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Publisher of Ebony shrinks in search of growth
« on: February 08, 2015, 11:26:39 am »
February 07, 2015
Publisher of Ebony shrinks in search of growth

By LYNNE MAREK

Johnson Publishing, parent company of Ebony magazine, has the weighty title of “curator of the African-American experience.” But the corporate base supporting that role keeps shrinking.

The company's recent decision to sell its historic photo collection is the latest example of downsizing, following the cancellation of Jet magazine's print version, the sale of Johnson's 11-story Michigan Avenue headquarters and the paring of its workforce by a third since 2007. Now it's trying to sublet one of two floors it rented at its new digs, after giving up a third earlier.

Johnson Publishing Chairman Linda Johnson Rice and CEO Desiree Rogers say they're positioning the 73-year-old publisher for growth, but even a 2011 cash infusion from JPMorgan Chase hasn't prevented reductions. Rogers won't comment on the private company's financial results, but she acknowledges that print advertising revenue for its remaining title, Ebony, fell 8 percent last year over 2013, or only 3 percent if digital is included. She has cut costs and outsourced to buoy the bottom line.

“A lot of these decisions that are being made are decisions to right-size the company,” says Rogers, who took the CEO post in 2010 after leaving her job as White House social secretary.

Johnson Publishing, with estimated revenue of about $90 million in 2013, isn't the only magazine company struggling. Revenue for the industry sank 4.9 percent last year from 2013, according to New York-based Standard Media Index, which tracks spending by the biggest U.S. ad agencies.

Publishers have scrambled to replace lost print ad sales, which still make up the bulk of industry income. Meredith, Hearst Communications and Atlantic Media, all of which own magazine portfolios, have bolstered revenue through acquisitions, digital offerings and advertiser-sponsored events. But Time and Conde Nast, a unit of Advance Publications, each recently have cut 10 percent or more of the employees in their magazine divisions, according to news reports.

Johnson has a steep challenge because it can't offer advertisers an array of audiences in different publications. “It's very difficult for a single-title magazine company to survive unless they have an extraordinarily strong and loyal readership,” says New York-based industry consultant Peter Kreisky.

Ebony and Jet long have had a devoted African-American audience, but their allure is waning. While Ebony's circulation makes it the most popular African-American title, circulation slipped to an average 1.26 million for the six months ended June 30, from 1.29 million for the year-earlier period, according to the Alliance for Audited Media.

Standard Media Index says Ebony's income fell 24 percent in 2014, compared with 7.5 percent at its chief rival, Essence, which is owned by New York-based Time. Rogers says SMI misses three-quarters of Johnson's advertising, especially spending by smaller agencies and by advertisers that work directly with the publisher. She is pleased Ebony met its 1.25 million circulation pledge the past three years because that let Ebony raise rates this year and attract new advertisers, such as Apple.

She also notes the company has a growing online enterprise, including a store with Ebony- and Jet-emblazoned items. In addition, the company's events business is profitable, with sponsors such as Comcast and Toyota funding parties like the Ebony Power 100 Gala in Los Angeles last year.

Still, Samir Husni, director of the Magazine Innovation Center at the University of Mississippi, says it was “a big mistake” to fold Jet because print ad sales are a moneymaker and the brand is likely to disappear online. “It's like someone just plucking the chicken one feather at a time,” Husni says.


'Incredibly historical' photos seek a deep-pocketed buyer
Johnson Publishing is asking $40 million for its historic photo collection, but photo appraisers say the ultimate purchase price for the 5 million images will depend on their historical value, condition and who owns the copyrights, among other things.

The photos were taken for the company's magazines, principally Ebony and Jet, which have been widely read by African-Americans for decades.

"It's documentation of black American culture since the magazine started," says Lorraine Davis, who owns a photo appraisal firm in Houston. "It's an incredibly historical document."

Johnson Publishing CEO Desiree Rogers won't say how the company determined the $40 million asking price but notes that the company is in the early stages of a process that could take years.

Typically, 5 to 25 percent of such collections is valuable, but in this case it could be as much as 30 percent, says Marie Martin, who leads a photo appraisal firm in St. Michaels, Md. A price of $40 million isn't unreasonable, but it's difficult to say without seeing the photos, she and other appraisers say.

The work of Pulitzer Prize-winning photographer Moneta Sleet Jr., now deceased, is a prominent feature of the collection. Bidding for his images has varied widely in recent years, Martin says, with one photo selling at auction for $9,000 in 2009 and another for $700 in 2010.

Mark Lubell, executive director of the International Center of Photography in New York, is advising Johnson Publishing. He led the Magnum Photo agency when it sold its collection to billionaire Michael Dell in 2010. (The price wasn't disclosed.) The Johnson collection "has great academic and scholarship value," he says.

It may take another deep-pocketed buyer to acquire the Johnson archive. "I doubt we could afford it," says Mary Yearwood, curator of photographs and prints at the Schomburg Center for Research in Black Culture in New York.

Another institution that could be interested is the Smithsonian National Museum of African American History and Culture in Washington, D.C., where Linda Johnson Rice, chairman of Johnson Publishing, is council co-chair. A spokeswoman for the museum declines to comment.

In the past, Johnson Publishing could lean on its Fashion Fair cosmetics business if its magazine business was under pressure, and vice versa. Today, that approach isn't working as well, with Fashion Fair facing increased competition for the African-American consumer. Rogers appointed Clarisa Wilson president of Fashion Fair, but she left after two years and wasn't replaced for months until the hiring last year of Amy Hilliard, formerly CEO of Chicago-based ComfortCake.

Johnson Publishing beefed up sales and marketing staff for both businesses and added a chief revenue officer for media. It's also added cosmetics counters at stores in France and South Africa, although the number of U.S. outlets dropped by about a fifth to 530.

“We have turned the corner—the business is now positioned for growth and investment,” Rogers says.

Today, the company's headcount is 960 worldwide, with the bulk being Fashion Fair workers in department stores. There are 110 at the company in Chicago and New York. That's down from 1,500 full- and part-time employees in 2007.

The decline is occurring despite the millions raised in 2011 when JPMorgan invested in the company and acquired a minority stake. The 2010 sale of the company's historic headquarters only extinguished debt and didn't provide any capital for growth, Rogers says.

Ron Childs, who worked at now-defunct Ebony Man, says the editorial product is stronger than it has been in years. But founder John Johnson's strategy of dominating the African-American market is increasingly outdated as readership is wooed by mainstream magazines.

Johnson “wanted to be the king of the black hill, and he was that for a long time,” Childs says. “But I don't think we paid enough attention to the segmentation of media that was coming.”