Subject: Hot Magazine Still Isn't Out of the Cold Date: Published: 3/25/92 (155 lines) Source: Wall Street Journal. Copyright Dow Jones & Co. Inc. Advertising: Hot Magazine Still Isn't Out of the Cold ---- By Patrick M. Reilly Staff Reporter of The Wall Street Journal One of the peculiarities of magazine publishing is that one of the industry's "hottest" titles has already gone through $100 million, is at least two years away from turning a profit, and may not earn back its total investment until after the year 2000. The debut of Entertainment Weekly in early 1990 was greeted with a barrage of criticism, but the brickbats have since turned into accolades. Last month, Adweek, the trade publication, picked EW's managing editor, James W. Seymore Jr., as its magazine editor of the year. Advertising Age followed, naming EW "magazine of the year," and Rolling Stone called it "the country's ascendant magazine." Paid circulation in 1991 soared 61%, including a gain of 280,000 subscribers, to more than 750,000. It is the only major magazine in Time Warner Inc. 's stable that registered a double-digit increase in ad pages last year, when other "entertainment" magazines, such as Premiere, US, TV Guide and Rolling Stone, were mired in double-digit declines. Quite a comeback -- but the editorial revival hasn't boosted the bottom line, and myriad challenges remain. Like other magazines, Entertainment Weekly made a poor start this year, with ad pages falling 12% in the first two months. It is still having trouble drawing ads in seemingly natural categories, such as books, videos, records and movies. It was supposed to have reached a million in circulation by now, which would have let it command higher ad rates. And it is still slogging through the costly stage of finding first-time subscribers. EW will probably never produce the profit level of its closest Time Warner sibling, People magazine. With circulation at 3.4 million and low costs for black-and-white printing, People churns out an operating profit of about $150 million a year, making it perhaps the most profitable magazine in the business. If things go well for EW, it's expected to amass annual operating profits in the $50 million to $60 million range -- but years from now. Meanwhile, EW will spend another $40 million before it sees its first profit, for a total investment of $140 million. From its start in the winter of 1990, EW has had no shortage of detractors. Ad executives said its design was too cluttered and its tone too snotty. Even EW's publisher admits it had an "overcritical nature, dripping in opinion." As recently as February, after a major overhaul, Forbes magazine gravely pronounced, "Time Warner looks to have another expensive magazine flop on its hands." EW was the brainchild of Jeff Jarvis, its first editor and a former critic for People. He envisioned the ultimate media guide for harried yuppies, but the first issues were difficult to read. Reviews from little-known critics were stacked chockablock throughout the magazine. It didn't help that Mr. Jarvis was also turning out clunker covers like "Why Can't We Get Out of Vietnam? " Then came the near kiss of death: EW failed to reach the 600,000 circulation rate base it had guaranteed, forcing it to offer free ad space to cover the shortfall. Mr. Jarvis quit in June 1990, after only four months on the job. He usually gets the blame for botching the launch, but he says Time Warner raised expectations too high beforehand, thinking it had another People on its hands. "They got greedy," he contends. Enter Mr. Seymore, a People editorial veteran. He consolidated the jumbled "News & Notes" into an upfront news section and set aside more space for longer features. The reviews were moved to the back of the magazine where readers expect to find them. Mr. Seymore threw out gimmicks like tear-out cards listing the week's reviews (to help readers remember which video to rent) and showed a knack for picking slick, movie-star covers. Circulation goals became more modest. The emphasis switched to building subscriptions from pushing supermarket sales, and a realistic circulation goal was set at 1.5 million to two million. A sense of fun seeped in. A recent story on movies filmed with multiple endings ended with multiple endings. On the heels of the Elvis postage-stamp poll, EW suggested stamps featuring a crotch-grabbing Michael Jackson and a police mug shot of the Doors' Jim Morrison. The magazine has also raised its profile with a series of "scoops." It ran exclusive interviews with Al Pacino before the opening of "Godfather III" and with Julia Roberts after she called off her wedding. Recently, it bought exclusive rights to photos of Elizabeth Taylor's 60th birthday bash at Disneyland, the first time EW paid for a story. ("It bothers me" to buy a story, says Mr. Seymore, "but the money did go to a worthy cause" -- AIDS research.) Critics are waiting to pounce on EW for giving glowing reviews to products from parent Time Warner. But EW has learned to subtly bite the hand that invests in it. In a recent issue, it criticized the marketing of a Led Zeppelin CD set that was selling for an "abnormally steep $40 for two disks," and suggested that the Time Warner unit's product should be renamed "Stairway to Profits." The magazine was also tough on the Warner Bros. movie "Freejack," giving it a C-minus and calling it "cheezoid sci-fi." It gave Warner's "JFK" an A-minus but later devoted 14 pages to questioning Oliver Stone's "manipulative film techniques." EW's evolution has agency executives rallying to its side. David Verklin, corporate media director for Hal Riney & Partners, says the editorial improvements have prompted him to add EW to the list of 30 magazines that will get ads for General Motors Corp. 's Saturn in the fourth quarter. He says he likes the magazine's "attitude, voice and self confidence." For many advertisers, EW's audience is ideal: average age 31, younger than Time (38) and People (36); an even split among men and women; better educated and with more disposable income than the average People reader. EW sells best in New York, Los Angeles and San Francisco but falls off considerably in cities outside the top 25 metropolitan markets. But the magazine still has trouble getting entertainment ads, which currently account for only 9% of its total ad pages. Movie studios are accustomed to newspaper spreads and Thursday-through-Saturday spot TV previews. Book publishers rarely use magazines in a big way, and record companies use specialty music magazines that often offer lower rates. Michael Klingensmith, EW's publisher, says he hopes to raise the entertainment segment to 15% of ad pages, but first he must "educate" advertisers "about using a weekly entertainment magazine." Despite high praise, the editor, too, continues to tinker with the format. Mr. Seymore keeps in mind that the magazine is years away from profitability, but he's counting on the promises of support from Time Warner brass. "There are some design changes and refining needed," he says. "But yes, we breathe a little easier these days." --- Ad Note.... SUN REVIEW: Sunoco gas station operator Sun Co., is putting its $11.2 million account with Wells Rich Greene BDDP up for review. A decision is expected by June. --- Corrections & Amplifications ENTERTAINMENT WEEKLY magazine says its ad pages for the first two months of the year were down 2% and its losses have been narrowing. The magazine, a Time Warner Inc. publication, underwent an overhaul in mid-1990. An article in yesterday's edition misstated the advertising and financial figures as well as the timing of the overhaul. (WSJ March 26, 1992) [This article is made available here by Dow Jones Co. for the personal and non-commercial use of callers to this bbs, in the hope that it will be of some help to those who are suffering from the disease and others who are seeking to help them.]