A Feb. 27 Business article reported that U.S. News & World Report discounts its advertising more than rival newsweeklies. U.S. News publisher William D. Holiber said that while the magazine sometimes offers deeper discounts than its rivals, it does not do so on a regular basis. (Published 3/1/03)
For the business side of news organizations, war is hell. The cost of sending reporters, photographers, television camera crews, producers and production equipment around the world -- as well as paying overtime and hiring temporary help stateside -- is high. CNN, for example, has budgeted more than $25 million to cover a war on Iraq.
In the short term, there is little chance to recover those costs. Television news channels, such as AOL Time Warner Inc.'s CNN and News Corp.'s Fox News Channel, plan to pull all commercials for at least the opening days of an Iraq war, costing each network about $1 million a day.
Even after the networks return to their regular commercial breaks, many sponsors don't. Advertisers, squeamish about seeing their products appear next to photographs or video of wartime death and destruction, frequently react by pulling their ads in a war's opening weeks.
Most television networks, newspapers and newsmagazines just accept the losses and hope that interest in the war will spur longer-term circulation and ratings gains.
But U.S. News & World Report -- the third-largest newsweekly by circulation, behind Time and Newsweek -- is retooling its design to provide advertisers with war-free pages in hopes that they'll stay put.
If war breaks out, U.S. News will publish what it calls a "2nd Front" inside the magazine, effectively splitting the magazine in two: war coverage in the front, everything else in the back. The back of the book, U.S. News hopes, will be a haven for advertisers that might otherwise have jumped ship.
"We are re-laying out the magazine so advertisers will feel that if they want to be in the issue that week but do not want to be near editorial that is showing the difficulties one knows go on in war graphically or even in words, then they can be in other sections," said William D. Holiber, publisher of U.S. News.
Magazine analyst and former Newsweek Inc. chief executive Mark M. Edmiston said he had never seen a magazine "create a war-free zone" for advertisers like what U.S. News plans, but he noted the common practice of pulling airline ads from publications with coverage of airline crashes.
U.S. News's radical approach may be unique, but the problem it addresses is not. All news media, including television, are bracing to absorb a loss of revenue if a war commences. A long conflict, however, could be good for business.
"The longer the war lasts, the more money we can make," said Larry Goodman, CNN's president of sales and marketing. But, he said, "we don't want to capitalize on the war. We're not out there saying, 'We're going to sell you higher ratings for March and April.' The Persian Gulf War lasted nearly three months and we ended up making a significant amount of money over the time period."
Television, though, is a trickier ad sell than print. Unlike in magazines, where an advertiser knows his ad will appear between, say, a health story and a sports story, advertisers have no control of what brackets their ads on television. That is why most just pull out completely at the beginning of a war.
"Most of our advertisers are sensitive to environment," said Paul Rittenberg, senior vice president of advertising sales for the Fox News Channel. "The toughest for certain is going to be travel and hotels. They're just going to have to be off the air for a while." He said his department will consult with all Fox News advertisers to gauge their comfort levels.
"There's no way around it for us," Rittenberg said. "This will be a short-term revenue hit. We'll hope we'll wind up down the road with the plateau of Fox News viewers going up."
The nature of the war will also guide ad sales, Goodman said.
"If, God forbid, the war is casualty-laden on the American side, that will cause sensitivities that are hard to anticipate and may cause more advertisers to shy away," he said. "If the war is as sanitized as the recent conflict in Afghanistan was, then we're not going to see any fallout whatsoever from major advertisers."
U.S. News's second section may be the magazine's only hope of retaining some advertising in the early days of a war.
"We've had several advertisers inform us that they don't want to be in at least the first few issues," Holiber said. He said some have expressed interest in putting their ads in the second section. Asked if any advertisers have said it would be okay for their ads to appear in the magazine's war pages, Holiber said, "No one."
As the third-largest newsweekly, with a circulation of 2 million (compared with Time's 4.1 million and Newsweek's 3.2 million), U.S. News can ill afford to lose advertising dollars. It operates in the red despite discounting its ads more than its rivals do.
"Their biggest concern should be whether people will be coming to the magazine, not what they're doing inside of it" during a war, said Newsweek's worldwide publisher, Gregory J. Osberg Newsweek, which is owned by The Washington Post Co. has weathered a tough past two years of its own -- with reduced ad revenue and deep budget cuts -- and only now is getting the whiff of a turnaround.
With the proliferation of cable television and Internet news outlets, the magazines have struggled to stay relevant with days-old news. They also have lost ad dollars to network television, which can better reach a mass audience. Advertisers that want to reach niche audiences -- such as boaters, hunters or gardeners -- place ads in magazines that serve those interests rather than in the general-interest newsweeklies.
From 1999 to 2000, Newsweek lost 24 percent of its ad pages, Time 25 percent and U.S. News 31 percent, according to research by Edmiston, the analyst.
Because of a glut of media, advertisers have been able to make demands of magazines that they could not make in the past, Edmiston said. Besides asking for front-of-the-book placement and other advantages, advertisers have demanded "special sections" that include puffy editorial content that essentially fills space between the ads, he said.
Further, newsweeklies face difficulties that non-news magazines don't, Edmiston said.
"A lot of niche-y publications believe advertising is part and parcel with what they're delivering and they will bend over backward for an advertiser," he said. "So newsmagazines -- and this would include magazines like Sports Illustrated, as well -- have increasing difficulty in resisting an advertiser who says: 'I am a food advertiser. Why don't you run recipes in Newsweek?' "