Wednesday, September 05, 2007

Bauer Upping Most Low-Cost Weeklies' Cover Prices

Bauer Upping Most Low-Cost Weeklies' Cover Prices
Lucia Moses

Bauer Publishing, which built its business on the low newsstand cover price model, will raise prices on most of its 11 titles, the company confirmed.

In Touch and Life & Style weeklies, which sell more than 2 million copies on the newsstand at a price of $1.99, will go up to $2.99. On the women's service front, First for Women will go to $2.49 from $1.99; and Woman's World to $1.79 from $1.49. Teen titles J-14 and M will go to $3.99 from $2.99. Soaps in Depth will go to $3.99 from $3.50. The increases will take effect at the end of October and early November.

The moves come as major wholesalers have been pressuring Bauer and other low-cost magazine publishers to raise their cover prices in an effort to improve their profits. A recent study by Harrington Associates found wholesalers lose money on magazines priced under $2.49 (wholesalers get a percent of the cover price of each magazine they sell, a disincentive for them to carry low-priced magazines).

Relatedly, three wholesalers have made sharp distribution cuts in the past year with an emphasis on low-priced titles, which have proliferated in recent years. A source at a major wholesaler said that in addition to raising prices, Bauer agreed to appease wholesalers by selling its magazines at a higher discount.

"I think they realized wholesalers weren't getting enough out of their margins to cover their costs," the source said of Bauer. "In our view, they've come a long way in terms of making their products more viable."

Hubert Boehle, president, CEO, Bauer, in his first interview on the cuts, said discounts have been adjusted in some cases, although he contested the notion that low-priced titles are unprofitable for wholesalers. Asked if wholesaler pressure played a role in the pricing increase moves, he said, "The wholesalers obviously are happier with high prices, and we are working with the wholesalers to see that our sales remain at the same level and both sides will be in a strong position."

Predicting a price increase's impact on newsstand sales is difficult, but observers have pointed out that Bauer has built its business on low cover prices and relies heavily on circulation revenue. "No one knows what will happen to their sales, but they'll still be a low cover price title [publisher,]" the wholesaler source said. Observers also will be watching to see if other $1.99-and-under titles, which include Meredith Corp.'s Family Circle and Hearst Magazines' Quick & Simple, will follow Bauer's lead in raising their prices.

Boehle said he doesn't expect newsstand sales of Bauer's titles to fall off following the increases, noting that, especially in the case of the celebrity weeklies, Bauer's will still be priced significantly below their rivals.

Northern & Shell's celeb weekly OK! went to $2.99 from $1.99 earlier this year, and Time Inc.'s People will go up to $3.99 from $3.49 this month. Wenner Media's Us Weekly and American Media Inc.'s Star are priced at $3.49.

Boehle also noted that Bauer teen title Twist had a recent price increase, with no impact on newsstand sales. Twist went to $3.99 in October/November 2006, from $2.99.

"If you look at our pricing history, we've held our prices for a long time while other publications have gone up, the most recent example being People," he said. "All are in very good shape editorially, and we offer a great value to consumers. And since there has been a general increase in pricin

No comments: