Thomas O. Ryder: 2004 AMC

October 25, 2004

Thomas O. Ryder
Chairman and CEO
The Reader’s Digest Association, Inc.
Board Chair
Magazine Publishers of America

CHAIRMAN’S REVIEW
American Magazine Conference
Boca Raton, FL
October 25, 2004

 

It’s good to see all of you.

This marks one year since I became your Chairman.  I would like to thank you, my colleagues, for your wonderful spirit of cooperation.  I think we are unique among competitors.  We fight like hell when the time is right.  But at the end of the day, we maintain a healthy respect among adversaries – and a unique collegiality when it comes to supporting our industry.  We come together to oppose the forces of evil that would do our industry harm.  More and more, this is emerging as one of our greatest assets.  There is a lot of evil lurking.

I want to thank our officers and committee chairs and Nina Link and her staff.  You are doing incredible work.  We are blessed to have talented and creative people in our midst, and I’m grateful to you for your generous efforts.

As we start this conference, I would like to take a look back at the year that was.   I suspect it is a measure of how difficult things have been that in this year’s annual reports three of our member companies listed their soda machines as a profit center.  I wish I could tell you that things are going to get better fast, but I don’t believe it’s true.

I am going to update you on four of the key areas that I identified as vital in my talk with you one year ago:  Postal issues, Advertising, Circulation and Diversity.

Let’s start with postal reform.  We made progress and won some hearts and minds, but our initiative got bogged down in the election year.  What a surprise. 

And yet, we are making progress.  Think about how far we’ve come.  Until recently, no one was even using the term “postal reform” on Capital Hill.  Now it is top of mind for key leaders of both houses of Congress.  Chair of the Governmental Affairs Committee, Senator Susan Collins, says she started each of this year’s hearings by reciting statistics reminding that the postal system supports a $900 billion mailing industry and nine million jobs.  I like that.

I also like that your MPA took initiative in reaching out to tell our story to elected officials.  Many of your officers made trips to Capitol Hill to tell our story.  We sponsored major events at both national political conventions, the first time ever for MPA.  This by-partisan show of courtesy gave us an unprecedented opportunity to meet and converse in high-profile yet personal venues.  This Government Affairs effort was led by our colleagues, Cathie Black and Ann Moore.

I think it’s fair to say that postal reform is now on the must-do list of the highest ranking Congressional leaders on BOTH sides of the aisle.  A blue-ribbon presidential commission delivered recommendations in favor of reform.  Committees in the House and Senate unanimously approved draft bills.  I should also point out that dozens of leading companies and associations that do not normally play in the postal legislative arena have joined in the fight for reform – organizations such as Citigroup, Capital One, the National Retail Federation and the National Association of Manufacturers.

So, some measure of reform will almost certainly come.  But, let’s be realistic.  Reform will not be a cure-all.  Rate increases of ugly magnitude will come in ’06 and will continue from time to time, just as sure as death and taxes.  The name of the game is not elimination, but rather mitigation.  And, we need to be better prepared to have the consumer share some of that increasing burden.

In advertising, I think we have a historic opportunity.  I have two words for you:  Watch TV.  I don’t mean that literally.  I mean, notice it.  Weakness in the TV industry means that the time is absolutely right to counterattack.  Their audience is declining… the costs are crazy… and, all the while, channels continue to proliferate.  High up the dial, the content is getting bizarre.  The latest reality shows feature John Gotti’s daughter and porno-rocker Tommy Lee.  Home designers show 50 ways to make your house ugly.  Bad cooking shows.  Obscure pseudo-sports.  What’s next?  The checkers channel?  Celebrity nude poker for dogs?  Eventually, it will all morph into one giant show called:  “Queer Factor – How to Marry My Big Fat Apprentice Survivor.”

“A vast wasteland”…  That’s the phrase Newton Minow coined to describe television programming 43 years ago, when he was FCC Chairman.  And this was back when there were programs that by today’s standards were thoughtful – Gunsmoke, Twilight Zone, Bonanza, Beverly Hillbillies and Pettycoat Junction !!!

There is a great opportunity to gain share here.  As you know, we are about to launch an ambitious three-year project to boost awareness in the advertising community about the effectiveness of magazines.  Our coalition includes member companies as well as suppliers.  And it’s going to make some noise.  Later this morning, Jack Kliger and Ed Kelly will tell you more about the Magazine Marketing Coalition.

Let’s get our argument together.  For advertisers, magazines have never been a better buy.  It terms of ROI.  In terms of environment.  In terms of accountability.  In terms ability to target the audience.  In terms of size of audience.  In terms of an alternative to inanity. 

Circulation… I think we’re making some progress there, too.  The Retail Growth Initiative has resulted in three “Top to Top” meetings – at Weis Markets, Barnes & Noble and 7-Eleven.  Five more are scheduled – HE Butt, Kroger, Albertsons, Meijer and Costco.  The Barnes & Noble meeting proved instructive.  Their leaders are bullish about magazines in stores.  And they were delighted to see publishers visiting them.  This is the nation’s third largest retailer, and normally they just don’t get visits like this.

We have agreed on some key economic benchmarks with some of the supermarket companies that paint a pretty favorable picture for magazines.  We’re also moving forward in other areas, including rethinking the way magazines are displayed – that’s a huge opportunity for us – as well as a new research proposal on “Magazines’ Role and Relevance to Supermarket Shoppers.”  John Loughlin and Peter Kreisky will give a progress report, including more about these benchmarks on tomorrow’s program.

On the subscription side of the business, we are working with Mastercard to develop a system to enable publishers to do continuous service or automatic renewal more easily.  And, we also intend to seek similar help from Visa and American Express.  We are working to clear up abuses in door-to-door subscription sales and to syndicate information on best practices in subscription sales.

And, finally, we are working with our friends at ABC to calm the waters in what has been a tough time for them and for us.  Thanks to John Griffin for his efforts as Co-Chair of the Circulation Committee.

In the area of diversity, we have two principal goals:

One is to retain and advance the careers of minorities whom we already have in our industry, and

Two, to create greater minority candidate pools for our companies to choose from – and promote the hiring of those minorities.

These efforts take personal and financial commitment – and I’m delighted that this organization and its members have provided both. Time Warner’s generous Leadership Grant got us going in the right direction.  I would also like to highlight the inspired efforts of Jim Berrien of Forbes and Cyndi Stivers of Time Out/ New York in helping us raise matching funds form all of you.  Together we have raised a warchest of almost $600,000 to help us advance this important cause.

We have launched an MPA Diversity Web site, which is a terrific new resource. 

This fall, we hosted a “diversity town hall” on multi-cultural issues both inside and outside of our industry. 

And, we are about to launch the Multi-cultural Leadership Coalition, the industry’s first business resource and affinity group.  Its goal is to provide members – people of color within the magazine industry – with increased mentoring and networking opportunities, and personal and career development.

Postal reform… advertising… circulation… diversity.  This morning I focused on the four areas of effort from the past year that I thought most urgent.  And, by the way, those will remain our focus next year.  I chose not to update you on two other areas that I identified last year – rethinking our economic models…  and how we make our products.  These are important areas as well.  And, I really want to talk about them….but maybe next year. 

You know as well as I that the issues we are focusing on are very serious ones.  As I told you a year ago, our efforts are just beginning.  They will not be fixed easily or quickly.  But if we continue to work together, we will make progress. 

Thank you.