 112,000 magazines are sold every day at retail outlets in Canada (one every 2.6 seconds), and that 13,000 different issues of magazines are delivered to Canadian retailers every year... Amar Sing from Kantar Retail reported that online shopping accounts for just 2.8% of all product sales in Canada. Online shopping provides convenience and competitive prices, whereas brick-and-mortar stores are evolving to provide a sensory experience, he said. Magazines and books can "play in both," he said: The category must view ecommerce and digitally enabled consumers as an opportunity to expand the business. Online shoppers will continue to grow and traditional retailers will be pursuing omnichannel strategies, and magazines and books have an opportunity to align and participate in that effort, he emphasized. Sing cited examples, such as a magazine-sponsored recipe that's available on a retailer’s site or in an app where the shopper clicks on it and the ingredients are added to their shopping list. He also advocated testing magazine distribution in rising retail formats, including dollar stores and other discounters. He also urged the category to analyze whether magazines are creating content for the demographic segments that are growing (older and immigrant segments, particularly), noting that diversity is an opportunity to find ways to align product for the retailer and consumer. Site offers additional coverage.
 

Attorneys for B&N, Fired CEO Have First Court Hearing
PW: "Attorneys in the breach of contract and defamation suit brought against Barnes & Noble by recently fired CEO Demos Parneros held their first conference before judge John G. Koeltl in New York on Tuesday, with Koeltl signing off on a discovery schedule, and encouraging the two sides to engage in settlement talks. In the brief opening conference, Koeltl asked attorneys for each side if they’d be willing to at least confer about a settlement with the help of a magistrate judge. And while neither side sounded optimistic about a deal (Parneros' attorney Anne L. Clark told the court that settlement discussions had been broached at one point but 'didn’t get far'), neither side offered 'an unequivocal no,' Koeltl observed, prompting him to say he would refer the parties to U.S. Magistrate judge Gabriel Gorenstein for a settlement conference. The signed scheduling order gives the parties until Dec. 3 to notify the court 'if such a referral would be useful for purposes of a settlement.' Koeltl also suggested the two sides consider waiving the jury waiver clause in Parneros’s employment contract, and proceed with a jury. The litigation is currently proceeding as a non-jury case. B&N abruptly fired Parneros on July 3 for (at the time) undisclosed violations of company policy. However, in his lawsuit, filed Aug. 28, Parneros confirmed that he was fired for alleged sexual harassment, but insisted that his firing was in fact brought about by B&N founder Len Riggio, who Parneros claims was irate over the collapse of a proposed deal to sell the company in June. On Oct. 30, B&N counter-sued Parneros, accusing him of sabotaging the sale of the company, in addition to sexual harassment and bullying. In [yesterday's] 20-minute hearing, Clark portrayed Parneros as a respected, once heavily recruited executive who is now 'unhirable' after being wrongly dismissed for alleged sexual harassment. Clark reiterated Parneros's claim that he did not sexually harass anyone, and said that an incident with an executive assistant cited as the basis for his firing had been 'resolved' in-house prior to his dismissal. Parneros, Clark said, also denies being abusive toward other members of B&N's executive team. B&N attorney Jay Cohen told the court that his client had 'a different view of the facts,' and said he was confident the bookseller would prevail. Cohen said that the alleged victims of Parneros’ sexual harassment and bullying would testify in court. And, he stressed, the CEO was fired by the B&N board for cause, after a thorough investigation... Clark informed the court that Parneros was planning to file a motion to dismiss B&N's Oct. 30 counterclaim, which seeks damages, as well as to potentially claw back payments already made to Parneros in light of the CEO’s alleged 'disloyal' conduct and breach of fiduciary duties. Clark asserted that B&N's counterclaim did not meet the proper legal standard to qualify for relief. It is unclear, however, when or whether that motion will actually materialize. Koeltl seemed to discourage it, at least at this stage of the proceedings, suggesting that the fate of any motion to dismiss the counterclaim would necessarily turn on the facts being litigated in Parneros’s suit. Under Koeltl’s order, all discovery in the case is to be completed by June 14, 2019, with the case to be fully briefed for trial by Oct. 23, 2019."
 

USPS Losses Jump Despite Rise in Shipping, Packages Revenue
Reuters: "USPS reported operating revenue of $70.6B for fiscal year 2018, which ended on Sept. 30, as sales at its shipping and packages business rose 10%. However, its net loss rose to $3.9B from a loss of $2.7B in 2017, hurt by rising pay and benefits and higher transport costs, such as gas prices. 'The flawed business model imposed by law continues to be the root cause of our financial instability,' said Postmaster General Megan Brennan, adding that USPS is pressing for reforms that would allow it to cut costs, increase revenue and compete more effectively. Neither USPS nor the president have the power to set postal rates directly. They are set by the Postal Regulatory Commission... That panel raised prices on packages by almost 2% in November. Package delivery, especially for major customer Amazon, has become a key part of USPS’s business, but has not been enough to offset the sharp decline in first-class letters caused by the internet and email. The Cowen Washington Research Group earlier this year forecast that USPS will nearly double the number of U.S. packages delivered for Amazon from 1.1B in 2018, or 55% of total USPS package deliveries, to 1.9B in 2023. 'Following discussions with persons in the USPS ecosystem and a review of USPS financials, it’s clear that Amazon has been a key driver of USPS for years,' Cowen analysts wrote"... MarketWatch: "Excluding items outside of management control and non-recurring items, the "controllable" loss widened to $1.95B from $814M. Revenue rose 1.5% to $70.62B as a 2.8% decline in first class mail revenue and a 0.7% fall in marketing mail revenue was offset by a 10% rise in shipping and packages revenue. First-class mail volume fell 3.6% to 2.1B pieces while package volume increased 6.8% to 394M pieces. The USPS said the increase in expenses was driven by a $896M rise in compensation benefits, as part of contractual wage increases, and a $623M increase in transportation expenses resulting from higher package volume, fuel prices and highway contract rates. 'The secular mail volume trends continue largely due to electronic diversion and transaction alternatives,' said [the PMG]"...
 

Former Time Inc. Pub This Old House Learns to DIY
Folio: 'Our number-one mission is to not screw it up.' That’s the dictum Eric Thorkilsen recalls conveying to his team following his equity-backed acquisition of This Old House—the brand he had previously spent a decade running as president—from Time Inc. in April of 2016. 'This was a beautiful brand that had continued to thrive,” Thorkilsen tells Folio:. 'All we wanted to do was build on that and not mess with it in any way that would impede further growth.' Growing a mass-market media brand, whose primary distribution channels were a television series and a print magazine, bringing new audience segments into the fold and adding new revenue streams to the mix—absent the infrastructure, resources, and reach of one of the world’s largest publishers—necessitated a relaunch of its digital platform, Thorkilsen says. 'If you’re in the media business, you really need to be in the audience business,' Thorkilsen adds. 'You need to focus on where that audience is, how it’s changing, and how it’s consuming what you provide, and then figure out a way to efficiently get that content to them... In 2016, we relaunched the whole business on a new platform with a very strong emphasis on short-form video, as well as mobile. When we took over the business, the brand was doing about 350,000 video views per month. This past month, we did just under 5 million. Part of that goes to the increase in video consumption, but it also goes to the ways in which we’ve been able to edit and present and organize the videos on our site. We’ve also gone full steam into OTT. When I started, YouTube was essentially the one OTT platform we were on. Now we’re on 18 different OTT outlets. We’d love it if our audience all came to us to watch the videos, but we know that a large group of them won’t. So we want to be there too, and we’re experimenting with different revenue models.'" In a Q&A, Thorkilsen expounds on the brand's initiatives to serve specific audiences, including OTT channels for professional contractors/remodelers; a real estate network; a membership program; and House One, a new content brand for millennials who want to DIY remodel their homes. 
 
Folio: 

Why New York Media Is Selling Its Own Technology to Other Media
Fast Company: "New York Media, the parent company of New York Magazine, is the latest media company to join the software licensing bandwagon. In an increasingly competitive industry–where revenue streams rise and fall like unpredictable monarchies–organizations have sought new ways to rely less on content churn and advertising. Those that have built their own proprietary technology have found an opening. The company behind the beloved biweekly magazine—and a series of popular branded verticals like The Cut, Vulture, and Daily Intelligencer—has been using its own publishing platform for many years, and now others are beginning to pay for it, too. The first to test it out was Slate, which used New York Media’s software to build out its most recent website redesign earlier this year. Now two others media organizations have inked licensing agreements: Golf.com and Entercom’s Radio.com. According to Daniel Hallac, New York Media’s chief product officer, the company has been thinking about selling its own technology for a while now. Some years back, it built its own publishing platform after deciding that Adobe CQ—which New York Media’s sites were previously built on—wasn’t robust enough for the magazine’s digital ambitions. New York Media’s engineers devised their own program and named it Clay (after one of the magazine’s cofounders, Clay Felker, as well as the idea of software that can “mold”). Hallac describes Clay as built with adaptability in mind. The overall idea, he says, was to make it 'as future-proof as possible.' What’s more, it’s a 'component-based platform.' Hallac describes it like a Lego set that allows developers to add in whatever new components they want. The architectural philosophy, he explains, is to have a platform that lets the company easily add new components on both the front and back ends.The transition from individually bespoke software to potential revenue driver was slightly haphazard. Much of Clay is open-sourced, and so when word got out that Slate was unhappy with its content management system (CMS), the two media companies decided to test out a partnership. First, Slate built its long-form features on Clay to see if it liked the new system. The test worked, and so Slate signed a deal to license Clay for its entire redesign. This first test, says Hallac, 'really opened our eyes to the possibility' of selling more of these licenses. The other two new sites being built atop Clay, says Hallac, show off its flexibility. Golf.com, for instance, has an extensive database of golf courses around the country—which should be architected differently than your average news page. Similarly, Radio.com has to be a single-page app site so the radio can play continuously throughout the experience. These features require their own bespoke functionalities—which Clay powers—but they weren’t part of an existing template, like the kind you would find in a conventional CMS. In fact, Clay goes against the model of template-based CMSs, and instead allows developers to use its code base and tools to build their own unique features. 'What I think makes our CMS and model unique is that [clients are] not buying what we have,' Hallac says. 'The way Clay works is that licensees are part of a closed, open-sourced network.' In a sense, all the customers are part of a consortium building their own things. The Clay codebase is shared among all of them, but they fork it and then build whatever they want atop it themselves'"...
 

Good Housekeeping Launches Sustainability Awards
Folio: In 2009, the Green Good Housekeeping Seal was launched. It's awarded to products whose claims of environmental sensitivity have been vetted by the Good Housekeeping Institute. Now, GH is launching Good Housekeeping Sustainability Awards, reflecting the brand’s stance that most consumer products are over-packaged... "'Everyone knows about the importance of recycling, but recycling isn’t the solution; it’s more the solution to a symptom. Packaging feels like the next area where we can focus in a massive way to help solve this problem facing our planet,' says GH deputy editor Laurie Jennings, who heads up the GH Institute. To encourage manufacturers to adopt a more minimalist approach to packaging and use more recycled and recyclable materials, this year’s jury—consisting of the GH team as well as TerraCycle CEO Tom Szaky and Brown and Wilmanns Environmental managing partner Mike Brown, who helped develop the Green seal—will examine submitted products against criteria such as recyclability and the ratio of product weight to packaging weight"...
 
Folio: 

Research: Which Platforms Publishers Say Monetize Best
Digiday: "Publishers have struggled to find revenue streams from platforms that come close to matching their reach.In a survey of 91 publisher executives at the Digiday Publishing Summit this September, respondents rated each platform’s monetization on a scale of 1 to 5. Facebook had the highest average rating of 2.22 and was the only platform to be rated above 2.0. YouTube came in second with a rating of 1.85 and Apple News was third at 1.70. Twitter did not fare very well, despite its surge in ad revenue, rating lower than Pinterest and Flipboard. Snapchat too was judged a difficult platform to monetize"...
 
Digiday (paid sub req.)

Nunez, Stewart, Reed, Tawada Win National Book Awards; Allende Honored for Lifetime Achievement
NYT: At the National Book Awards, presented last night, Sigrid Nunez won the fiction prize for “The Friend"; Jeffrey C. Stewart won the prize for nonfiction for "The New Negro," his book about the philosopher Alain Locke; Justin Phillip Reed’s “Indecency” won for poetry; Yoko Tawada and her translator, Margaret Mitsutani, won for translated literature, for the novel “The Emissary”; Elizabeth Acevedo’s “The Poet X” won for young people’s literature; and Chilean novelist Isabel Allende accepted the foundation’s lifetime achievement award. NYT offers more specifics on the books and the awards event--as does Publishers Weekly.
 

OTHER NEWS OF NOTE:









Retail News


Walmart Reports Strong Q3
WaPo: "Walmart upped its year-end forecast Thursday for earnings and sales, despite a shortfall in revenue because of currency complications. Although revenue was only $124.9B, the company came in above Wall Street’s expectations with $1.08 EPS over the predicted $1.01. Grocery and e-commerce headlined Walmart’s [Q3] performance, with online sales up 43%. 'We have momentum in the business as we execute our plan and benefit from a favorable economic environment in the U.S.,' Walmart CEO Doug McMillon said in a statement. 'We’re accelerating innovation and utilizing technology to shape the future of retail.' After years of being known for its low prices, Walmart has been making moves to capture younger, wealthier customers through a spate of acquisitions, such as plus-size clothing brand Eloquii, menswear line Bonobos and online indie clothing retailer ModCloth. Walmart had cut its forecast for fiscal 2019 because of the massive price tag on Indian online retailer Flipkart, the biggest acquisition in Walmart’s history. [Walmart] is also emphasizing e-commerce and convenience. By year's end, it's poised to overtake Apple to become the third-largest U.S. e-commerce retailer, according to an eMarketer forecast. 'The retail giant continues to make smart acquisitions to extend its e-commerce portfolio and attract younger and more affluent shoppers,' eMarketer analyst Andrew Lipsman saidt. 'But more than anything, Walmart has caught its stride with a fast-growing online grocery business, which is helped in large part by the massive consumer adoption of click-and-collect'"... Winsight: "Non-fuel U.S. comp-store sales gains of 3.4% in Q3 exceeded Wall Street estimates—and any number of rivals that have reported over a similar period, many of which cited deflating prices in fresh food as a factor in weaker comps. Walmart may have continued to play a role in that equation, as officials cited price investments and an increasing mix of online sales as a percentage of its total revenues as factors in reduced U.S. margins in the quarter. Fresh food sales drove low single-digit comps in grocery and helped spark a 1.2% increase in traffic to U.S. stores, while the average ticket increased 2.2%, reflecting what McMillon called a “favorable economic environment.” U.S. e-commerce sales also grew 43%, and contributed about 140 basis points to the segment comp. The grocery comps represented a slight sequential decline from Q2, primarily due to lapping sales gains realized due to hurricanes in last year’s Q3. But on a two-year basis, grocery comps were Walmart’s strongest in nearly nine years, McMillon said. He said advances in omnichannel capabilities have contributed to the retailer’s increasing momentum, citing grocery pickup, which has expanded to 2,100 U.S. stores, and growing delivery capabilities such as the test of driverless delivery in Miami, its Spark platform and partnerships with third-party providers. 'As we’ve learned to do pickup well, it has unlocked our ability to provide delivery,' McMillon said. 'We’re moving quickly on this front as well, and by the end of the year, we’ll cover about 40% of the population with delivery through about 800 stores.' For the period ending Oct. 31, Walmart posted total U.S. sales of $80.6B, a 3.7% increase. Operating income was 3.7% to $3.9B. Its Sam’s Clubs stores posted 3.2% comps and sales of $14.5B. The latter figure dipped by 2.7% reflecting store closures. Currency headwinds adversely affected international sales by 2.6%, with $28.8B reported lower than expected. Excluding currency effects, international sales increased by 1.6%, and comp sales were positive in nine of its 10 international markets"...
 

October Retail Sales +0.8%
Bloomberg: "U.S. retail sales rose in October by the most in five months on purchases of autos, fuel and building materials, rebounding after Hurricane Florence may have depressed demand in September. The value of overall sales increased 0.8 percent after a 0.1% decrease in the prior month that was revised from a gain, Commerce Dept. figures showed Thursday. The median forecast of economists surveyed by Bloomberg called for a 0.5% advance. The results indicate that consumption, which represents about 70% of the economy, continues to advance in the final three months of the year after posting the best back-to-back quarters of growth since 2014. Yet some of the details of the report concerned economists: In the “control group” subset, which can help gauge underlying consumer demand, sales climbed a below-forecast 0.3% after a downwardly revised 0.3 percent increase in September. The measure excludes restaurants, car dealers, building-materials stores and gasoline stations. The slowdown in this measure from earlier in the year 'looks very much like the end of the boost from the tax cuts, and it strengthens our conviction that GDP growth has peaked,' Pantheon Macroeconomics chief economist Ian Shepherdson said in a note"...
 

Inside Stop & Shop’s New In-Store Mini Fulfillment Center
PG: "As part of Ahold Delhaize’s repositioning of Stop & Shop, its largest banner, the Netherlands-based retailer is getting ready to debut an in-store mini fulfillment center within its recently renovated Windsor, Conn., store--one of 21 remodeled by the company in the greater Hartford market. Described by store manager Tom Scott as the 'little hidden crown jewel' of the chain, the 12,000-sq.-ft. center, set to go live in Jan. 2019, will automate and streamline the picking process by which orders are filled, leading to greater efficiencies and cost savings. According to the retailer, the facility is the first of its kind in the Northeast; a mini fulfillment center recently rolled out to service Sedano’s supermarkets in the Miami area. The move is in alignment with Ahold Delhaize’s strategy of focusing on ecommerce solutions to offer customers greater choice in how they get their groceries, in its bid to double net consumer online sales to about U.S. $8B by 2021. As CEO Frans Muller noted during the company’s Capital Markets Day in New York on Nov. 13, “Food ecommerce is in our DNA.”Indeed, in one of the day’s presentations, JJ Fleeman, president and chief ecommerce officer of Peapod Digital Labs, an Ahold Delhaize USA entity created to drive digital and ecommerce innovation, technology and experience, laid out the retailer’s ambitious goals in this area, which include the launch of more than 600 click-and-collect locations in 2019, with more to come; building an integrated ominchannel platform for each U.S. brand; making same-day delivery or pickup options accessible to 65 percent of its customers by 2020; and accelerated ecommerce sales growth of 10% in 2018, 20% in 2019 and 30% in 2020"... Article goes into more detail on the Windsor store/fulfillment initiative. In other coverage, SN offers its own detailed report on the strategic insights offered during Ahold's Capital Markets Day event.
 

Survey: Nearly 50% of U.S. Consumers to Shop Online for Thanksgiving Groceries
PG: "The number of consumers purchasing grocery items online for their Thanksgiving meals will more than double this year, with 44% buying online compared with 20% last year, according to a 2018 holiday digital grocery survey from RichRelevence, a leader in experience personalization.Amazon dominates as the top online grocery destination for shoppers (57%), followed by big-box retailers such as Walmart and Target (48%). Traditional supermarkets like Safeway and Kroger will attract a significant but smaller number of online shoppers (30%) this holiday. The top Thanksgiving items that people plan to purchase online are bundled ingredients for side dishes (56%); canned items like cranberry sauce (51%); and beverages including alcohol (44%). Turkey (33%) and frozen/pre-made desserts (31%) are the least likely to be purchased online. When online orders are ready, more shoppers plan to pick up their groceries (47%) than have them delivered to their homes (43%) .Americans overwhelmingly turn online for grocery shopping to save time (73%), and 26% choose to shop online because it allows them to shop for groceries during work hours. The top factors keeping people from shopping online for groceries are a lack of trust that others will pick the best or freshest items (50%), followed by a reluctance to spend extra money (37%). Across the board, respondents have strong opinions on which online tools will be most helpful as they plan and prepare a Thanksgiving or holiday meal. Half of Americans (50%) said that online personalized offers or discounts are helpful, followed by fast, accurate search results on a grocer’s site (46%), and having a grocer present them with relevant alternatives when a desired item isn't available (43%)… The survey of 1,565 U.S consumers was completed online in November 2018."
 

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