Though a Time Inc. executive reportedly cited “the virtual collapse of the sweepstakes business” as part of the reason for the planned suspension of Life magazine with the May issue, a company spokesman denied it is a sign of sweeps fallout to come.
“I wouldn’t extrapolate from the phenomenon that happened at Life,” said Peter Costiglio, a spokesman at Time, New York.
Circulation analyst Dan Capell, however, begs to differ.
“Will we see more of things like Life? I think we will. I just don’t know when,” said Capell, adding that he expects more magazines will cut circulation commitments to advertisers rather than go out of business.
For the past several years, Life’s subscriber base has hovered between 1.5 million and 1.6 million. In the 1970s, it was 8.5 million.
Costiglio said that Life’s situation was unique in that the public has grown cold on general-interest magazines.
“The challenge was two-pronged,” he said. Besides the magazine’s reliance on stamp sheets for part of its circulation, “there wasn’t any natural base of advertising.” Life’s ad pages dropped 9 percent last year.
The 64-year-old magazine relied on stamp sheets “to a fair degree,” Costiglio said. And poor performance by sweepstakes companies as a result of bad publicity and government scrutiny “was certainly felt at Life,” he conceded, declining to be more specific.
Still, Capell, who is publisher of Capell’s Circulation Report, Ridgewood, NJ, estimated that orders generated by American Family Publishing and Publishers Clearing House in 1999 were down 60 percent from 1998. Investigations set in motion by 32 states in early 1998 and civil suits by at least four states have resulted in consumers losing trust in sweepstakes and have caused AFP and PCH to tone down their mailings. “And those two guys were the main suppliers,” he said.
Most recently, PCH, Port Washington, NY, in February was ordered to pay $30 million to settle a class-action suit filed in Illinois. The company also has laid off more than 200 staff members, or more than 25 percent of its work force, since last fall. AFP’s parent company, American Family Enterprises, filed for Chapter 11 bankruptcy protection in November and agreed to pay $33 million to settle the outstanding legal claims of all class action and other private lawsuits filed against the sweepstakes marketer.
AFP and PCH officials could not be reached for comment.
Meanwhile, Life magazine is apparently the first sweeps-related magazine fatality.
“There are plenty of reductions, but nobody out of business,” said Capell, adding that TV Guide, Reader’s Digest and U.S. News and World Report have all reduced circulation recently.
More sweeps fallout is virtually certain, he said. “The only question is whether you’re going to get magazines going under, or just more significant cuts in their circulation promise to advertisers. My hunch is it’s going to be cuts.”
This isn’t the first time Life suspended publication. Time discontinued it as a weekly in 1972 and then brought it back as a monthly in 1978. Time said it plans to keep the brand alive online at Lifemag.com and by publishing occasional special issues.