Examining the financial performance of Consumer Reports
Jeff Fox, the former tech editor at Consumer Reports, examines the financial performance of the personal finance magazine.
Sales are way down
During the first three years that CR’s President, Marta Tellado, and her team have been in charge (see arrow), combined revenues of the flagship products, Consumer Reports Magazine and Consumer Reports Online, declined by about $31 million or more than 13 percent.
Subscribers are leaving, including online
During the same period, nearly three-quarters of a million fewer people subscribed to the two products. Nearly half of that plunge was in the number of subscribers to Consumer Reports Online. Declines in print subscriptions are widespread in the publishing industry, but online subscriptions are supposed to be increasing to compensate for them, not decreasing.
Losses are mounting
Flagging sales has also taken its toll on CR’s bottom line. After one year in the black under Tellado, CR has suffered two consecutive years of operating losses, each exceeding $5 million. That CR operations lost that much in fiscal 2017 may not be obvious from its audited financial statement, the bottom line of which shows a gain (technically referred to as an “Increase in net assets”) of more than $31 million. But such a net gain can be misleading. A closer look shows that the bottom line has been boosted with such “non-operating” items as $29 million in investment income, which have nothing to do with how profitably CR operates.
Read more here.
We asked Consumer Reports for a response. Here is a statement from a spokesman:
Consumer Reports is in the middle of a historic transformation to best deliver on its mission as a nonprofit membership organization. The figures reported as operating losses represent necessary strategic investments we are making, and will continue to make, to serve consumers.
These investments include rebuilding our technology infrastructure, building much stronger and more valuable relationships with consumers through a new membership model, and developing new sources of funding and revenue. New revenue streams, including shopping, fundraising, and strategic partnerships, are the fastest growing sources for funding our mission.
We expect to post our Fiscal Year 2018 results soon, which will show the early success of our transformation in the media arena – record online traffic, increased average order value (or the amount a member spends with CR); digital revenue is at the highest in years, and we are seeing historically high member satisfaction and retention rates with our products. In coming years we expect these successes to deliver financially. However, CR’s true success is not measured in simple revenue or operating costs, but rather in the much larger mission of creating marketplace change with and for consumers. On that measure 2018 was a very successful year.
In an increasingly dynamic marketplace and challenged media landscape, where people find it increasingly harder to know what and whom they can trust, we will continue to be at the side of every consumer, working together to create a fairer, safer, and healthier world.