USA Weekend shuts as costs spike and ads tumble
The circulation of the Sunday supplement, which was stuffed into newspapers delivered to as many as 70 million homes a few years back, has fallen today to about 18 million, according to a knowledgeable source at Gannett Inc., the parent of the publication.
With advertising sales collapsing by nearly half in the last few years, USA Weekend was expected to produce about $40 million in revenue in 2014, yielding losses in excess of $10 million in each of the last two years, according to the source, who declined to be identified because s/he is not authorized to speak with the press.
Some 30 advertising and editorial staffers will lose their jobs in the shutdown.
The demise of USA Weekend will leave the contracting Sunday supplement market to Parade Magazine, whose distribution is about 32 million copies. A few years back, its circulation was double that size, according to industry sources.
Financial information is not available for Parade because it is privately held. However, industry sources say revenues today are in the neighborhood of $60 million, as compared with $100 million in the last two or three years.
Parade was sold in the fall to Athlon Media by Advance Publications, which had owned the title since 1976.
The once-robust Sunday supplement business unraveled as the result of the declining economics of newspaper publishing and the changing demands of advertisers.
In the heyday of newspapers – when industry-wide revenues and profits were approximately twice as large as they are today – the publishers of USA Weekend and Parade were able to charge local publishers for the right to distribute the magazines in their Sunday papers.
When newspaper advertising began the slide that has taken it today to less than half of the record $49 billion achieved in 2005, the Sunday supplement publishers found themselves first absorbing the costs of shipping the product to local newspapers and eventually paying local publishers to distribute their magazines.
The flip in the distribution model not only eliminated tens of millions of dollars of annual revenues for the Sunday supplements but also burdened them with tens of millions in new costs.
“The cost structure got crazy,” said an executive who tried to turn around the decline at USA Weekend. “You could afford to pay people to take the magazine if you had enough advertising but this doesn’t work if you don’t.”
The demand for advertising in Sunday supplements collapsed because most national advertisers are not willing to purchase space in publications that require copy to be submitted weeks in advance. “Advertising in print is soft, anyway,” said the executive. “When you can sell it, you get the copy days before the paper is printed. It is almost impossible to get people to commit a month ahead.”
The demise of USA Weekend will punch a hole in the budgets of publishers who were being paid to distribute the supplement. Because the payments are based on the circulation of the participating publisher, metro papers that formerly carried USA Weekend instantly will lose as much as hundreds of thousands of dollars in annual revenues.
With the losses at USA Weekend soon to be stanched, Gannett plans to step up the distribution of content and advertising in the USA Today-branded sections it has been supplying to its network of more than 80 daily papers.
The modular sections, which are edited by a small team of editors at USA Today near the nation’s capital, are being credited internally at Gannett with producing $20 million in additional circulation revenues for the company’s dailies.
This has been made possible, said a corporate source, because the daily USA Today supplements have cut churn and enabled local publishers to increase circulation fees. Building on the momentum the daily sections have achieved, Gannett plans a major ad-sales push in 2015.
While the USA Today supplements to date have been available only to Gannett-owned papers, the company has begun a pilot program to offer USA Today pages to non-affiliated papers.
The executive said s/he believes the real-time delivery of daily USA Today supplements will please both cost-conscious publishers and modern readers.
The delivery of fresh daily content “can produce a more relevant product that can succeed without even selling more advertising,” said the executive. “The months-old articles we used to put in the Sunday supplement don’t have the same value for readers any more.”