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Celebrity Magazines 'May Never Recover'

30 march 2009 | 15:41
DeSilva Phillips report: Turnaround 'slow, painful, and partial at best.'

The consumer appetite for celebrity news has exploded in recent years. But shortsighted strategies, poor management and the recession have hit traditional celebrity media hardso hard the nine magazines covering the space is too many, consolidation is inevitable as advertising and circulation erodes, and even the markets dominant Web sites should be looking over their shoulders.

This, according to a new report from DeSilva Phillips, a New York-based media banking firm, released today.

The rise of feisty online alternatives and the recession have sped up the decline of some celebrity media franchises, according to the report. But timid magazine management is also to blame.

As a result, celebrity magazines have the most to lose in terms of audience and revenuesand they will certainly lose the most in the years ahead. People, the report notes, is perhaps the only magazine to prove itself as a multi-platform leaderaccounting for 24 percent of the categorys print circulation, 28 percent of its ad pages and an eyebrow-raising 43 percent of its revenues.

Even People, however, has to face the same nagging issues: the segments dwindling readership base, the buyers market for advertising, and cost pressures across the board that are painfully compressing margins," the report said.

Celebrity Media M&A

The report points to the $1 sale of TV Guide, a magazine that once was acquired by Rupert Murdoch for $3 billion, as emblematic of the erosion of prints value. How [a] magazine is worth nominally .000000001 percent of what it was 20 years ago is a story for a B-school case study, D P managing director Ken Sonenclar, the author of the report, wrote. But whats most noteworthy now is that the sale excludes and the TV Guide Network cable channel, which were sold separately in January to Lions Gate Entertainment, the Vancouver-based film company, for $255 million. Thats where the seller realized growth and value.

In terms of the future of celebrity media M&A, select Web sitessuch as perezhilton.comshould be acquisition targets as they appear to resist the recessions downward pull and continue to attract eyeballs and advertisers.
But few gossip sites have built the kind of loyal audiences or barriers to entry to warrant serious M&A interest.

A bigger fear for celebrity magazine publishers now is that the recession will end much differently than those in the past. Specifically, even when the economy eventually recovers, advertisers will direct their budgets to the Internet and televisionand away from magazines. The fear is justified, Sonenclar wrote. Magazine publishers eventual recovery will be slow, painful, and partial at best.

He added: Long-term winners online will have roots in print, TV and the weband so will the losers.
: Dylan Stableford

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