David Pecker's American Media Inc. is jumping right on fixing newly acquired OK! Weekly’s weak circulation—by cutting it.
Effective with the second half of 2011, AMI will whack OK!’s rate base to 625,000 from 800,000, a decrease of 22 percent.
The celebrity and fitness publisher of Star and Shape took the struggling weekly off Richard Desmond’s hands in June for a reputed $10 million to $15 million, ending a five-year experiment by Britain's Northern & Shell, which wanted to establish a foothold in the U.S. OK! went through a revolving door of executives and circulation ups and downs during that experiment, losing millions in the process—including a reported $25 million in 2010.
David Leckey, executive vice president of consumer marketing at AMI, said he planned to reduce OK!’s reliance on subscriptions, which include a sizeable amount of free, public-place circulation, whose value to advertisers is often questioned; and agent-sold subs, which are less profitable to the publisher.
“We want to make sure subscriptions contribute to the bottom line,” he told Adweek.
Subscriptions have grown over the years as a percentage of OK!’s circulation and accounted for nearly half of it in the second half of 2010, according to the Audit Bureau of Circulations.
The rate base cut will help bring OK! to profitability with the July 11 issue, execs there said. Making newsstand sales and paper purchases more efficient and reducing spending on celebrity exclusives also are helping, they said. The ownership transition continues this week, with the staff moving into AMI’s lower Manhattan offices on July 13, including Richard Spencer, who’s staying on as the top editor.
Cleaning up the circulation and lowering the rate base is the "right thing to do" considering the misses, print buyer Robin Steinberg of Mediavest said.
Goosing newsstand sales is still going to be a challenge. The celebrity-friendly OK! fell short of its rate base by 2.4 percent in the second half of 2010. Its problems have continued this year when it missed the rate base on 14 out of its first 21 issues, per the ABC’s Rapid Report, which consists of publisher-reported circulation figures. Many of those issues sold fewer than 300,000 copies on the newsstand, far below its newsstand average of 360,120 in the first half of 2010.
AMI executives said that under OK!’s previous ownership, the magazine wasn’t widely available, which hurt newsstand sales, and contended that slotting OK! into its distribution system would help. “We’ll focus on placement, pockets, and distribution,” Leckey said.