Monday, July 28, 2014

What Happens to Forbes, Now That Has Been Sold

Earlier this month, I wrote a column for CommProBiz called "What the Selling of Forbes Tells Us about the State of Business Media" that raised some key points about the health of business media, namely:
  • Establishing a strong brand is important for readers and advertisers but can be difficult to truly monetize.
  • Standalone magazine companies are at a disadvantage to conglomerates that can spread costs and profits across a family of magazines. 
  • The value shoring up Forbes is not its free popular website or its steady level of subscribers — but its conference division. 
  • Forbes is very creative in finding revenue but not all ways of charging access -- like paywalls (which Forbes does not have) or separate digital subscriptions (which it does) -- are reader friendly. 
Soon afterwards, on July 18, Forbes, which had put itself up for auction in the fall of 2013, announced that it had sold itself for more than $300 million to Integrated Whale Media Investments, a Hong Kong investor group. The asking price had been above $400 million, and the Wall St. Journal had said some "traditional media companies" had offered bids of $200 million but were rebuffed by Forbes. The valuation of Forbes Media is at $475 million, roughly what the family had been asking for.

As part of the sale, Elevation Partners is selling its entire stake. According to the Wall St. Journal, Elevation Partners, which had invested $264 million in 2006, "would recoup substantially all of its investment." Which is to say: Elevation did not make money on owning a portion of Forbes. 

Additionally, "The Forbes family will take some cash out as well, although the precise amount isn't known." Which means the Forbes family has limited its potential liabilities without making much money on the deal.

Meanwhile, here are a few key facts about the business of Forbes from the sale include:
  • Forbes's print circulation increased in 2014 to 6.1 million, a record for the magazine and much higher than competitor Fortune (at 3.6 million, down from 3.8 million a year earlier). However, Forbes offered heavily discounted subscription fees that shored up its print circulation.
  • Print advertising has continued to drop, declining 11% to 650 pages compared with 2013. (Fortune's ad sales declined 4.7% to 665 pages over the same period.
  • Traffic to Forbes's websites increased 17% to 27.7 million unique desktop and mobile visitors last month in the U.S., which makes Forbes the third-largest business and financial news provider online behind Yahoo and Dow Jones.
In my next blog post, I'll address the editorial implications of the sale of Forbes.

Thursday, July 24, 2014

Top 7 Things to Understand about Magazines' Lists

If the age of social media and native advertising has taught us anything, it's that people love lists: 
  • "15 ways to waste more time on the Internet."
  • "10 useless facts that will bore your friends at cocktail parties."
  • "10 secrets to reduce procrastination." 
Those aren't real lists but they aren't so far off from native advertising articles (my favorite native ad headline of the day: "Warren Buffett Tells You How to Turn $40 Into $10 Million." Native ads are so prevalent, that The Onion recently launched a spinoff site called Clickhole that serves up faux native ad-like headlines and stories. The main problem is that the blurred line between Clickhole stories and real, unironic native ads.)

No business publication "gets" the importance of lists than Forbes, which researches, compiles and publishes dozens of lists each year, beyond the iconic Forbes 400 of the wealthiest Americans (by which Forbes tends to mean U.S. citizens or residents).

Here's our own list based on Forbes' range of lists.

  1. You can never have too many different flavors of lists. In addition to the Forbes 400, Forbes also publishes the Worlds Richest Billionaires issue; "Richest Families in the U.S."; as well as the "Best & Worst Cities for Jobs," "The Best Cities for Business"; "The World's Most Powerful Celebrities" and "The Top Earning Actors" and "The Highest Paid Athletes" and don't forget: "Superheroes of the Celeb 100" and the "Richest Fictional Characters." (Seriously -- Mr. Monopoly ranked #13.) Several lists seem like variations of another list; the most powerful celebs includes top earning actors and athletes.
  2. Publishing lists as a slideshow can be great because each click improves the traffic counts on your website. Instead of printing the top 10 of a list on one page, which generates only one click, slides of the top 10 whatevers generates 10 clicks.
  3. Lists work best when they are quantifiable, which is why Forbes allocates resources to compile these lists. But there is a lot that can be hard to pin down, even when it comes to net worth. A lot of other lists are subjective, even as they try to apply some framework to the list. For example, Forbes ranks author John Green at 79 on the Most Powerful List, with JK Rowling at 84 -- really? Perhaps it's a nuance of power, but I would think Rowling still has more "power" to get published and movies made than John Green (not to take away from Green) but perhaps Forbes has a different definition of "power."
  4. Realize that most rankings are designed to generate a barroom discussion and are not scientific. Most rankings should be taken with a grain of salt. What stars earn each year can be variable, with payouts dependent on sponsorships and multi-album deals. Same for CEOs and stock options.  
  5. Even if Forbes provides some quantifiable numbers, there's a lot of guesswork and sometimes those numbers don't really matter. On the "Most Powerful Celebrities" list, which looks at earnings, money rank, press rank and social rank, LeBron James is ranked number 2 (after Beyonce). But King James' scored 19 on the money rank and 22 on the social rank; his highest ranking was the press rank at 9 -- so how can Forbes justify his top-two ranking? Well Forbes adds a "cultural figure," which is not clearly defined.
  6. There are always questionable selections. Some of the stars on the Most Powerful list certainly deserve to be there -- Beyonce, LeBron, Dr. Dre, Oprah, Ellen, Jay Z, people known by their first names. But some of the rankings are questionable: Does Floyd Mayweather belong at #7? Roger Federer at #16, the Eagles at #36, One Direction at #28, Justin Bieber at #33? That doesn't include some folks I haven't heard of (because that may say more about me than them). Then there are celebs who don't seem particularly powerful like Avicci (#47), Kate Upton (#94), Kaley Cuoco (#99) and therefore don't belong on the list at all.
  7. The teams that compile these lists do not always read the rest of the magazine -- and vice versa. On the very next page of the printed edition, Forbes reported that Michael Jordan is now a billionaire.  Here's the news blurb in its entirety from Forbes' "Scorecard" column: "Jordan never retired. Still earning $90 million a year selling shoes, he ups his stake in the NBA Charlotte Hornets and becomes the first NBA star worth a billion." If I were compiling a list of "Most Powerful Celebrities," I would have included Michael Jordan.
I don't mean to pick on Forbes or that particular list. I like lists as much as the next person but at some point, most are subjective, and that's okay. Cases in point: People's "Most Beautiful" and "Sexiest Man Alive" lists, various magazine's Best (and Worst) Dressed lists, and hundreds more. I think it is helpful to understand how the lists are compiled and why publications rely on them as long as readers take most of them with a grain of salt.