Masthead News Archives
October 2005

October 27, 2005
Massive CAA contract changes hands
TORONTO—After six years with contract publishers Formula Media Group of Oakville, Ont., the Canadian Automobile Association has moved its three member publications (Leisureways, Going Places and Journey) to Toronto-based Redwood Custom Communications Inc., whose other clients include Kraft, Sears and General Motors. Redwood will merge the three titles into a single quarterly that will relaunch in February 2006 for 1.5 million CAA members nationwide.

The new name and design aren’t finalized yet, but each of the association’s five product areas will get custom content within their own distributions while uniting under a consistent national brand. Customized content will grow from reader research and feedback. Boyana Papia, CAA’s director of publication and special projects, said this ability to communicate with readers was what made the switch to Redwood so attractive. “It wasn’t just that [Redwood] had the editorial team. They had the data science and the research under one roof.” Papia thinks such reader access will attract a wider range of advertisers to CAA’s demographically broad membership.

Last year, Leisureways alone, with a circ of about 736,000, attracted $4.5 million in advertising revenue, including inserts and supplements, according to the ad-tracking firm LNA Canada.

The printing contract, previously accorded to Transcontinental under Formula’s tenure, has been awarded to St. Joseph Communications, parent of St. Joseph Media.

October 25, 2005
Frank to relaunch ink-on-paper edition
OTTAWA—Thanks to software that will significantly simplify the production process, Michael Bate says he’ll launch a magazine version of his satirical, gossip-mongering Web site eFrank.ca.

“It’s going to be the regular Frank. We’re going to have it as a supplement. We’re really finding that there’s a lot of demand,” he says. “There’s two different camps. One is the older set who are not tech savvy or they’re on dial-up or for whatever reason [the Web site] is not available to them, and they want it.”

The idea is to simply reproduce the site’s content in magazine format every two weeks with the help of software that easily converts Web pages into Quark documents. “It’s going to be just like the old magazine except that it will be fed by the online version.” It will be called Frank, and the Web product will remain eFrank. He expects to be on newsstands as soon as mid-November with an initial press run of 5,000 copies. Those who subscribe to efrank.ca will receive a copy of the magazine as well, Bate says. Newsstand and subscription prices have yet to be determined while access to the Web site is $9.95 per month. “I’m really excited about it because I don’t see it eroding the online base, which is growing really nicely,” he says, claiming it has 1,000 subscribers since launching last month. He adds that efrank.ca is a popular destination during the workday. “I thought people would be leery of reading it at work but it seems that’s where the action is. I guess they don’t work; they just sit there and troll the Internet.”

Bate founded Frank magazine in 1989 as a twice-monthly tattlesheet and guided it to lucrative infamy throughout most of the ’90s before its circulation began to slide in the face of mainstream competition. He sold the title in 2003 to a group of Toronto investors who tried to reverse the publication into journalistically respectable waters, and failed miserably. Bate reacquired the title earlier this year and relaunched it as a Web-only product.

October 20, 2005
Saturday Night suspends publication
TORONTO—For the fourth time in its 118-year history, Saturday Night has ceased publication. Today, owner St. Joseph Media conceded that its four-year, white-knight effort to position Saturday Night as a general-interest survivor in the age of specialized, niche media has come to an end.

“[A]dvertiser support—although favourable—has not reached projected levels,” said Donna Clark, the company’s newly appointed president who succeeded Greg McNeil last month. The magazine, published 10 times per year, was not turning a profit and “[g]iven our numerous growth opportunities and priorities, we are placing Saturday Night on hiatus,” Clark said in a statement today, alluding to last month’s purchase of Gardening Life, its newly sprung Interactive Media Services division and last year’s launch of Wish. SN’s last issue will be the Winter 2005 number, which will piggyback the National Post’s Nov. 26 edition.

“This is a black day for Canada and for freelancers,” said writer David Hayes, whose first of many feature contributions to Saturday Night was in 1984, under the editorship of Robert Fulford. “Saturday Night was one of the most important [journalistic] outlets in the country.”

Sharon McAuley, who joined St. Joseph Media in August as publisher of Saturday Night and Toronto Life, said that it was “a very difficult decision” because the editorial team and the product it produced were strong. “When I came onboard, I assessed the situations of both magazines to develop a strategic plan going forward,” she said, adding that it became apparent that profitability was not within reach for the controlled-circ title, which distributes 197,550 through the National Post. “I’ve been in the industry for almost 20 years now and an analysis of the greater forces indicates that going forward would be no way to bring this to profitability given that it’s a small circulation, relatively speaking, and a general-interest magazine. So, it’s positioning is not as targeted as what we’re up against in the competitive market.” The real “engines” of the magazine industry are the women’s service titles that offer both mass reach and targeted demos, McAuley said. The Walrus, which launched in September 2003, was not a factor in Saturday Night’s profit-and-loss situation, she said. While she declined to indicate how much St. Joseph had invested since acquiring the magazine, she said it was “comparable to a new magazine launch.” For a magazine of Saturday Night’s size, that would be in the neighbourhood of about $1 million per year.

She said every effort will be made to reassign Saturday Night’s nine editorial and art staff within the company. Their last day as SNers will be Oct. 28. Editor Gary Ross, in the slot for about 14 months, declined comment.

Sales data from Leading National Advertisers (Canada) for the first three quarters of this year show that Saturday Night’s ad sales (including inserts and supplements) increased 32.6% to $1.98 million over the same period last year and that ad pages (including inserts and supplements) increased 25.2% to 138.12 pages.

Conrad Black was the last benefactor of the magazine; he purchased the title in 1987 and later converted it into a weekly, supercalendered supplement to his fledgling daily, the National Post. When CanWest Global Communications acquired full control of the Post in August 2001, it killed the title a month later as accumulated Post losses were approaching a reported $200 million. Within days, McNeil’s Multi-Vision Publishing (later acquired by St. Joseph) had purchased the Lazarus-like glossy.

A history of hurdles

The first issue of Toronto Saturday Night hit the streets at 6 p.m. on Saturday Dec. 3, 1887. Then a city of 125,000, all 9,500 copies of the 12-page broadsheet sold out within a few hours. In today’s terms, that would be like readers in the Greater Toronto Area snapping up 380,000 copies of a newspaper in one evening. As the son of a preacher, founder and editor Edmund Ernest Sheppard was no stranger to theatrics, introducing his new journal as the most luxuriously produced, illustrated and written publication of its kind.
Dropping Toronto from its moniker, Saturday Night later assumed national influence under the editorship of Charles Frederick Paul (1909-1926). “He made a great many enemies,” Robert Fulford has written, “and he did so with gusto.” A Paul specialty was exposing business corruption; the plucky weekly became a must-read in the financial community. By 1937 it claimed to have the third-highest ad lineage in North America, bested only by Collier’s and the Saturday Evening Post. Circulation exceeded 30,000.
The Forties were brutal. In addition to paper shortages, Reader’s Digest and Time launched Canadian split runs that vied for ad revenue. Then a powerful new competitor emerged—the television set, which was mass produced beginning in 1947. Still a weekly, SN’s finances began their chronic slide in this decade. In ’49 the magazine converted from broadsheet to magazine format; in ’55 it converted to fortnightly frequency to rein in postal expenses. It still lost money.
Frequency switched to monthly in 1963 as part of an ill-fated scheme hatched by new owner and Social Credit party member Percy Bishop to merge it with The Canadian. It was a thudding failure and publication ceased.
Months later SN was revived by former editor Arnold Edinborough, who sunk $100,000 of his own money to float SN’s boat. Circ grew to 90,000. Robert Fulford began his illustrious 19-year editorship in 1968. Unable to turn a profit, Edinborough sold it for $1 in 1971 to a non-profit foundation that presided over its second death in 1974. Cause: too many unpaid printing bills. It was revived in ’75 with $100,000 from Imperial Oil and $300,000 from private investors. In 1979 Globe and Mail London correspondent (and later editor-in-chief) Norman Webster purchased the title, appointing John Macfarlane (current editor of Toronto Life) as publisher.
Conrad Black purchased the 130,000-circ title in 1987. Fulford decided to resign after lunching with his new boss and was succeeded by Globe foreign correspondent John Fraser; Macfarlane was replaced by Jeffrey Shearer in 1989.
In 1990, frequency was again cut from 12 to 10 issues per year in pursuit of a controlled-circ model that saw The Globe and Southam papers distributing nearly 400,000 copies. The plan failed to generate profits. Fraser left in 1994 and was succeeded by Kenneth Whyte who left in 1998 after accepting the editorship of the nascent National Post. Paul Tough succeeded Whyte as editor but later resigned after learning of the plan to convert SN to a weekly insert to the Saturday National Post. Dianna Symonds, who joined SN as Fulford’s assistant in 1982, succeeded Tough. With losses at the National Post and SN fast approaching $200 million, Black relinquished ownership to CanWest in August 2001. The following month—for the third time in its history—the magazine suspended publication. Within days, Multi-Vision Publishing president Greg MacNeil was negotiating its purchase. A deal was reached in November 2001.

Rising mail costs causing “downward spiral,” circulators told
TORONTO—One of Canada’s most senior publishing executives yesterday painted a grim scenario for the industry’s future if the current trend of increasing postal rates and decreasing postal subsidies continues.

Michael Fox, senior vice-president of Rogers Publishing, suggested the most recent reductions to individual magazines under the Publication Assistance Program could lead to big cuts in freelance and content budgets, a freeze on selling new subscriptions, reductions in circulation levels, a faster move to digital editions and the closure of marginal magazines caught in a new “downward spiral.”

Fox was speaking at a session titled PAP Attacked, conceived by the CMC Circulation Management Association and co-sponsored by Magazines Canada. The room at a downtown hotel was packed with about 60 circulators eager to learn what new reduced PAP support levels, which take effect Nov. 1, mean for their magazines… and for the future of Canada’s dominant subscription-based, mail-order consumer publishing model.

The percentage of a magazine’s postal bill paid for by the Department of Canadian Heritage through the PAP varies depending on circulation level and circulation type (paid or request). One of Fox’s many detailed slides showed a typical monthly consumer magazine that may have been able to raise its basic subscription price by only 2% since 2001 has, during that time, suffered a 117% increase in real mailing costs.

The problem is that while Canada Post raises its prices every year, the PAP fund is not growing. Meanwhile, with the addition of new publications added to the fund, each magazine’s slice of the pie is getting smaller. And support levels are geared so that larger circulation magazines get hit with the biggest real cost increases. PAP pays between 12.26% and 69.98% of a publisher’s Canada Post bill, depending on the variables.
(Visit http://www.canadianheritage.gc.ca/progs/ac-ca/progs/pap/neuf-new/avis-notice_08-29-2005_e.cfm for full details.)

The reduced support levels that take effect Nov. 1 translate into $7 million moving from the pockets of publishers into the pockets of Canada Post, Fox estimates. Another $4 million will move to Canada Post after a postponed cut to the PAP fund is finally implemented in fiscal 2006/2007. That’s an $11 million gap, a huge amount in an industry where “pennies are precious,” Fox said. Based on Statistics Canada data, Masthead estimates the $11 million swing reduces total industry profitability by 7.3%

Gordon Platt, head of publishing policy for the Department of Canadian Heritage, was on the hot seat as he explained the government’s decisions. He said the 2003 announcement by then-Heritage minister Sheila Copps to support more aboriginal, ethnic, local and minority-language publications is partly responsible for the decline in support levels for other magazines. This led to a discussion about whether the government’s policy towards supporting existing magazines had, in fact, changed fundamentally, and whether the industry “missed” the importance of those changes when they were announced in 2003. About 1,300 publications receive PAP support.

(Many other factors have helped cause today’s postal crunch. They include the 1997 World Trade Organization ruling that led to the end of special, higher postage rates for foreign-owned magazines; annual Canada Post rate increases that have often exceeded the rate of inflation in recent years; and the federal government’s policy of no indexed programs. Even the success of PAP, in terms of helping to create a successful Canadian publishing industry with 60% more titles than 1960, was cited as a factor that has put more demands on the program.)

“De-linking” the PAP subsidy to Canada Post was suggested as one way to help bring competition into the distribution game to help control costs. Currently, Canada Post enjoys exclusive-supplier status with regard to the PAP program; publishers must patronize the monopolistic Crown agency if they want to access PAP—the funds are not available for any other distribution service, but they could be if the political will existed. Rivals to Canada Post have threatened to emerge in the past but a high hurdle has been their independence from PAP.

Another suggestion was to take the battle into the wider political realm, since policy is ultimately dictated by elected parliamentarians representing the wishes of Canadians. (Witness the recent end of the CBC lockout after pressure from backbench MPs.) “In the grand scheme of things, [$7 million] is chump-change,” said circulation consultant Scott Bullock. With a minority government and an election looming, Bullock suggested the industry has “a golden opportunity” to affect change politically, particularly since the Liberals never made good on their promise to kill the GST on reading.

CMC plans to post an abridged version of Fox’s presentation on its website; visit our Industry Links page for Web addresses. Follow MastheadOnline for updates on this story, and watch for the November/December issue of Masthead, featuring a Circulation Roundtable on the biggest challenges affecting circulators today.

October 18, 2005
Taskforce to examine single-copy channel
MONTREAL—With rising postal rates and diminishing postal subsidies, the newsstand has acquired added importance as a distribution channel for publishers. Next month, Transcontinental Media president André Préfontaine will lead a Magazines Canada taskforce on single-copy sales in Canada and how domestic magazines can excel. “One of the areas where I think we can grow market share is on the newsstand,” he said yesterday from his Montreal office. Foreign titles dominate Canadian newsstands, accounting for an estimated 85% of sales. “We need to really understand this channel and see how we can actually build a presence for Canadian titles within the newsstand environment. It’s not obvious when you just look at it quickly. It needs study and analysis.” Préfontaine added that the taskforce will only be effective if it seeks out the perspectives of the various stakeholders. “We will have to bring all of the actors together—distributors, wholesalers, publishers and retailers. We need to all sit at one table.”

The initiative is part of a larger though informal project known as the “Fight for 50” that took shape at last February’s Creating Canada conference in Ottawa. Canadian magazines have a 41% share of the entire magazine market, the highest penetration among all domestic cultural industries. The heavily subsidized feature film industry has 2% market share, by comparison. The idea is to boost market share to 50%.

At the conference, Préfontaine suggested the industry set a goal of 45% market share, which was later anted up by Rogers Publishing CEO Brian Segal to 50%, a number that stuck throughout the rest of the conference.

Once Transcontinental’s budget season wraps up next week, Préfontaine will begin “structuring how I’m going to approach this [taskforce].”

October 13, 2005
McCallum “still considering” The Walrus
OTTAWA—The waiting game continues for all those who have an interest in the fate of The Walrus—including the magazine’s staff, freelancers patiently awaiting payment and paying readers, who number close to 50,000. But publisher Ken Alexander suggested a decision on the magazine’s crucial application for charity status may be announced next week. “I’m not at liberty to say anything right now but I will have news next week…after Tuesday,” he said this morning. Meanwhile, National Revenue Minister John McCallum “is still considering the matter at this point and absolutely no decision has been made,” said press secretary David Hurl in an e-mail response yesterday. Asked if the Ministry was on the verge of adopting a more open-minded policy toward granting publishers charity status, Hurl replied that “[t]he Canada Revenue Agency evaluates each charitable application based on its own merits and set of circumstances. If others wish to apply, the CRA will evaluate their applications on a case-by-case basis.”

Hurl said recent examples of magazines that have been given charity status are The Dandelion Magazine Society (July 2003), which is affiliated with the University of Calgary’s English department, and Vallum Magazine (April 2003), a twice-annual, Montreal-based literary magazine. Since it launched in October 2003, The Walrus was to have been supported with up to $1 million per year for its first five years from The Chawkers Foundation, a charity established by Alexander’s father, Charles. But to receive that money, The Walrus ideally also needs to be a charity. Alexander has already invested more than $2 million of his own money to keep The Walrus afloat.

October 12, 2005
Zi Magazine to fall stillborn from the press
CALGARY—The publisher of a glossy lifestyle magazine for “young sophisticates” aged 18 to 34 has suspended publication after her first issue, which will debut next week.

Eponymously named after founder, publisher, editor-in-chief Zinat Damji, 75,000 copies of the premier issue have just come off the press. About 45,000 copies will still piggyback the Globe and Mail and National Post in Vancouver, Calgary and Toronto on Oct. 20, and the title will still appear on urban newsstands across the country, but there will be no second issue. In an interview yesterday, Damji said that an unexpectedly low level of advertising support and high start-up costs have prompted her to fold the operation. “The reality is everything costs a lot of money, far more than I had ever anticipated spending. I have already spent far more than I ever thought I would on one issue alone, and now to go on an on to the second and third and fourth issue, even if advertising comes after the fourth issue, it will never, ever make up for the one year’s worth of money I’ve put in.” Damji wouldn’t disclose how much she’s invested so far. She said she is open to offers by anyone interested in buying the magazine.

The magazine targeted “Generation Zi”—a male and female demographic “of truly global citizens, with energy, style, personal flair, intelligence, sophistication and a competitive spirit.” Damji, a Calgary based entrepreneur, says she was the first woman to build a non-deposit trust company in Canada. She sold Valiant Trust Company to Canadian Western Bank in April 2004.

October 6, 2005
Ontario tax man to clarify PST rules for controlled circ mags
TORONTO—The Province of Ontario’s definition of what constitutes controlled circulation is contradictory. It’s unclear which titles are exempt. According to the Ministry of Finance’s Guide 507, publishers of controlled-circulation magazines are exempt from the 8% provincial sales tax (also called the retail sales tax in the guide), if the magazine is mailed, delivered or handed off to specific individuals. That means that publishers do not have to pay PST on their production costs (printing, prepress, photography, editorial). However, “If the public can help themselves to a free magazine that is placed on a counter or newsstand, or handed out on a corner to those passing by, the distribution of the publication is not being controlled…In this case, the magazine does not qualify for exemption,” according to the guide. Collection works on the honour system; publishers are expected to voluntarily remit monies owed. (Note: publishers of paid-circ magazines are exempt from paying PST in this context.)

The problem is, the ministry’s definition of controlled is bizarre. According to Guide 507, a giveaway magazine stacked in piles “at theatres, cultural events or sporting events” is PST exempt, yet a freebie about widgets stacked on the counter at a widget shop is not. So, publishers are wondering, how does the guide apply here? “We are trying to establish the very same thing,” said a source at the Ministry who did not wish to be identified. “We are presently involved in trying to establish a more clear set of guidelines for this.”

The Ministry is currently assessing the exemption status of at least two publishers who have been hauled onto the carpet, one of which is quarterly children’s magazine YTV Whoa!, with about 245,000 copies distributed to kids at more than 320 Pizza Hut locations, says publisher Beverley Paton.

Exposure to the tax could have far-reaching implications for many publishers given the spectre of retroactive remittance. MastheadOnline will follow the story very closely.

October 4, 2005
Publishing veteran passes away
OAKVILLE, Ont.—Magazine broker Peter Perry died on Saturday at his home at the age of 67. Perry was well known to many as a helpful, laid back and unfailingly scrupulous industry peer. He was the founder and, until recently, the engine of the Periodical Publishers Exchange—a monthly dinner club that serves as a valuable forum in which publishers can share ideas. As a magazine broker—a line of work where confidence must be assured—Perry was a pioneer, and for the last 21 years he served to connect sellers to buyers.

From the mid-1960s to the mid-1980s, Perry owned Canadian Funeral Director magazine, a very profitable title. But it was a lot of work. “I was burning out,” he said during an interview in January 2004. So he decided to sell CFD in 1984. The problem was, he couldn’t find a broker. His printing rep expressed an interest. “So I sold it to him. Then I was unemployed. And I said, ‘Well, we’ll just see what happens when I hang out [a magazine broker] shingle for a while.’” He started getting calls “right off the bat. Within three months…I had sold my first magazine, a whopper…and I put a cheque in my pocket for $48,000 and I thought, ‘Well geeze, that’s kinda neat. I wonder if there’s any more of those.’”

Perry was a fount of publishing wisdom, and he enjoyed sharing his expertise. “His many stories,” recalls Morley Lymburner, a PPE member and publisher of Blue Line magazine, “included tricks on how to get payment from deadbeat advertisers. One in particular simply ignored all his attempts at getting payment until he wrote a press release asking them if they wanted to comment on a story he was going to publish. The story indicated the company was on the verge of bankruptcy as attested by its refusal to return creditors’ phone calls. Full payment was made two days later.”

Perry was diagnosed with lung cancer earlier this year and had recently undergone chemotherapy. A service will be held today at 1 p.m. at the Kopriva Taylor Community Funeral Home, 64 Lakeshore Rd. West, Oakville. E-mail condolences may be sent to kopriva@eol.ca.

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