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February 23, 2018

Publishing News


Print Remains Big Business for Magazine Media
Folio: Despite all of the challenges and death predictions, "Print continues to generate the largest chunk of revenue for most legacy publishers. Print advertising accounted for 62% of the $16.6B in magazine advertising revenue in fiscal year 2016, according to PwC’s most recent research, and 87% of circulation revenue came from print products. “We see it as print and digital; not print or digital,” says Jon Werther, president of Meredith’s National Media Group. At Meredith, print revenue accounted for two-thirds of overall advertising revenue, and circulation represented 30 percent of revenue in 2017, making it the company’s second-largest revenue stream. 'The old trope that print is dead is just lazy thinking,' says Linda Thomas Brooks, president and CEO of MPA... While many ad dollars that were previously allocated to print will almost definitely not bounce back to pre-recession (and pre-mobile) totals, brands still want to invest in print campaigns, and continue to believe in the power of the medium to get their message across. 'There is so much innovation that you can still bring to the magazine part of the business,' says Chris Mitchell, chief business officer for the Condé Nast Culture Collection. 'For a while, we were so focused on innovation equaling digital that we as an industry didn’t put quite enough of our brain power into how we could integrate the businesses and the delivery of magazines.' The ability to use big data to prove the value of print advertising has become even more important as publishers find themselves competing with data-rich digital rivals. Print publishers have responded with hard numbers of their own. Meredith, for example, uses the Meredith Sales Guarantee to measure and guarantee the incremental sales impact of advertising in print, digital and cross-platform. In every case, advertisers have seen a positive ROI and increase in sales, and the company plans to roll out the program to cover it’s recently-acquired Time Inc. assets, Werther says. Bauer Media—where more than three-quarters of revenue comes from print—uses GFK MRI’s Starch research data to show advertisers how it can help them meet their marketing goals. 'Because readers are making an active purchase decision the day they read the magazine, we provide outsize reader engagement that we can very convincingly demonstrate with third-party data,” says Steven Kotok, CEO of Bauer Media Group USA. 'And because our readers are retail shoppers who encounter and purchase our products in a retail environment, we are uniquely able to activate retail consumer purchases'"... Folio: also outlines how magazine media are using renewal methods, frequency reductions and price increases strategically. “We raised prices on most of our products in 2017, and our ability to do that was a direct outcome of everything else we do right for our audience,” Kotok says. In recent years, Condé Nast has also had success with price hikes on some of its magazines, including The New Yorker. The cost of a print sub to the magazine has increased from $59.99 in 2015 to $109.99 this year (after an intro offer of $12). [Yet, subs] have grown at double-digit rates every year for the past five years. That success has inspired similar moves at other Condé titles. Part of the shift to eight volumes from W this year, will also include a price increase of $2 per issue to $9.99 each." As for newsstand special interest publications (SIPs), "Last year, Trusted Media Brands sold many of its “megazines” for $12.99, more than double the price of most of its other magazines. 'People really like the single topic thing,' says Alec Casey, CMO for TMB, which yields about 70% of its revenue from consumers. 'It’s a smaller investment than what you’d pay for a book, but bigger than a magazine. If you know you’re going to like the topic, you’re willing to spend a little more'"... Bauer Media is also enjoying a boon in consumer interest in SIPs. The company produced seven of them in 2016 and 17 last year. In 2018, it expects to more than double that number, sending 41 SIPs onto newsstands under various titles.
 
Folio: 

Smithsonian Redesigns, Dedicates March Covers To Norman Rockwell
MediaPost: "Smithsonian redesigned its print magazine for the March issue, which hits newsstands March 27. The issue has four covers based on Norman Rockwell’s "The Four Freedoms," inspired by President Franklin D. Roosevelt’s iconic speech to Congress in 1941. Roosevelt spoke of the freedoms at stake in World War II: freedom of worship, freedom of speech, freedom from want and freedom from fear. Rockwell's interpretations of those freedoms were featured on four successive issue covers of the Saturday Evening Post in 1943. To mark the 75th anniversary of the Rockwell works, Smithsonian commissioned four contemporary artists--Tim O'Brien, Melinda Beck, Ryan Schude and Edel Rodriguez--to recreate Rockwell’s images. While Rockwell used his Caucasian Vermont neighbors as models, these four artists chose to update the images to represent a new, more diverse America. Smithsonian collaborated with NYC-based design firm Priest + Grace, which has done work for Hearst, Conde Nast and Reuters, on a more contemporary design for the monthly print magazine. "We’re publishing some amazing and startling work by award-winning writers, photographers and illustrators, and we wanted to give them a cool new showcase,” says Smithsonian editor-in-chief Michael Caruso.
 

Time Inc. UK's Sale Reportedly on Verge of Closing
NY Post: "The much-delayed sale of Time Inc. UK is close to being finalized, sources tell Media Ink. The deal, which late last year--prior to Time Inc.'s [acquisition] by Meredith Corp.--was talked about as being in the $200M range, has since dropped to about $167M, according to one British publishing source. The buyer is said to be Epiris, a London private equity firm headed by Alex Fortescue. The executive did not return several e-mails seeking comment. The British publisher was still known as IPC back in 2001 when Time Warner agreed to buy it for $1.6B--and assigned it to its then wholly-owned Time Inc. publishing subsidiary. When Time Warner chairman Jeff Bewkes ultimately spun off the entire Time Inc. publishing arm in 2013, he stuck the new publicly traded unit with nearly $1.4B in debt--in large part to pay for the long-ago IPC deal. Time Inc. did manage to reap some benefit when it sold the London real estate that housed the British publisher for around $600M... A Meredith spokeswoman said that the company continued to work on a deal for the UK unit but declined to divulge any specifics or the identify of a buyer.
 

Lenny Letter, Iris Brands Join Conde Nast's Next Gen Network
MediaPost: Condé Nast is looking to attract advertisers with a new Next Gen Network, a collection of new brands and existing Condé Nast digital titles, including Teen Vogue, Healthyish, GQ Style, The Hive, and AD Clever. Combined, the brands in the network record more than 20M interactions per year, and 82% of the content's consumers are millennials. One of the new brands to launch with Next Gen is Iris, 'a video and social-led brand for socially-conscious millennial women.' The new brand grew out of the success of Condé Nast’s video aggregation platform The Scene, home to original programming targeting millennial women with a mean age of 26--who make up 83% of Iris's audience. Iris will host two of Condé Nast’s more popular shows, "Broken," which features couples confronting each other about suspected cheating, and "Affirmations," featuring parents delivering affirmations to their children, along with stories catering to the network’s audience. The first episode of Broken debuted in February 2017 and generated more than 64M combined views. Today, the couple featured on the first episode, exes Kourtney and Leonard, appeared in the latest installment, which was released on the Iris platform. Lenny Letter, a millennial feminist brand that includes a popular newsletter founded by Lena Dunham and Jennifer Konner, also joins the Next Gen Network. Condé Nast will manage the brand’s products, ad sales, events and more. Lenny Letter will collaborate with Condé Nast’s other editorial properties, too, beginning with an upcoming political fiction series with Glamour. 'Our advertising partners can leverage the power of the Network to reach consumers in new and innovative ways––from co-creating content to integrating into tent-pole events that deliver a new level of connection and interaction with today’s millennial and Gen Z audiences," said Condé Nast chief revenue and marketing officer Pamela Drucker Mann."
 

Nat Geo Books Unveils Its First Kids' Fiction Imprint
PW: "National Geographic Kids Books is charting new territory with the launch of Under the Stars, the publisher’s first-ever fiction imprint. The press will release its inaugural book, Explorer Academy: The Nebula Secret by Trudi Trueit, in September. A new book in the seven-part series will follow every six months thereafter, and additional series will be added beginning in 2019. The idea for a fiction division came about more than four years ago at a meeting of the book publisher’s editorial division. “We were sort of everywhere,” said editorial director Erica Green. “We’d penetrated the market totally in terms of our nonfiction, and we asked, ‘How else can we reach kids?' Executive editor Becky Baines and SVP for content Jennifer Emmett proposed moving into fiction with a starting focus on middle grade readers. 'We thought that middle grade was the sweet spot,' said Emmett. 'That’s where we were strongest with nonfiction'"... Article offers more detail on the venture. 
 

Media Companies, Right-Wing Social Mavens Share Fake Twitter Account Problem
Quartz: "President Trump has 47.9M followers on Twitter. But, by one estimate, almost 18M—about 38%—are fake... What hasn’t been explored is the huge number of bots following the media institutions covering Trump... According to the service Twitter Audit, 17M of the New York Times’s followers 41M are fake. So are 7M of Fox News’s 17M... about 11% of Breitbart’s nearly 1Mfollowers, and 17% of The New Republic’s 160,000. Last month, the Times struck deeper at Twitter’s integrity with a story about the practice of buying fake followers, calling out politicians, actors, and even newspaper writers in its story. Twitter has since deleted about 1M erroneous accounts, but some estimate the social network is haunted by nearly 50M more. If Twitter is built on bots, how much stock should news outlets put in the social network? On the other hand, if outlets can’t control who follows them, does this even matter? It does if you expand the scope beyond fake followers and look at the real value, or lack there off, of Twitter’s relationship with journalism. The original metrics used to judge a print publication’s value were fairly straightforward. First you looked at circulation, a hard number that showed the amount of people actually buying your publication. Then you looked at advertising revenue, a number that couldn’t really be doctored. But as historic profits declined and journalism moved online, traditional metrics only made print look bad. 'The industry looked for a new metric,' said Kevin Convey, a Quinnipiac University professor who teaches “Mobile Journalism: the Future of News” and is a former editor-in-chief of the New York Daily News. 'The first new metric was clicks... [then] social media began to take its place. Social platforms first became an invaluable tool for reporters to find sources, to actually gather news. Then they quickly became distribution channels'"... Meanwhile, MediaPost reports: "Facing pressure from its most conservative users, Twitter is responding to claims of politically biased censorship. 'Twitter’s tools are apolitical, and we enforce our rules without political bias,” the company stated. Twitter was forced to explain itself after efforts to curb fake accounts, Russian bots and hate speech had a significant impact on the follower counts of conservatives and 'alt-right' figures like Michael Flynn, Jr. and white nationalist Richard Spencer. Rallying around the hashtag #TwitterLockOut, Spencer and other like-minded users were even supporting an effort to sue Twitter on First Amendment grounds. Twitter insists that it has every right to rid its network of fake accounts, and any users who fail to abide by its terms of service. 'As part of our ongoing work in safety, we identify suspicious account behaviors that indicate automated activity or violations of our policies around having multiple accounts or abuse,' according to Twitter. 'We also take action on any accounts we find that violate our terms of service, including asking account owners to confirm a phone number so we can confirm a human is behind it.' More broadly, the tech titan said the policing is part of 'ongoing, comprehensive efforts to make Twitter safer and healthier for everyone.' Recently, Twitter has faced far more criticism for failing to aggressively police its platform. Just this week, The New York Times found that Twitter remains a hotbed for Russians determined to sow discord across the U.S. Twitter has also been blasted for its unclear posting policies. Several times over the past year, the company has been forced to refine its so-called Twitter Rules. Among other changes, Twitter has tried to better define spam and spam-prevention measures. Rather than reviewing the factual accuracy of spam, the company says it focuses on behavioral signals."
 

OTHER NEWS OF NOTE:









Retail News


Sprouts Farmers Market's Sales Rose 15% in 2017
SN: "Sprouts Farmers Market Inc. reported results for Q4 and year-end. Income, net sales and same-store sales grew for both periods... For the year, net sales increased 15% to $4.7B, and same-store sales rose 2.9%. Net income frose to $158M, +27% vs. 2016. In Q4, net sales rose 16% to $1.1B, and same-store sales rose 4.6%. Net income for the quarter rose to $40M, +133% vs. same period 2016. 2017 sales were boosted by growth in the company’s private label sales, an “enhanced deli program” and increased grab-and-go options, said aid Amin N. Maredia, CEO and director. Grassroots marketing and investments in training and technology also paid off... The company will binvest $10M or about one-third of its tax savings toward employee benefits. Maredia said private label is a “top priority” for 2018, noting that Sprouts's PL revenue growth has been 30% or more for the past seven years. Customers can expect a new website and app and expanded home delivery this year. In January, Sprouts announced a partnership with Instacart. The company also plans to use technology to 'scale and drive efficiencies.' Sprouts opened three new stores during Q4 and now operates 285 stores in 15 states. It plans new store openings in the Mid-Atlantic, with its first Maryland location opening next month; and plans to open in three new states--Washington, South Carolina and Pennsylvania--by year-end. 'For 2018, our pipeline remains strong with 52 approval sites and 44 signed leases for the coming years,' said Maredia... Thanks to merchandise margins and labor management, Q4 EBITDA rose 25% to $63M, representing 5.5% of sales. For the year, EBITDA totaled $324M, up $30M, or 10%, vs. last year. Q4 SG&A rose 8% to $38M, up by 30 basis points vs. Q4 2016, to 3.3% of sales. For the year, SG&A rose 17% to $148M, up by 10 basis points vs. last year, to 3.2% of sales. MartketWatch reports that Sprouts's results beat Wall St.'s expectations...
 

SpartanNash Reports Higher Sales, Lower Earnings
SN: "SpartanNash reported sales of $1.92B for its Q4 ended Dec. 30, 2017, up $96M, or 5.3%, vs. $1.83B in Q4 2016. The company attributed the increase to growth in its food distribution segment, primarily due to contributions from its acquisition of Caito Foods Service, along with organic growth of 3.2%, and a continuation of improved sales trends in its military commissary business. These gains, were partially offset by lower sales at its retail stores. For fiscal 2017, net sales reached $8.13B, up by $393.5M, or 5.1%... 'During the four quarter, we remodeled several retail locations under our refreshed Family Fare brand positioning, which provides customers with a more experiential and unique shopping experience,' said David Staples, president and CEO. 'We continue to pilot and test numerous innovative concepts and incorporate these learnings into our retail operations and distribution customer offerings. We are confident that these strategies and investments will serve to strengthen our competitive positioning in 2018.' Staples noted that SpartanNash has been converting select stores to its Family Fare banner, while remodeling others. 'We remain pleased with the return on these investments and our locations in South Dakota continue to deliver better than expected results,' he said... While such improvements are pushing up sales, gross profit during Q4 declined to $254.8M, or 13.2% of net sales, vs. $259.3M, or 14.2% of net sales, in the prior year quarter. SpartanNash attributed that to...the impact of minor inflation on LIFO (Last In First Out), which resulted in Q4 LIFO of $0.4M vs. $4M in the prior-year quarter.
 

Canada's 2017 Retail Sales Growth Strong, Despite December Dip
WSJ: In December, Canada's retail sales "ell 0.8% on a seasonally adjusted basis to C$49.65B ($39.18B), Statistics Canada said Thursday, following a revised 0.3% gain in the previous month... Despite December’s unexpected decline, retail sales were up 1.5% in the fourth quarter, Statistics Canada said. For 2017 as a whole, retail sales increased 6.7% compared with the previous 12-month period—marking the strongest annual growth rate since 1997. The gain in 2017 corresponded with an improvement in Canada’s job market..."
 

Brookshire's, Shoppers Value to Acquire Winn-Dixies in Louisiana, Mississippi
MediaPost: "Brookshire Grocery Co. (BGC) will acquire eight Winn-Dixie store locations in south Louisiana from Southeastern Grocers (SEG), whose Bi-Lo subsidiary is reportedly considering bankruptcy.The deal calls for BGC to acquire Winn-Dixie stores in New Roads, Breaux Bridge, Franklin, New Iberia, Abbeville, Crowley, Rayne and Eunice, La. The stores will become part of BGC’s Super 1 Foods banner... After the sale is completed, the stores are expected to reopen within a matter of days under the Super 1 Foods banner... After the sale is completed, the stores are expected to reopen within a matter of days under the Super 1 Foods banner... Known for their everyday low prices, Super 1 Foods opened its first location in Alexandria, La., in 1984. The newest location opened in November 2017 in Youngsville, La. Founded in 1928, BGC operates 176 stores in Texas, Louisiana and Arkansas under the Brookshire's, Super 1 Foods, Fresh by Brookshire's and Spring Market banners. Jacksonville, Fla.-based Southeastern Grocers operates the Bi-Lo, Fresco y Más, Harveys Supermarket and Winn-Dixie banners throughout Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina. Meanwhile, news has also broken that Baton Rouge, La.-based Shoppers Value Foods is acquiring seven Winn-Dixie stores in New Orleans and Mississippi from Southeastern Grocers, with plans to take over the sites in late March, according to ABC-affiliated TV station WGNO, in New Orleans."
 

Analyst: Dollar Tree to Benefit from Tax Cuts
CNBC reports that J.P. Morgan reiterated its "overweight" rating for Dollar Tree, based on its estimation that wage increases and tax reductions among lower and middle class consumers will drive sales at the discount chain.
 
CNBC 

Loblaw Sees Q4 Dip
SN: "Canadian retailer Loblaw Companies Ltd. reported a drop in its fourth-quarter profit, as the operator of Loblaws and Shoppers Drug Mart was hit by costs related to the launch of its PC Optimum loyalty rewards program and the fallout from its admission of participation in an alleged industry-wide bread price-fixing conspiracy. Revenue for the fourth quarter fell to $11.03B, vs. $11.13B a year earlier, or 0.9%, due to the sale of the company's gas bar operations. The company said the disposition of the gas bar operations negatively impacted retail sales growth by $350M. Food retail same-store sales rose 0.5%, excluding gas bar operations, while drug retail same-store sales rose 3.6%. In December, Loblaw and parent company George Weston admitted their participation in what they said was an industrywide arrangement to coordinate the price of packaged bread for at least 14 years. Days later, Loblaw offered customers a $25 gift card as a goodwill gesture. Loblaw recorded a charge of $107M in relation to the gift card program in Q4 2017, and said that it expects the program to be an offset against civil liability. The company declined to comment further on the issue. Loblaw also recorded a $189M charge related to its merger of the Shoppers Optimum and PC Plus programs this year under the PC Optimum brand. The costs were associated with a higher anticipated redemption rate of points and IT assets that support the existing loyalty programs..."
 

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Opinion: How Walmart Plans to Up Its E-Commerce Game
Writing in the Chicago Tribune, Robert Reed points out that "Taking on Amazon isn’t so easy, even for one the world’s mightiest retailers.This is not to say superstore kingpin Walmart won’t eventually give the Seattle-based e-commerce giant a serious run for the online money, but it isn’t there yet. Far from it. Walmart announced Tuesday that its fourth quarter e-commerce sales grew 23%, down from a 50% hike in the previous quarter. In contrast, Amazon’s net sales were up 38% in Q4, vs. 34% the quarter before. That translates to $60.5B in quarterly sales and more than 5B items shipped. Walmart's lackluster e-commerce sales were brought on, in part, by operational snafus,  including unanticipated inventory shortages of basic products like toilet paper and toothpaste... [Now, Walmart] is scrambling to regain its online mojo in hopes of achieving 40 percent e-commerce sales growth for this year... Recurring customer gripes about Walmart.com include faulty or slow product delivery and confusion over return policies, according to a spot check of online customer complaints on ConsumerAffairs.com... And the sheen is coming off the chain’s much-heralded, $3B acquisition of Jet.com, which accounted for the lion’s share of the company’s e-commerce sales boom last year but now is showing signs of leveling off. Jet.com does well in major metro areas ripe with millennials, like Chicago and New York, selling stylish and trendy products from Bonobos, Modcloth and Moosejaw, sites that Walmart acquired in recent years for a total of $175M. Now Walmart wants to reassert its e-commerce connection with Middle America, a customer base that’s a staple of its bricks-and-mortar superstore empire. It's going to put more resources behind its namesake Walmart.com site, CEO Doug McMillon told analysts. That push includes a springtime launch of a Lord & Taylor landing page on Walmart.com. [But]  Walmart.com’s emphasis will be on selling an expanding array of consumer products that compete more directly with Amazon’s wares. This year, much of the Amazon versus Walmart battle will also be waged in the food aisles. McMillon stresses Walmart is expanding ways for e-commerce customers to order groceries online, along with speedy customer pickup at the stores. This is designed to beat back a similar “click and collect” tactic that Amazon is putting into place at its Whole Foods unit, with over 400 stores. Walmart intends to add 1,000 stores to the estimated 1,100 it already has providing online grocery sales/distribution. With revenues of $482B, Walmart has the financial firepower to be a formidable rival to Amazon, which tallied $177B in 2017. 'We believe Walmart is poised to be one of the few retailers that can compete in the e-commerce space and stay relevant over the next decade,' wrote John Brick, a Morningstar equity analyst, in a report after Tuesday’s earnings call..."
 

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