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Believing in Magazines
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Magazines have long been migrating to online formats, and when it comes down to it, publishers don't much care how consumers consume their content as long as they consume it. And so the industry is getting used to having to offer both digital and print versions. But taking a publication completely online is like giving up a TV show to be on YouTube. And a print publication with no digital option simply leaves digital-only customers for competitors to serve. Neither option is attractive by itself.

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Meredith Corp. is a magazine publisher with titles like better Homes & Gardens, Shape, Allrecipes, Real Simple, InStyle and People, and a company that also owns 17 broadcast TV stations. It recently acquired Time Warner for $1.85 billion, and is betting big on the latter's portfolio of publications which include the last three mentioned above. The consumer portion of Meredith's magazine business is relatively healthy and serves 60 million subscribers with very high rates of renewal. Over the past few years, the company has successfully combined its print and digital businesses without cannibalizing the former in favor of the latter. And so Meredith should be able to digest the new titles nicely. But is there really any opportunity in magazines? To many, they sound very 20th century.

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The industry isn't growing rapidly or anything, but there are still a lot of titles out there; and holding 8 million subscribers, as Better Homes has done for 20 years, has been good enough for Meredith. Magazines are all about "lifestyle", and people enjoy content that appeals to their lifestyles. Will that really go away? Now, with a larger stable of magazines, Meredith will be able to more effectively cross-sell and flesh out any market-growing and/or cost-saving synergies among readers and advertisers. The TV business is very profitable and is growing rapidly, and so it is likely that Meredith will be able to keep these magazines in strong positions across multiple platforms. In other words, due in large part to this acquisition these magazines are likely to survive, and perhaps even flourish, with high quality content at reasonable prices, unlike what is happening in the newspaper industry.

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But until more folks adopt reading habits, publishers will have to be satisfied reaching a shrinking number of literati with as many titles as they can. And if Meredith is any indicator of the industry as a whole, a profitable magazine industry might emerge from all of this (albeit with fewer titles) after years of struggling with the Internet and changing consumer behaviors.

 

Discussion: Fast forward 10 years when you are likely to have more free time for light reading. Then, think about your desired lifestyle? What sorts of things will you be interested in? What magazines do you see yourself reading to appeal to these current and potential interests, if any? Do you prefer print, digital or both formats?