Magazine Industry Shake-Out

December 15, 1971

Report Outline
Economic Ills of American Magazines
Development of the Magazine Industry
Direction of Change in the Industry
Special Focus

Economic Ills of American Magazines

Multiple Problems of Past Two Recession Years

In a recession, most businesses expect some loss of profit. A business that produces non-essential luxury products is usually hard hit. It should come as no surprise that during the 1970–71 recession many of the approximately 750 general magazines published in the United States encountered financial problems. Readers bought fewer magazines and advertisers began to spread their money thin. The Gallagher Report, a trade newsletter, reported that the combined circulation of 203 leading magazines declined in the first six months of 1971 from the same period of 1970.

The decline was only one-half of one per cent but it was the first to occur in two decades. Moreover, the drop in circulation was predicted to accelerate and continue through 1972. Stephen E. Kelly, president of the Magazine Publishers Association which represents 140 companies publishing more than 400 magazines, contends that magazines are now “at the bottom of the ladder of profitability.” He said net profits in 1970 were only 1.5 per cent, compared with 4.8 per cent for all manufacturing concerns.

The association reported that in 1970 magazine revenues fell by $70 million, or 5 per cent. Even The New Yorker, which seemed financially impregnable five years ago, was reported to be having problems. Its 1970 circulation was down 15,000 from 475,000 in 1969. Advertising pages—4,040, the highest of any magazine in the country—were 34 per cent below the 6,143 pages in the peak year of 1966, according to a spokesman for the magazine. Profits per share for its 1,400 stockholders dropped to $3.65 in 1970 from $6.51 the previous year. However, economic difficulties have not discouraged publishers from starting new magazines. About 700 magazines have appeared in the last 10 years while fewer than 200 have failed or been absorbed by others. A few succeeded and became profitable. Many have limped along from financial crisis to financial crisis.

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