Six months ago, Newsweek embarked on a bold effort to stanch its losses in a brutal economic time, with a major redesign, price increases, a steep reduction in circulation, and a continuation in a long series of steps away from weekly news and toward commentary and analysis. From the legion of people in the media who write about one another’s organizations, there was plenty of skepticism, even some derision.
Last week, Newsweek laid off 13 people from its already depleted editorial staff, but the reaction from the professional media watchers was muted, notably lacking in declarations that the strategy had failed and that the magazine was doomed. After quoting the editor, Jon Meacham, as saying that the future remained promising, even the reliably sardonic Gawker.com added only this comment: “Can’t blame him, really. Tough times.”
Whether Newsweek’s plan pays off eventually, this is a time when even smart strategies can fail, and Newsweek has plenty of company in the struggle. Through the first nine months of the year, the volume of advertising in American magazines fell 27.2 percent from the period a year earlier — 29.2 percent for Newsweek — and dozens of magazines have closed, including big names like Gourmet, Domino, Vibe and Hallmark Magazine.
Newsweek decided to stop the expensive pursuit of high circulation and focus on a smaller readership of higher-income people who appeal to advertisers. Many publications have made similar moves, but few have gone as far; Newsweek lowered its rate base, the minimum circulation promised to advertisers, from 3.1 million to 2.6 million in early 2008, then to 1.9 million in July. It will go to 1.5 million in January.
With the combination of fewer ad pages and fewer copies, the magazine’s owner, the Washington Post Company, reported that Newsweek’s ad revenue in the third quarter was down 48 percent from last year.
But because of cost-cutting and price increases, the bottom line looks, if not good, then a little less bad than it did earlier this year. The Post Company’s magazine division, which is primarily Newsweek, had a third-quarter operating loss of $4.3 million, after losing $25.4 million in the first half of the year.
“It’s been a disgusting economy, in case nobody else noticed,” said Thomas E. Ascheim, the chief executive of Newsweek. He said revenue per subscriber was up, adding that in 2010 “we expect to operate less in the red” and holding out a hope of profitability in 2011.
The magazine went through two rounds of layoffs in 2008 that were much bigger than the most recent one. Newsweek declined to give its staff head count, but an executive who spoke on condition of anonymity because he was not authorized to discuss the matter said last week’s contraction amounted to about 7 percent of the total number of editorial employees and regular nonstaff contributors. All of those cut last week came from the staff.
“I think their whole shift, their new business plan, was a step in the right direction,” said Samir Husni, publisher and editor of the site MrMagazine.com, which follows the industry, “but I still have my fears about whether it will save them in the long run.”
He also praised the content of Newsweek, but said it might be too serendipitous for its readership.
“The reader of a weekly magazine expects you are going to address certain obvious big things, even if you don’t cover everything, but Newsweek is hit-or-miss that way,” said Mr. Husni, a journalism professor at the University of Mississippi. “Sometimes Newsweek comes out of left field, like the cover on whether America could have won the Vietnam War. I think that works better for a monthly.”
Mr. Meacham and Mr. Ascheim say that renewal rates are high, despite the price increases, and surveys show that readers like the revamped magazine. But in a business heavily dependent on advertising, that may not be enough. The Internet has given publications more readers than ever, while siphoning away print readers and generating little revenue.
“One of the tragic elements of the current crisis is that we have never had as many engaged readers as we do now,” Mr. Meacham said. “But it’s clear that the entire media business is facing an unprecedented shift in the economics.”
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