A lot has happened since I wrote to you last week about the rapid spread of COVID-19, its impact on all of us in publishing and our continued commitment to serve you.
As I stated then, Folio: will keep our promise to seek out positive stories on how our community can get through this unprecedented time. And we will also remain committed to keeping you informed on what’s happening with your industry without spin or puffery. So with that in mind, let me be frank: things are not so good today.
The immediate impact the novel coronavirus has had on publishing has already become palpable, and for many who have been around this this business for more than a decade, it’s likely bringing back bad memories of the 2008 recession.
Like many other businesses across the country and the globe, publishers are suffering from a liquidity problem. That makes it very hard to maintain an operation. Hopefully swift government intervention will prevent many businesses from running out of cash or securing the credit they need to stay afloat and make payroll.
In less than two weeks, COVID-19 has exposed the vulnerability of our industry, despite years of hard work building out more recession-proof businesses.
Playboy ended its print magazine’s frequency in response to the impact of the virus. It’s unlikely it will be the last iconic publication to do this in 2020. Time Out has temporarily suspended its print edition across all of its global markets and closed its chain of upscale food halls in four U.S. cities, plus two others in Montreal and Lisbon. But the company is confident both businesses will make a comeback this year. Layoffs have decimated city and regional magazines and newspapers. And publishers are cutting budgets wherever they can—including spending freezes and salary reductions as high as 20%.
Another undeniable gut punch is the impact on events, a once promising diversification strategy for publishers reeling from recession-era print advertising losses. For now at least, events are a nonviable business proposition until the third quarter at best. And even when they do return, there is reasonable uncertainty how sponsorship and attendee revenue numbers will shake out.
These are indeed difficult times.
More than a few publishers have reached out to myself and others at Folio: to express their concerns on a number of issues. A particular concern shared with me on a few occasions is related to the supply and distribution chains, with genuine worries about paper and the other resources necessary to produce and deliver magazines. This is a critical concern for those who still primarily rely on print revenue. And after hearing the news yesterday that LSC Communications could be filing for bankruptcy, these concerns are likely amplified for many. After all, basic economics tells us that stable demand but a lack of supply and output will drive up costs for an already hurting magazine or newspaper.
Publishing—both in print and digital—is an interdependent business that relies on a number of service providers and vendors in order to operate efficiently. Our collective ability to survive depends on the health of our support partners as much as our own. Likewise, we have a dependence on distribution channels—from the postal service to telecom industries to internet providers—and retailers. They provide the means for our readers/subscribers/members to access our content. So any disruptions in those businesses could also cause a ripple effect in our own.
Our readers have also expressed concerns about filling their ad inventory. Many of their marketing partners are getting similarly crushed by the almost-immediate economic halt. I have been asked questions about the viability of incentivizing or upgrading ad buys, good-faith comps, barters and a number of other ideas that could at least keep partners engaged. The only advice I am really qualified to give in the interim is to do whatever you think is best for your business to survive and maintain the relationships you have built with your partners. When things do normalize, the strength of these bonds will matter the most.
On the flipside, I have also spoken with folks who feel confident about the diversity of their portfolios. And although they are rightfully concerned about an uncertain future, as well as the human impact of this virus, they are confident they will get through this.
Regrettably, this has become a zero-sum situation. There will be winners and losers. Those who have spent the past decade diversifying their portfolio are likely survive with less scarring. But those who have not, may not emerge at all, or at least not in their previous form.
A lot of publishers will need to completely step outside the box and think about entirely new methods to drive revenue and create value in ways that are not necessarily endemic to their models. There isn’t going to be a silver bullet solution, but this publication will try to share as many ideas as possible over the next several weeks and months.
Such a situation, while cripplingly terrifying as we think of our own health, the health of our families, friends and colleagues, and the livelihoods of ourselves and the rest of the country, is also an opportunity to reinvent and eventually strengthen our businesses.
SWOT analyses are typically a business school exercise that are occasionally incorporated into corporate brainstorming meetings. They rarely deliver any sort of actionable plans. But I think now is a great time to try one, and actually follow through with some actionable next steps.
I would almost guarantee “global pandemic” would not have appeared in most people’s “Threats” category a month ago, and unfortunately, COVID-19 is not a singular threat, so the others your business faces still exist. However, this virus is the biggest threat we all face right now and it has shown us that we need to be prepared for anything. Part of that preparation is identifying new “Opportunities,” so its critical to share ideas that overfill that bucket in your analysis. The best ideas should be ones that complement your “Strengths.”
We need to also be mindful of the “W” in the acronym. Your own weaknesses are an added challenge, whether it’s a lack of cash flow or human capital, your given market share or having too many eggs in one revenue basket, you have to be self-aware and realistic about what you can or cannot do to move the needle forward. This will require painful decisions for some.
As I said last week, the publishing industry has an uncertain future, but it still has a future. This industry will go on in some form or another. People need information, entertainment and escape. They crave the content all of us produce. That appetite will not go away, no matter what economic disruptions are ahead. There will always be a demand for what we do best.
While it may be difficult to generate the level of revenue we had all hoped for when we set our 2020 goals, we can’t expect Adam Smith’s “invisible hand” to correct this this economic debacle. It’s not cynical to say that things will not magically return to “normal” in a matter of days or a few short weeks. But that doesn’t mean we should assume a hopeless outcome is inevitable either. Instead, now is the time to be proactive, creative and become true agents of change.