The end of biz mags as we know it?

Douglas McIntyre of 24/7 Wall Street writes about how the big three business magazines — Fortune, Forbes and BusinessWeek — will have to dramatically change to survive in the future.

McIntyre says that all three lost money in the first quarter.

He writes, “BusinessWeek is doing so badly that its parent has a small number of options, each of them unattractive. McGraw-Hill can live with the large deficit and hope that as advertising returns to print when the recession ends, that the magazine will once again become profitable.  It is not clear that print advertising will rebound sharply in a better economy. And, BusinessWeek’s online operation is not large enough to support all of the magazine’s expenses. BusinessWeek could do what Newsweek is doing, which is to sharply shrink the number of subscribers it has, cutting printing costs and eliminating the least profitable customers. The global edition of BusinessWeek has an advertising rate base of 900,000. The printing and distribution costs of those copies could easily be $1 a piece. The solicitation of new subscribers to replace those who do not renew costs millions of dollars a year.  A cut in the rate base would drive down printing and circulation acquisition expenses. It would also decrease what BusinessWeek could charge for advertising, so this plan would cause a drop in print advertising revenue.

“BusinessWeek could do what US News did last year and reduce its frequency of publication. It might decide to go from weekly (the magazine does publish several double issues) to fortnightly, the same frequency as Fortune and Forbes. In this situation, advertisers will be likely to decrease the number of pages a year that they are running in the magazine if it comes out less frequently.

“The most probable solution for the magazine’s financial problems is staff reduction.  This is exactly what large metropolitan newspapers have been forced to do over the last two years. It would not be unusual if the salaries and benefits paid to people who work at the magazine averaged $60,000 a year. Several dozen people would need to be laid off for this solution to have any significant effect.

“No matter what McGraw-Hill does, BusinessWeek will not be a weekly magazine with over 200 employees and a rate base of 900,000 at the end of the year. BusinessWeek will have to become a much, much smaller operation.”

Read more here.