Standard and Poor's outlook for U.S. mags

Standard and Poor, the rating agency, forecasts that magazine ad pages in the U.S. will post minimal growth in 2006, in the low single-digits, according to an article on the UK-Ireland edition of Yahoo Finance.

"Ad pages increased an anemic 0.3% in the first 10 months of 2005, according to the Publishers Information Bureau, as declines in pages for home furnishings, technology, and automotive -- the largest category -- offset improving advertising demand," said the article, which looked at all media, advertising and the music and entertainment businesses.

"The (magazine) industry has been struggling to reestablish a growth trend since 2001. The sector's share of total ad spending has steadily declined, to about 4.5% of total advertising expenditures in 2005 from 5% in 2000, losing to cable TV and the Internet. Complicating a bleak growth outlook, the industry is still embroiled in a scandal over the use of subscription agents that have overstated paid circulation, impairing affected magazines' credibility with advertisers.

"New magazine launches are likely to continue at a robust pace in 2006, as publishers seek to gain revenue share through better niche targeting -- increasing already stiff competition for circulation and advertising dollars for established titles.

"Circulation-related costs are expected to remain high. Paper, printing, and postage costs account for approximately 40% of magazine publishers' operating expenses. The industry will face a modest postage-rate increase, which will likely be implemented in January, 2006, the first hike since June, 2002. The independent Postal Rate Commission has approved a 5.7% increase in the postage rate for weekly newsmagazines, to 18.5 cents, and a 5.5% hike for household magazines, to 28.9 cents. Paper cost increases have eased in late 2005 and could be on a flattish trend going into 2006."