Meredith's Time-Management Problem: The Largest Magazine Publisher Has Some Explaining To Do

Tom Harty sounds like a guy who thought he’d bought a shiny new car, only to find out the engine had been removed right before he wrote the check. And who then failed to report the theft to his insurance company in a timely manner.

Earlier this month, the Meredith CEO made some revealing statements about the mess Meredith inherited when it acquired fellow publisher Time Inc. (My article for Publishing Executive, Meredith Stumbles with Time Inc. Purchase, provides additional explanation and insights about Meredith’s announcements.):

• “They were holding cash and not investing in the business.” 
• “We had two years before we acquired it with their mismanagement, the business was down 25% year-over-year in print advertising,” Harty said. “And so the base of that advertising business is much lower than what we had expected at the acquisition.” 
• “It has taken longer than we initially expected to elevate the print and digital performance of the Time Inc. assets.” 
• “We acknowledge the challenges we face that resulted in a reset of EBITDA expectations for fiscal 2019 and going forward. Foremost, it took longer than expected to turn around advertising performance with the legacy Time Inc. brands.”

The trouble is that these revelations and acknowledgements came more than 18 months after Meredith plunked down $2.8 billion to buy Time Inc. and become the U.S.’s largest magazine publisher.

When Meredith released a revised forecast on Sept. 5 that announced the Time-acquisition troubles, its stock price dropped more than 26% in a matter of minutes, Wall Street cried foul, and trial lawyers started circling like sharks.

Meredith headquarters

“The Company made false and misleading statements to the market,” charges one of the many law firms that have announced or are considering class-action stock-fraud lawsuits. “Meredith overinflated the profitability of the Time Inc. merger. In fact, the Company was forced to make significant investments in the Time business to improve it. These investments negatively impacted the Company’s earnings.”

Most of Meredith's previous comments about the Time deal were far rosier. Ten months ago, Harty said, “We continue to expect to achieve our goals of reducing debt by $1 billion by the end of fiscal 2019 and generating $1 billion of adjusted EBITDA in fiscal 2020, meaningfully contributing to total shareholder return.” In the Sept. 5 announcements, Meredith dialed down its FY2020 EBITDA (earnings) forecast to the $640 million to $675 million range.

Just seven months ago, Meredith’s CEO said, “We are off to a strong start in fiscal 2019, delivering results that exceeded expectations. He added that, “We delivered significantly improved year-over-year adjusted EBITDA and margins, which we expect will continue through fiscal 2019.” There was no breakout of the former Time Inc. properties’ money-losing performance or references to the sad state of their ad-sales efforts and magazine-subscription lists.

Meredith now faces a few key questions about the Time Inc. acquisition:

Savings delayed or savings lost?
Meredith had projected $550 million in “synergy” cost savings from combining the two companies. Have those gains gone “poof,” as one stock analyst charged last week, or is it just that they will come later than originally projected?

Did Meredith understand what it was buying?
Some stock analysts now question whether Meredith conducted proper due diligence. I suspect much of the trouble happened after Time realized its sale was imminent, causing it to focus on short-term gains (by shrinking its sales staff and shifting to a cash-upfront subscription strategy, for example) rather than the long-term health of its titles.

Could it have prevented Time Inc.’s deterioration? 
Because it was purchasing Time with cash and not stock, it should have realized that Time no longer had an incentive to manage for long-term sustainability. But could it have built safeguards or incentives into the deal to ensure the Time titles didn’t deteriorate while awaiting new ownership?

What did it know about Time Inc.’s troubles, and when did it know it? 
Meredith dropped the first hints of trouble with the Time deal just three months ago, when Harty said, “We believe it will take longer than originally anticipated to achieve the remainder of the synergies.” But even then he added, “we remain confident we will achieve our $550 million cost synergy goal by the end of fiscal 2020.”

In hindsight, it’s easy to say that Meredith should have realized, and revealed, months ago that there was trouble in paradise. But the acquisition was massive and complex – Time Inc. after all was bigger than Meredith – and there was the difficult matter of splitting off the operations of titles like Time and Sports Illustrated for sale to other parties.

Could Meredith have been so consumed simply with keeping the newly acquired titles running that it didn't at first notice that in Time's last days advertising sales had been neglected and many multi-year, low-profit subscriptions had been sold?

Meredith’s Fiscal Year 2019 annual report, released Friday, said that it recently discovered “incorrect coding of certain magazine subscriptions by Time” – more than a year after it acquired Time. That gives you some idea of the challenges it faces in combining the two companies’ operations, systems, and data.

Did Time cheat Meredith?
Meredith has referred to Time as a sick “patient” that was mismanaged, but it hasn’t given any indication that Time violated the terms of the acquisition deal. Still, you have to wonder whether there will be claims that Time failed to disclose information or violated terms of the deal by allowing its business to deteriorate.

Stay tuned in the coming months (and years?) as high-powered lawyers for Meredith and its investors attempt to answer these questions.

Other Dead Tree Edition articles on Meredith and the magazine industry in general include: 

• Wait! Don't Kill That Magazine: 4 Ways To Rescue A Struggling Publication
• Meredith Warns PRC of Massive Magazine Cutbacks
• This Magazine Subscription Has No Co-Pay

 

Is This the Ghost of Robin Williams -- Or Just a Printing Error?

Please see the follow-up to this article, Ghost of Robin Williams Is Haunting eBay Again.


A cover of TIME magazine purportedly showing the late Robin Williams as a ghost is being offered on eBay at a starting bid of $10,000.

There are no bidders so far in the auction, which ends Friday.

"After Robin Williams' tragic death, Time Magazine honored the beloved actor/comedian in the August 25, 2014 issue," says the description provided by "warnecathe," a newbie eBay seller. "This particular copy bears a mysteriously misprinted cover that features a ghostly Robin Williams. During his life, Robin Williams was known for his practical jokes, so it is typical of him to continue his jestful ways by appearing as a ghost on the cover of Time Magazine."

The ghostly copy was mailed Periodicals class to a U.S. address. The design is exactly the same as a regular cover except what is black on the regular cover is gray on the haunted cover.

I'm calling on my fellow printing geeks for an explanation, but I'd say it was a simple case of the black ink missing. It's not unusual at press start-up for some of the colors (the other inks used in four-color printing are cyan, magenta, and yellow) to start appearing before others do, though pages that are missing colors are supposed to be discarded.

But these probably aren't start-up copies because TIME presumably prints its time-sensitive newsstand copies before the mailed subscriber copies. So maybe a mischievous spirit from the planet Ork snuck into the printing plant while the press was at full speed and stole the black plate.

Or perhaps Williams was doing one final impression -- of what Time Inc. looks like after Time Warner recently sucked out all the cash and jettisoned the former subsidiary. Or maybe the socially conscious comedian was showing us what will happen to Time Inc.'s reputation if it keeps blurring the lines between journalism and advertiser-friendly content.

Related articles:

• 12 Telltale Signs That You Are A Printing Geek
• Viagra in a Printing Plant? What's Up with That?
• Here's Why We Avoid Four-Color Body Type

 

Publishers Hope Threesome Will Perk Up Newsstand Sales

Here’s proof that tough times make for strange bedfellows: Three major magazine publishers are teaming up to peddle newsstand copies of their top fashion magazines.

The unprecedented promotion for Conde Nast’s Vogue, Time Inc.’s InStyle, and Hearst’s Elle will appear this autumn in Target stores during fall fashion season, the publishers revealed at last week’s Retail Marketplace 2014 conference. “The offer: Buy any two of the fashion titles and get a $5 Target gift card as you check out,” according to a write-up from the event.

Along with in-store displays, the promotion will be boosted by 50 fashion bloggers, said Will Michalopoulos, Hearst’s senior director, retail sales.

“This is an example of competing titles coming together to drive sales for some of their biggest brands, and to drive traffic for a retailer,” he said. News of such innovations was welcomed by beleaguered newsstand executives, who are still reeling from the collapse of the country’s second-largest wholesaler, Source Interlink, not to mention continuing declines in newsstand sales.

A Meredith 2-for-1 promotion

Hearst and Meredith are among the publishers who have polybagged pairs of related titles to offer two-for-the-price-of-one deals at retail.

“In almost every case, these have gained incremental distribution, and in one case, we calculate that this program will double the overall retail business in one of the chains in which it’s been introduced," Michalopoulos said.

With publishers talking more than ever about cooperating to bolster retail sales, the three-way Vogue-InStyle-Elle tie-up is a logical next step. There was also talk of other joint ventures at the conference, such as creating an industry-wide mobile app to promote sales of magazines.

“Our competition is not other magazines; it’s all of the things that readers are doing when they’re not looking at magazines,” preached Joe Ripp, Time Inc.’s chairman and CEO.

“There’s no going back, so we’ve got to work together to survive in this brave new world,” agreed British media consultant Jim Bilton.

While the magazine industry’s newsstand leaders were having their Kumbaya moment at the conference, the nation’s largest magazine wholesaler sent them a message demanding that they sign a legal agreement if they wanted to continue selling magazines in Walmart and many other stores. The document, which spells out the terms under which TNG will take over most of the magazine distribution that Source Interlink left hanging, is highlighted by a convoluted 191-word Lawyerspeak sentence covering indemnification.

“I still can’t make heads or tails of that sentence,” commented one magazine executive, “but I think it means that if Source ever sues TNG or anyone who works there, I have to give up my first-born child.”

Related articles:

• A Glimmer of Growth Amidst the Newsstand's Gloom  
• A Renaissance for Print, Or Is Flat Just the New "Up"?
• Shootout at the Newsstand

17 Years Later, Using SCA in Magazines Can Still Stir Controversy

Early one fall morning in 1996, the magazine production director heard the phone ringing as soon as he walked into his office.

“Who are these assholes?” the publisher on the other end of the phone growled. “And are we buying any paper from them?”

“Huh?”

“You’d better take a look at today’s Wall Street Journal, then tell me who Champion Paper Company is and why they’re calling us liars.”

The production director soon learned that his counterparts at other publishing companies were getting the same grilling from their publishers that morning. The controversial Champion ad warned advertisers to watch out for sleazy magazine-advertising sales reps, who promised their ads would be on glossy paper when in fact they would be printed on supercalendered (SCA) paper.

(Editor’s note: If you have a digital copy or scan of that ad, please email it to dead.tree.edition@gmail.com so that I can publish it. I would be happy to give you credit – or not, if you prefer.)

The campaign backfired, with some publishers dropping Champion as a supplier, and defiant Champion executives eventually hitting the road for an apology tour. International Paper bought the company in 2000.

Seventeen years later, the makers of coated-groundwood (CGW) paper are still seeking advertisers’ help to prevent magazines from switching to less expensive SCA. But their tactics have become less clumsy and far more subtle.

Based on information from unnamed “paper industry sources,” the New York Post reported today that Time Inc. is saving “at least $10 million a year” by switching from CGW to “razor-thin” SCA in its weekly magazines, “unbeknownst to advertisers.” You don’t suppose any of those sources were from companies that make coated paper, do you?

Color reproduction isn’t as good on SCA, and “bleed through” is worse because the paper is thinner, the tabloid quoted the sources as saying.

My fellow paper geeks will recognize the over-generalizations here: For example, color reproduction isn’t always inferior on SCA, and a thin paper doesn’t necessarily have more bleedthrough (or showthrough or strikethrough) than thicker paper.

Traditional coated paper is like a sandwich: The central “meat” layer consists mostly of pulp, which is covered on both sides by a clay-based coating and then run through giant calender rolls to make it smooth and glossy.

With SCA, the meat and bread are all mixed together, but heat and extra pressure in the calender rolls yield a surface similar to that of coated paper. Because the process is less expensive than making coated paper, SCA sells for a roughly 15% discount off of CGW.

SCA does tend to be limper, thinner, and less opaque than CGW of the same weight and to have lower print quality. But the quality gap between CGW and SCA has narrowed greatly to the point that a good SCA can look better than a bad CGW (and I’ve certainly seen plenty of bad CGW in Time Inc.’s flagship TIME magazine in recent years).

Although CGW is the dominant substrate for North American magazines, extensive use of SCA isn’t new to weekly magazines. In fact, by using SCA mostly in the heartland and coated paper on the East and West coasts, Time is following an approach that Newsweek reportedly employed for several years without a peep from the popular press.

Related articles about SCA and coated papers:

• There's Little Clarity About Some SCA Papers  
• Heavier Paper Can Save Money  
• Newsweek Spending Millions in Paper Money

My Heartfelt Apology to the Publishing Industry

Let me offer my deepest apologies to everyone who, like me, works in the magazine publishing industry. I’ve been committing an unpardonable sin without even knowing it.

From time to time when I wasn’t covering my usual obsessions – like the U.S. Postal Circus, black liquor tax credits, and greenwashing – I have actually written about and even opined about our industry, often focusing on major New York publishers. I thought somehow that having worked many years (too many years) in the industry and having the benefit of insights from a host of brilliant and well-informed insiders qualified me to speak about the business occasionally.

But I’ve discovered in the past few days that all wisdom about magazines emanates from the New York publishing elite. And I’ve learned about the unwritten rule that only members of that elite may pontificate about the publishing industry.

Rosie's salute to NY publishing

The revelations started last week with coverage of the proposed Meredith merger/takeover of most Time Inc. publications. Hick that I am, I saw real potential in the move. Meredith, a smart company that uses its strength in publications for women as a springboard into new ventures, would take on Time brands serving a similar audience.

How foolish of me! New York media reporters soon set me straight, pointing out that Meredith is based in Des Moines. Like, Iowa. Like, in the middle of The Flyover (which is how the Beautiful People refer to that cultural wasteland you

Soft Market, Digital Investments Drag Time Inc. Down

Time Inc.'s magazines are facing such "soft market conditions" that their estimated value may decline significantly this year, the company revealed in a financial statement yesterday.

The country's largest magazine publisher began 2012 with an estimated fair market value 19% higher than its book value, parent Time Warner stated in its quarterly 10-Q financial report.

"During 2012, the Publishing segment has experienced soft market conditions that have negatively impacted its operating results. If those market conditions worsen, it is possible that the book values of the Time Inc. reporting unit and certain of its tradenames will exceed their respective fair values, which may result in the Company recognizing a noncash impairment that could be material."

Decreased sales of both ad pages and newsstand copies dragged the publishing unit's first-half operating income down 60% from last year.

FSS Is Increasing USPS's Costs, Expert Says

So far, the Flats Sequencing System seems to be increasing rather than decreasing the Postal Service’s sorting and delivery costs, according to a postal expert.

“The FSS has at times been seen as the technological fix that would reduce flats costs” and make the Periodicals class less of a money loser for the U.S. Postal Service, noted Halstein Stralberg in comments Time Inc. submitted Friday to the Postal Regulatory Commission. But based on USPS’s data for fiscal year 2011, “FSS processing was in fact very costly and most likely made Periodicals costs higher than they would have been without FSS.”

“In FY2011, far too many flats were rejected from the FSS, and some either disappeared or had unacceptable delays. Additionally, relative to the volumes sorted by the FSS, there must have been far too many manhours spent on a system that was supposed to be highly automated,” Stralberg wrote on behalf of Time Inc., which is challenging the way USPS calculates the Periodicals class’s costs.

“It appears most likely that the majority of the flats that were rejected in some way by the FSS during FY2011 were diverted to manual processing,” Stralberg concluded. “Considering that the majority of flats processed by FSS are flats that without FSS would have been carrier route presorted [making their handling costs low], the flats that are diverted to manual from FSS will experience higher delivery costs, as well as much higher processing costs, than they would had they simply remained as carrier route presorted flats going directly to the carriers.”

Entertainment Weekly and the Case of the Upside-Down Pages

You can automate all your processes and follow every industry standard known to God and man, but that won't make your printed product immune to human error. Just ask the staff of Entertainment Weekly.

Print industry blogger Deborah Corn questioned recently whether the production team at the Time Inc.  magazine was “asleep at the wheel” because of upside-down pages in a subscriber copy she recently received.

Here’s her description: "I received my EW (with Captain America on the cover) and saw that the back cover, an ad for an upcoming TV show on TBS, was upside down. My automated address was also upside down on the right side up cover. I looked carefully to see if perhaps it was some gimmick – like “this show will change your perspective” or if there was some reference to why it was placed this way – but there is none. I flipped over the mag, and saw that the back inside cover was also upside down, as were the last 2 text pages, also ads for this show."

As a Time Inc. publication, EW no doubt did everything in a sophisticated, leading-edge way. SWOP-compliant, PDFx/1a page files? Check. Ad file preflighted by Time and virtual-proofed at the printing plant? Check. Instructions to the printer generated automatically in a computer-readable format (instead of the usual spreadsheets and emails)? Check.

So what happened? It sounds to me as if this went wrong at the imposition stage – what PrintWiki defines as "the positioning of pages on a press sheet in such a manner that when the sheet is folded into a signature and cut, the pages will be in the correct sequence." In the U.S. magazine industry, imposition is almost always done by the printer, not the publisher.

How did it happen on both two cover pages and two body pages? This was probably a single eight-page signature. Saddle-stitched magazines often run mixed-stock cover signatures, where one web of the press prints four pages on cover stock that are assembled with four pages of lighter body stock from the other web.

And what about the upside-down address? That was no accident; it’s almost universal for mailed magazines in the U.S. these days. Postal regulations require flat mailpieces to have a right-side-up address in the upper right-hand corner when the bound edge is on the left. The back cover (where catalogs put the address) is prime advertising space, so most magazines meet the requirement by putting the address upside-down near the bottom of the front cover.

Why haven't more people reported seeing this? The big weeklies usually print in several different locations to meet tight newsstand delivery schedules, so this error only affected part of the country.

And I'm guessing not many copies had been produced before someone at the printing plant in question said, "Holy s#*t! Stop the cover press and fix these pages pronto!" But there might not have been time to redo all of the defective magazines.

And how did this mistake happen in the first place? An actual human apparently found a way to goof up an almost comply automated process. So much for the dream of a "lights-out" pressroom (although the error does make me wonder if the lights really were out).

Reminds me of the famous Warren Bennis prediction: "The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment."

Greenpeace Is Back, But Time Warner Looks the Other Way

Nearly 16 years to the day after protesters hung a "Take The Poison Out Of Paper" banner on the TIME-Life building, Time Warner's paper-buying practices were blasted once again this week by Greenpeace.

But two Time Warner properties, TIME magazine and CNN, published articles about the Greenpeace study that failed to mention its listing of Time Warner's CNN Traveller magazine as one of the brands that "prop up Sinar Mas" by buying from its Asia Pulp and Paper (APP) division.

Other magazines singled out for criticism in "How Sinar Mas Is Pulping the Planet" on Tuesday include three Hearst brands (Esquire, Marie Claire, and Cosmo Girl) and Hachette Filipacchi's Elle -- though it wasn't clear whether Greenpeace was pointing the finger at those companies or at content licensees who publish Asian-language editions.

But the copy of CNN Traveller shown in the report is clearly an English-language edition, and the magazine's Web site indicates that the Asian edition is published by CNN.

The TIME article notes that Greenpeace "singles out some of APP's big global customers" like WalMart, Hewlett Packard, and KFC. But nowhere does the article mention Time's UK-based sister publication. And the CNN story doesn't list any of the companies that Greenpeace criticizes for buying from the Sinar Mas empire, which has repeatedly been accused of massive deforestation in Indonesia.

On July 11, 1994, three Greenpeace activists gained international media attention by climbing Time Inc.'s headquarters in New York and hanging a banner saying "TIME: Chlorine Kills -- Take The Poison Out of Paper". Since then, the Time Inc. branch of Time Warner has focused on studying the environmental impact of magazine paper and working with its suppliers to reduce that impact.

Related articles:

• Illegal Logging in Indonesia: Not Funny "The country’s enforcement of logging laws is a joke."
• Three, or Maybe Four, Green Magazine Pioneers: Both Time Inc. and Hearst have been green leaders in the U.S. magazine industry.
• Marcal Challenges the Green-ness of Greenpeace: Paper company accuses Greenpeace of setting its standards for paper too low.

Postal Service Inefficiency Drives Up Periodicals Costs

The U.S. Postal Service is missing out on an opportunity to reduce its costs of handling Periodicals mail, a postal expert says.

Declining mail volume has left the USPS with “a great surplus” of flats-sorting machines, but a large portion of magazines and newspapers are still undergoing more expensive manual sortation, according to Halstein Stralberg. That’s part of the reason that the cost of handling Periodicals supposedly rose 6% in the previous fiscal year even though average copy weights were lighter.

“The tendency of Periodicals flats to be sorted manually . . . is a major contributor to the excessively high Periodicals costs and the inability of the class to meet its attributed costs,” Stralberg said in a report presented to the Postal Regulatory Commission this week by Time Inc. “The likelihood of a Periodicals flat being diverted to manual sorting, even when there is a machine that it could have been sorted on, is considerably greater than for a Standard flat.”

Each year, the Postal Service concludes that publishers are paying less and less of the cost of delivering Periodicals mail. That is increasing pressure to increase Periodicals postage rates to close the gap. Time and other publishers have been presenting evidence to the PRC that the Postal Service’s methods of handling Periodicals and of calculating their costs are both flawed.

Postal officials have acknowledged that Periodicals are frequently diverted to manual sorting, sometimes for “service related” reasons, Stralberg wrote. Others have been less kind, citing the manual sortation of Periodicals as a sort of make-work program for “automation refugees” – postal employees who have become unnecessary because of automation.

The Postal Service acknowledges that it has more employees than it needs. But it has not been able to implement an effective early-retirement program, and Congressional and public opposition have prevented it from closing most of its redundant facilities.

For further information:

• For Periodicals, The Postal Service’s Math Doesn’t Add Up: Why does the alleged cost of handling Periodicals keep rising so fast when publishers are mailing more efficiently than ever?
  
• Postal Accounting Snafus Might Be Bad News for Publishers: The USPS calculates that the Periodicals class covered only 76% of its costs in 2009.
• What the Postal Service Left Out of the Early-Retirement Deal: Two reasons, besides the meager incentive, that response was low to the latest early-out program.
  

2 Major Magazine Publishers Reportedly Join Forces To Buy Paper

Two of America's largest magazine publishers, Time Inc. and Meredith, have reportedly joined forces to buy paper.

The two companies issued joint requests for proposals to potential paper suppliers late last year, according to several sources.

Together, the two probably buy several hundred thousand tons of paper annually -- enough to keep at least a couple of good-sized paper machines busy. The majority is probably coated groundwood (mechanical), but supercalendered, coated freesheet, and reply card are also in the mix. It's not clear how much of their paper the two publishers are planning to buy via the joint arrangement, but it seems to cover at least a major portion of their North American needs.
 
The two companies -- along with Conde Nast, Hearst, and News Corp. -- are part of a much ballyhooed joint venture to develop a publisher-friendly digital-publishing platform.

With such weekly magazines as People and Sports Illustrated, Time is a major buyer of lightweight coated (LWC) for offset printing, much of it apparently in the range of 29# to 32# (43 to 48 gsm). Meredith's focus on such high-circulation monthlies as Family Circle and Better Homes and Gardens means it is more geared to rotogravure papers and higher basis weights.

An executive from another magazine publisher said his firm has discussed the formation of a paper-buying consortium from time to time but held off because of anti-trust concerns. Another industry veteran, however, said that wasn't the major problem with joint buying efforts.

"We looked into this years ago and found that there were no anti-trust problems as long as we were talking about buying things together rather than, say, selling ads. We had some brief discussions with another publisher, but we both decided it wouldn't work because many potential suppliers were a good fit for one of the partners but not for both," the source said.

"Newspaper companies have had buying co-ops for years. The concept works well for newsprint, which is a commodity where more volume means lower pricing. But with coated paper, so many other factors can influence pricing, and the biggest buyers don't necessarily get the best deals."

Magazine publishers for years have debated whether others in the industry should be viewed primarily as competitors or collaborators. But with the toughest competition coming increasingly from other media, often powered by such goliaths as Google and Amazon, the pendulum is definitely swinging toward collaboration.

Related articles:

• The 10 Most Common Paper-Purchasing Mistakes 
• Coated Paper Market: Been Down So Long This Looks Like Up

Three, or Maybe Four, Green Magazine Pioneers

While some magazine publishers get plenty of PR mileage from using paper with recycled content, the real leaders in making U.S. magazines greener have gone largely unheralded.

In a recent interview with Publishing Executive, I named three publishing companies that have been “industry pioneers” in making printed products greener. I had a fourth pioneer in mind as well but disqualified it from the list. More on that later.

Here are my green heroes:

Wenner Media
I’ve previously praised U.S. News & World Report for using Catalyst Cooled “manufactured carbon-neutral paper” throughout its “green” issue this year, but it was really following in the footsteps of Wenner’s Rolling Stone magazine. Two years ago, Wenner began changing the industry’s thinking on the environment away from simplistic discussions of recycled content when it announced that all of the magazine’s inside pages would be on Catalyst Cooled.

Wenner pays for a tree-planting program that offsets the already low carbon footprint of the paper. As far as I can tell, Wenner gets no PR or marketing mileage out of that commitment other than a small mention in each issue of the magazine. It is just doing the right thing, in good times and in bad.

Time Inc.
The “Evil Empire”, as competitors and even employees call Time, made a huge contribution by commissioning the extensive, landmark Heinz Center study in 2006 called "Following the Paper Trail". That study showed that the vast majority of a consumer magazine’s carbon footprint occurs at the paper mill and that the emissions of greenhouse gases vary widely from mill to mill.

Time also pioneered the ReMix (Recycling Magazines is Excellent!) advertising campaign that encourages consumers to recycle their magazines.

Check out this audio interview with Guy Gleysteen, Time Inc.’s production chief, who talks about how the company is lobbying paper suppliers on such issues as carbon footprint and sustainable forestry. He’s especially interesting when talking about the company’s motivation for these actions and why Time doesn't mention them in its marketing to consumers.

“The issues that you’d want to educate people on are complex and are not readily described in one or two lines that would appeal to a consumer,” says Gleysteen. He adds that Time’s efforts are about “putting our company into a position where we can be trusted relative to the resources that we use.”

Hearst
Being green seems to permeate the company’s culture, from its award-winning LEED-certified headquarters in New York to the rooftop worm farms (Ooh, gross!) that recycle waste from its Good Housekeeping kitchens in London (Oh. Cool!).

“By the end of 2008, 70% of our magazine paper comprised certified fiber. We have set an interim goal of 80% by the end of 2009,” says the publisher’s "Being Green" report, perhaps the best example of environmental transparency in the U.S. publishing industry. As part of that effort, Hearst and Time went public this week with their campaign to help small forest owners in Maine get certified.

“Being Green” addresses the recycled issue clearly and correctly: “Hearst is currently using more than 15% post-consumer recycled (PCR) paper across its portfolio of publications, primarily in the newsprint we buy. After extensive review, we currently believe newspapers and other end uses (packaging, wallboard, etc.) are the most efficient use for recycled fiber, which continues to be in short supply.”

Now for the almost fourth hero: Readers Digest Association deserves some credit for using paper with 85% recycled content throughout Every Day with Rachael Ray.

As Hearst suggests, coated paper is often not the best use for recycled pulp. But if you’re going to print a magazine in the Midwest on relatively heavy coated-groundwood paper, Myllykoski’s Alsip, IL mill is a green choice. By mixing high-brightness recycled products, such as unsold magazines and printer waste, with curbside-collected paper and virgin kraft pulp, the mill is able to make good magazine paper without bleaching. (The mill’s products are too heavy for Rolling Stone and most Time Inc. magazines, by the way.)

As with Wenner’s announcement about Catalyst Cooled, the marketing of Every Day with Her Perkiness brought much-deserved attention to a paper maker that is greener than its larger competitors.

So why am I not giving RDA as much credit for being green as Wenner, Time, and Hearst? It turns out that Myllykoski already gave Readers Digest plenty of credit: The Finnish company was left holding the bag with $1.65 million in accounts payable when RDA went Chapter 11 in August. That's not exactly a great way to reward a supplier for its environmentally friendly practices.

Do you disagree with my choices of magazine-industry green heroes? Then make your voice heard, not only by commenting on this article but also by entering the 2009 Aveda Environmental Award for Magazines.

For further reference:

• Rethinking the "Green" Magazine Issue
• Certified forestry for small Maine landowners: Does FSC certification help the earth? and More on Maine and FSC.
• Certified Forestry Is In Trouble, U.N. Report Says
• I'm an environmental idiot!: Why recycled content doesn't always make environmental sense for coated paper.
  

Source Interlink Owes Publishers Millions

Source Interlink owes more than $200 million to magazine publishers and their affiliated national distributors, the company revealed today in filing for bankruptcy reorganization.

Except for the bank that is acting as trustee for Source's noteholders, the company's four largest unsecured creditors are the Big Four national newsstand distributors -- Time Warner Retail ($75.5 million), Comag ($53.2 million), Curtis Circulation ($42.7 million), and Kable Distribution Services ($22.9).

Other publishers on the list of the top 30 unsecured creditors are Bonnier ($2.4 million), Comag UK ($2.3 million), Harris Publications ($1.8 million), Acorn Media ($1.7 million), American Media ($1.7 million), Future Publishing ($1.6 million), Scientific American ($1.2 million), Playboy Enterprises ($1.0 million), and Meredith ($0.9 million). Also in the top 30 are Quebecor World, which itself is trying to emerge from Chapter 11 ($1.6 million), and Rider Circulation Services ($0.9 million).

Source announced today that it was filing a "prepackaged" Chapter 11 reorganization, meaning that it has worked out a deal with its lenders to restructure its debt and continue operating. Source says its lenders are canceling nearly $1 billion in debt and providing about $100 million in additional financing. Vendors will be paid on time "if they keep our credit limits and payment terms the same," a company statement said.

With the company's stock being canceled (and worthless), the lenders will presumably end up controlling the company. It's not clear whether those lenders include the Big Four or other publishers, some of whom Source sued earlier this year in a nasty legal spat that disrupted newsstand sales of magazines in much of the U.S. More may be revealed at a court hearing on Wednesday.

A Time Inc. attorney said in February that Time Warner Retail was concerned that it would never recover the $120 million in late payments owed by Source Interlink. Source Interlink's trade debt to Time Warner Retail and the other national distributors presumably resulted from its failure to pay for magazines it had sold.

I Got "mine", But I Don't Get It

Time Inc. just spent at least $2, probably more, to produce and mail me a beautifully printed customized magazine called mine. Just one question: Why?

Actually, I have lots of questions, like why a big publisher with lots of smart people goofed on so many aspects of this much-hyped project.

But the fundamental question is why anyone at Time Inc. or Lexus, the sole advertiser, thinks the project is worthwhile. It's as if someone said, "Let's figure out how to spend as much money as we can on mine without creating any value for the advertiser."

Subscribers to the free magazine signed up on a Web site, choosing to receive content from five of eight possible Time Inc. or American Express titles and entering some information about their personal preferences. The magazine consists of 36 pages -- a cover, four personalized Lexus ads, a customized table of contents, and six pages from each of the magazines selected for the mash-up. Rex Hammock's blog has a nice little slide show depicting his copy.

The text stock is brighter and much heavier than that used in National Geographic. I'm guestimating it's at least a 70# coated #2. The extremely smooth surface, moderate paper gloss, and high print gloss allow for some striking photo reproductions.

The saddle-stitched magazine is printed using a very high AM (that is, not stochastic) line screen, with a bronze PMS border on all of the editorial pages. The opening page of each six-page section has only the source magazine's logo in black type, the bronze border, and the page number -- a bit of a waste.

But there are plenty of other questionable features of mine:

• Needless complexity: The combination of saddle stitching and six-page snippets creates far more versions of the editorial sections than are necessary because each printed signature contains content from two different magazines. It's no wonder some subscribers received the wrong sections. Here's a way to create a simpler magazine with more editorial content and probably a lower cost: Offer eight pages of each of the five selected titles in a (selectively) perfect-bound magazine. That would have created much less complexity and probably would have allowed the editorial pages to be printed offset instead of digitally, at significant savings without loss of quality.
  
  


• Pointless personalization: All of the personalization is with text -- such as subscriber's name, town of residence, and selections made on the multiple-choice survey. But nowhere does it show the nearest Lexus dealer, much less a map from the subscriber's home to that dealer. The gimmicky, clumsy personalization does nothing to drive sales or even to create interest in Lexus.
  
  


• Pointless ads: The personalization gimmick was supposed to highlight the customer's ability to customize a new Lexus 2010 RX. But nowhere do the ads mention customization. In fact, the only mention of Lexus is in one of the ads, and that's in small type on the back cover. So when the second ads begins, "We know how much you love . . .", some readers will assume the "we" is Time Inc., not Lexus.
  
  


• Expensive postage: The magazine was mailed presorted First Class at a cost of probably more than $1 per copy. Standard class would have cost less than half of that. All Time Inc. got for the extra money was faster delivery, which is kind of irrelevant for something with months-old re-purporsed articles, including one that touted SI.com's "breaking news coverage" of a 2008 European soccer event.
  
  


• Awful ad copy: With all of the unemployed journalists around, you'd think Lexus could have done better than run-on sentences like this: "With more usable cargo space for your matching designer luggage, and an available Heads-Up Display for keeping your eyes on the road because the LA Freeway can be tricky on your way to the beach." We're supposed to be impressed that the references to designer luggage, LA Freeway, and the beach were personalized (in grey type to emphasize the gimmick). But it left me wondering how the cargo space would help me navigate the LA Freeway, what a Heads-Up Display is, and whether that random comma had eaten the sentence's subject and predicate.
  
  


• Tiny photos: The high production values are wasted on some photos that are smaller than a postage stamp. I needed a magnifier to make out what one of those mini-photos was depicting, and I still can't figure out how it relates to the article.