What's one more bit of bad media news on this dark, gloomy Friday? ABC News sent out a memo today saying that the bad economy is causing them to cut back on expense accounts, travel, and conference attendance, cancel all of their holiday parties, and, ironically, cancel all of their subscriptions to print magazines and newspapers (which will help the environment, they note!). And most painfully for ABC execs:
The death of Radar is just one more reminder of the incessant economic crisis that is destroying jobs for hardworking members of the media (and, you know, everyone else). But there may be an upside! Way back on September 16, when The Panic of '08 was just getting started, Curbed founder and real estate blog generalissimo Lockhart Steele made this prediction to Guest of a Guest: "You will know when we have hit the bottom of this financial crisis the very day when Radar Magazine goes out of business. And you can quote me on that!” So things should be looking up!:
After Moody's threatened to downgrade the New York Times Company's debt to junk status Thursday, Standard & Poors went ahead and actually made such a move, bringing to reality a development foretold fully two months ago by Bloomberg. The Times Company is only now considering reducing its outsized dividend to shareholders, including most prominently to the Sulzberger family that controls the company. Having failed one test, involving credit, the Sulzbergers now face another, involving their hold on arguably the most important journalism franchise in the country.
Oh, this is really not what you want to hear if you are a fan of the newspapers, or journalism as a whole, or especially if you're an investor in the NYT Co.: In the wake of shitty third-quarter earnings, the ratings service Moody's is warning that it may downgrade the company's debt to junk status. It's currently at Baa3, the lowest rating before junk. A downgrade would make it even harder for the company to borrow money, which—without going into a lot of financial mumbo-jumbo—is not what they need right now (Pictured: their year-to-date stock price). Financial mumbo-jumbo quote from Moody's analysts below:
Who says the magazine industry is in trouble, besides all informed analysts? Plain old pessimists, they are! For example, did you know that according to prominently quoted guy "Mr. Magazine," new magazine launches are actually up this year? We looked back at the dozens of hot new titles that launched just last month, and we've selected the twelve most promising. Hobbies for the poor, escapism through porn and pets, and information about your various afflictions are especially popular! Gaze upon the future of media:
Goodness, the bad news just doesn't stop for Harvey Weinstein. The movie mogul and Weinstein Co. head—who recently lost his bid to move Project Runway, his big moneymaker, to Lifetime—has had a rough time lately, dealing with everything from a flagging fashion line to a flagging internet company to a flagging video distribution service. So much flagging! And now the precarious nature of Weinstein's business is clear to everybody; his own executives are abandoning him, in a terrible job market:
In the same way people thought television and movies and the invention of thumb-twiddling would kill the radio industry, people were convinced the iPod would be the thing that pulled listeners away from commercial radio forever. But they failed to anticipate how utterly lazy and uncultured Americans are! Radio gained millions of listeners last year; young people's time listening to radio rose 11%, while their time listening to iPods dropped 13%. The whelps love Bubba the Love Sponge, or whoever is on "the dial" these days! So then why can't radio make any money?
The Hollywood brain trust is trying to figure out why millions of people prefer to see the talking dogs of Disney flick "Beverly Hills Chihuahua" to "Body Of Lies," an Important Movie about terrorism starring Leonardo DiCaprio and Russell Crowe that got murdered a the box office. The working theory: Everyone is depressed from the near-total-collapse of the Western economic system, and canine dancing helps them forget. So studios are now rushing out escapist movies, according to the Times. Including musicals! Also, to give the foreclosed-upon middle class some catharsis, screenwriters are fast-at-work on Wall Street villain characters:
Here's what you can expect in the coming year, internet lovers: lots of young internet companies going broke. The ones you love! Including, but not limited to, user-generated video sites, ad networks, fringe social media sites, and companies that make all those sweet apps. Why? Because in our brave new economy, companies are slower to buy bullshit ads of questionable efficacy on every random "Web 2.0" site. How bad will it get? We'll tell you: Ad Age predicts a small amount of growth:
There were "massive layoffs" today—amounting to 14% of staff—at Heavy, the guy-focused network of websites. Heavy has been on deathwatch recently, since it's become increasingly clear that the company's strategy of inflating its traffic figures by buying pop-up ads will not be enough to satisfy its big investors. This is a bad sign for those sites with flashy branding but little substance to build a strong base of regular visitors. The venture capitalists who sunk millions into Heavy two years ago thought that it's "Heavy Men's Network" could turn into something big among the coveted young male demographic. But apparently the company's ad network isn't making any money. The financial crisis is going to hurt the ad market even for strong sites. For shakier ones, it could be a death blow that even the grownup businessmen Heavy brought in to professionalize the company can't avoid. Heavy's optimistic statement today:
Playboy is cutting 80 jobs , including 55 layoffs, in an effort to save $12 million. The company is also exiting the DVD business completely, moving far-flung employees into the LA office, using cheaper paper, and cutting entertainment expenses (noooo!). This has all been easy to foresee. We hear Playboy's main money source at the moment is international brand licensing, along with distribution of their archives online. Not even nekkid women can convince people to buy magazines these days.
A tipster at Viacom sends us this regarding the company's rumored looming layoffs: "so here's the deal with viacom layoffs - they'll be no bulk layoffs, HR is laying off 3-4 people a day, until supposedly election day to minimize press coverage. sneaky viacom/mtv!" That would be sneaky. They add, "they are currently working on a company wide layoff structure. they've already begun, in a quiet ninja style manner that viacom normally does not do." We're watching you, Viacom. [Anyone with more info can email us]
Old Viacom overseer Sumner Redstone announced last week that he had to sell hundreds of millions of dollars worth of his company's stock, after the Wall Street crash left him short on cash to back a huge loan. Then this week, out of the blue, his daughter Shari Redstone, who runs the movie theater portion of National Amusements (the other parts being Viacom and CBS), sent out a statement to the media saying, basically, "HEY, THIS ISN'T MY FAULT!" What's the deal with this madness? Shari wants to run the whole company whenever her dad keels over, but her dad's not so sure that's a good idea, so they kind of hate each other. Sumner never even said that this whole stock sale was the fault of the movie side of the business; Shari went public anyhow:
When times were good and the economy was strong, you could sell companies any old kind of patently ridiculous ad. Did marketing savants really believe that spending wildly to place their brands inside "The Sims" was going to pay off in money that is made out of paper, and spendable here on Earth? It's doubtful. They just got caught up in the sheer newness of plastering their logo anywhere and everywhere, and then made up some bullshit about "branding" to explain the expense. Well that shit is over now, suckas! The first thing to get cut in everyone's ad budget was "experimental" ad buys, random things like branded pop-up games and ads in Virtual Worlds and other, mostly online things that probably never worked in the first place. Also getting chopped: mobile ads that go straight to your cellphone—which not only don't work, but actually annoy the consumer in the process of not working.
Tuesday afternoon we asked about rumored layoffs at Niche Media, publisher of socialite city magazines. From what we've heard since, it sounds like the bloodletting does, indeed, go well beyond Philadelphia Style and is in fact related to the Wall Street meltdown and advertising recession. "Top management is on it's way to Miami to repeat the same," one tipster writes. "Slash up the staff at Ocean Drive." Another writes, "There were more layoffs on Monday at [DC-based] Capitol File. The senior editor and two sales reps were let go." It should come as little surprise that plummeting real estate values and stock market contraction should sharply curb the number of people who think of themselves as affluent, and who thus read these sorts of magazines, particularly in recently fast-growing cities like Miami and DC. CEO Jason Binn made things worse by expanding to aggressively, one tipster claims:
One can tell the world's condition is dire because the practitioners of that famously dismal science, the economists, are the new celebrities. Putting aside Princeton's Paul Krugman-who this week won the Nobel prize for economics-one academic has emerged with a reputation of a seer, Nouriel Roubini. The NYU professor's once-mocked warnings-of a real-estate collapse, equity market slaughter, the systemic bust of the banking system-have largely come to pass.
Treasury Secretary Hank Paulson rounded up all the major banks for a big meeting Monday and all but told them they'll collectively be accepting $250 billion in government capital. The idea, of course, is to get banks lending to one another and to businesses again, by injecting not only money but also a measure of confidence into the banking system. Because while the Dow bounced back 11 percent today, its most dramatic gain since 1933, the market is still off sharply this year. (The chart above shows three months of the S&P 500, still poised for its worst yearly loss since 1937.) In addition to liquidity, Treasury is also providing some lavish new guarantees, which has the media scrambling to pick up the inevitable new angle: We're inflating another bubble here!
In recent months, new online business sites like Clusterstock and Slate's The Big Money launched—and what timing! The current meltdown of all things money-related is the biggest business story in a generation or more. But therein lies the quandary that is currently fucking with most of the big business media brands. Understand this, and you'll understand everything (about business media): Market crashes are, almost without argument, the biggest business stories there are. They're the wars of the financial world. Bull markets, runaway successes, and bubbles are all well and good from the reader's point of view—and they do tend to spawn new titles—but they lack the element of tragedy and fear that mark truly great stories. Ten years from now, business outlets will be judged by their coverage of this meltdown in the same way that the New York Times was judged by its 9/11 coverage, or the Littleton Independent was judged by its Columbine coverage. That said, the business side of business media should be booming, right? Audiences are up! Everyone is addicted to CNBC! The Wall Street Journal has been unmissable for a solid month! And it's fair to assume that readership and viewership is up across the board for business outlets, to varying degrees. Fear makes people extremely interested in information. Here's the quandary: The biggest story for business media always comes along at the same time as the worst ad market. By definition, unfortunately! Market crashes are great from a reporter's standpoint. From an ad salesman's standpoint, they're horrible. So a site like The Big Money, which would seem to have had the good fortune to launch on the wings of a massive story, is actually getting choked by the very same conditions it's reporting on. There's already speculation that Portfolio, Conde Nast's $100 million business offering, is on shaky legs. We know that the Great Magazine Die-Off caused by this shitty economic period is already underway. And ironically, mags like BusinessWeek or Fortune could be likely candidates for severe cutbacks, if not actually death. And hey, the publisher of Fast Company—actually a good magazine!—was just forced to lay off 20 people. That's a lot for a mid-sized place like that.The publisher, Mansueto, is also ending free snacks, gym reimbursements, and, worst of all, closing its Events division. That's a terrifying sign, since there are lots of business publications out there that (shhh!) make more money off their events than they do off their publication. In some cases, a shitty magazine is just a loss leader for a moneymaking side business of awards shows, seminars, and other branded events that companies will shell out for in order to "network" and have allegedly independent awards to use in their marketing materials. But when the businesses themselves tank, the business media tanks harder. It's as if Sports Illustrated saw all of its ads evaporate at Super Bowl time. It sucks, but it's a fact of media life. The survivors will come out stronger than ever, and can feast on the carcasses of their dead competitors, picking off choice talent at low prices. Journalism!
Newspapers are freaking out left and right. They can't hire anyone. They can barely afford to cover anything. And some of them are so paranoid they're looking to sue their own employees. Like an alcoholic dad who beats his kids and blames the god damn factory that just laid him off, newspapers' problem is that they just can't make any dang money, because the internet ate up their market. Their only real hope: increasing web revenue to make up for what they've lost in print ads. The problem: their web revenue is now stalling. The solution: Batman. Ha, no really it's just "more death":
Congratulations to Paul Krugman, Princeton Economist, for his Nobel Prize in Economic Sciences! The international trade expert learned he'd been honored this morning, greeting the news with only mild surprise. "To be absolutely, totally honest I thought this day might come someday, but I was absolutely convinced it wasn't going to be this day," Krugman told the New York Times, where he's been an Op-Ed columnist for years. And the prize committee claims they honored Krugman for "having shown the effects of economies of scale on trade patterns and on the location of economic activity," but we layman can all assume that Krugman won the prize for his column's years of Bush-bashing. Just like when Jimmy Carter won the Nobel Peace prize in 2002! Carter won supposedly for working "to find peaceful solutions to international conflicts, to advance democracy and human rights, and to promote economic and social development" but everyone knew it was just because the international community hates George W. Bush and former president Carter can't stop complaining about Bush. Of course, Krugman still thinks he won this prize for his "economics," but he knows full well that the recognition won't silence the people who read his writings just to call him a communist or whatever:
