The Italian consumer magazine market in 2010 was again characterised by the recessionary trend that has affected the world’s leading economies since the second half of 2008.
While less severe than the previous year, this has affected magazine advertising, which saw a further decline (-5.4% in terms of value, Source: Nielsen) in an overall context that was essentially positive (thanks to a recovery in television advertising), circulation, where there was ongoing weakness (-5.8% in terms of copies), and, finally, add-on sales, where there was a further sharp downturn (-23.6% in terms of value).
All of which makes Mondadori’s performance in 2010 all the more significant in terms of both profits (despite the unexpected impact of the cancellation, from 31 March, of government subsidies on postal charges for subscription copies) and revenues.
Magazine revenues in Italy in 2010 amounted to €471.4 million, a fall of 4.1% on the same period of last year.
| (in €m) | 2010 | 2009 |
|
|---|---|---|---|
| Magazine revenues | 440.5 | 462.0 |
|
| Other revenues | 30.9 | 29.8 |
|
|
|
471.4 | 491.8 |
|
| Operating costs | (423.0) | (463.4) |
|
| Gross operating profit | 48.4 | 28.4 |
|
| Amortisation and depreciation | (1.6) | (1.8) |
|
| Operating profit | 46.8 | 26.6 |
|
After the marked slump in 2009 (-14.1% on 2008), the results achieved by Mondadori titles, the main component of the area’s business, can be considered encouraging by examining a series of phenomena:
- a 4% fall in circulation revenues, in line with the market of reference and the consequent maintenance of leadership and market share;
- a fall of 8.7% in revenues from add-on sales, a markedly better performance than the market as a whole. As a result, Mondadori’s leadership was further strengthened, with a market share that is now more than 35%. The performance that allowed the company to outstrip the competition was based on the articulation of the activities across different types of offering (DVDs, CDs, books and miscellaneous goods), the strength of brands such as Panorama and Tv Sorrisi e Canzoni and a careful selection of initiatives;
- a moderate slide (-1.9%) in advertising revenues in line with the market and decidedly better than the top competitors in the magazine market, with a consequent increase in market share;
- the particularly positive overall turnover of the Magazines area was the result of a good performance by weeklies. Meanwhile, with some significant exceptions for products involved in specific re-launches, the performance of monthlies was markedly weaker.
The actions that allowed Mondadori to successfully contrast this still problematic context were developed along two main lines: one aimed at exploiting the benefits deriving from the multi-year reorganisation plan and the other at supporting the development of the product portfolio.
Among the most significant phenomena in the year were:
- the deployment of the benefits from the reorganisation plan that has affected both editorial and management structures;
- the editorial revision and subsequent re-launch of a number of monthlies: the changes made to Grazia Casa, Interni, Casa Facile, Cucina Moderna and Panorama Travel have been well received, on both the advertising and circulation sides. Also in the monthly segment, a new product, Guida Cucina, was launched in the last quarter;
- the radical reconfiguration, accompanied by significant marketing investments, in the weeklies Panorama and Chi, in the first half of the year, was followed in the summer by a new phase of investment for Tu Style, which to date has achieved exceptional results with weekly circulation now consistently over 200,000 copies;
- an intensive programme of launches in the add-on sales segment resulted in impressive results, often well above expectations;
- the launch of further brand extension activities to develop new revenue streams;
- the combination of traditional print versions with a presence on new devices (iPad) by certain titles, Panorama and Grazia;
- event organisation, for example Fashion&Design, in collaboration with the advertising sales company, with the aim of creating new communication formats;
- the development of activities around the country with promotional initiatives developed in agreements with leading retail chains;
- a management approach based on maximum rigour aimed at generating further efficiencies in all areas of the business.
Special attention was paid to the issue of subscriptions.
From 1 April, government subsidies for subscription postal charges were abolished and the Italian postal service, Poste Italiane SpA, later limited deliveries to 5 days out of 7 on the traditional network.
In response, Mondadori introduced a project to recover efficiency and profitability, reducing to a minimum the impact on the recruitment of new subscribers.
Results over the two-year period 2010-2011 will help contain the impact of the increased charges introduced.
The Press-Di subsidiary increased its revenues thanks to the positive effect of distribution services for new third-party publishers, such as Bonelli, Ubisoft and Mani di Fata.
At the beginning of 2011 an agreement was reached to manage the subscriptions of Hachette-Rusconi.
What follows is a brief outline of the circulation and add-on sales situation.
Circulation
In a highly negative market context in which circulation was down by 5.8%, Mondadori confirmed its leadership with a market share of 34.2%. Regarding the performance of the company’s main titles, we would note that Panorama held up well in the newsstand channel; as mentioned above, there was a marked improvement by Tu Style, which is now consistently one of the best selling women’s weeklies; there was a positive performance, compared with the reference market, by Chi and Donna Moderna, significant growth by Grazia, there were new editorial formulas for Casafacile and Interni and satisfactory results for the three monthly supplements to TV Sorrisi e Canzoni.
Add-on sales
Also in 2010 the poor performance of this market was particularly marked (-23.6%), and, for the first time, there was a fall in the average sale, along with a fall in the number of initiatives (-9%) and average prices (-2.8%).
In this context, Mondadori confirmed a performance that was far better (-8.7%), thanks mostly to stability in the home video offer and significant growth in classic collection series, such as l’Uncinetto, Hello Kitty, il Mondo di Patty and la Casa delle bambole. There was a fall in the number of editorial initiatives, among which, last year, there were excellent results for cookery books and musical products.
International
The overall revenues generated by the International area increased by 36.6%:
- licensing revenues grew by 36.4%, thanks to the positive performance of Grazia UK and Grazia Holland, as well as Grazia Germany and Grazia France, which was only launched in the second half of last year;
- revenues from advertising sales in Italy for the network grew thanks both to the new editions and revenue growth for existing titles (UK +14%, Russia +67%).
The performance of the 50-50 joint ventures in Russia and China was decidedly better than the previous year and well ahead of budget expectations, in particular in terms of advertising.
The Attica subsidiary was severely affected by the financial crisis in Greece and the Balkans and witnessed a reduction in advertising revenues of around 27% (-21% on a like-for-like basis).
Energetic action on costs already underway helped to contain the slump in revenues in 2010 and will have an even greater impact on the results of 2011.
Digital
The total advertising market in 2010 showed gradual improvement (+3.8%, Source: Nielsen) compared with 2009, a year that was notoriously difficult for advertising. The most dynamic medium in 2010 was the internet, which grew by 20.1%.
The Mondadori sites increased their gross revenues by 40%, thanks mainly to the performance of women’s sites, led by Donna Moderna and followed by Grazia, which benefited in the initial development phase from the launch of Graziamagazine.it and will continue for the rest of 2011 with a plan of progressive releases.
The creation of a dedicated sales force for the web with the sales company Mediamond has increased the effectiveness of the Mondadori offer.