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An Open Letter to Lachlan Murdoch re Acquiring Adweek et al

Lachlan Murdoch and his Illyria investment company are reported to be closing in on a $70 million deal to acquire the Adweek group, The Hollywood Reporter and Billboard from Nielsen Business Media. Before he signs on the dotted line, there's a few things he should know. Here's an open letter describing them.

Dear Mr. Murdoch,

It is really nice that you are interested in acquiring Adweek, Brandweek, Mediaweek, and the other media trade mags that have covered the ad biz for the last three decades. You may be hailed as a hero by the staff there for doing so, as you will be the first owner of those titles to display an actual interest in publishing since VNU acquired Nielsen in 1999 (keeping the Nielsen name).

The publishing group has two problems: Internal and external.

The internal problem at the Adweek group is that it has been badly managed since it was acquired by VNU in the late 1990s. Until that time, the company was a pure publishing company and the various titles had some control over their own destiny. Since then, the products have essentially been running on a combination of autopilot and benign neglect -- editors have asked for more resources and been given cuts, but survived the ax completely only because, next to Nielsen's audience measurement business, Adweek et al were too small to rise to the top of management's priority list. (And managers there were many. I have literally lost count of the number of managers the magazines had atop their mastheads who neither sold ads nor wrote copy but for some reason drew salaries out of the value being created by the writers and sales staff beneath them. It's in the dozens since the 1990s.)

Another odd factor hobbling the Adweek group -- which your acquisition could potentially cure -- is that managers at the magazines don't actually control their own web sites. Those are controlled by Nielsen's tech department. Nielsen liked this structure because the consolidation of tech ops saved money in the short term.

However, editorial managers must apply to the tech people to get anything done on their sites -- such as a redesign -- and then the tech people put their requests in a queue ordered by importance. It thus can take years for major changes to be made to the group's web sites. The most famous example: Editors at Brandweek asked their bosses to create blogs for their staff in 2004. The tech department finally created them in 2007.

This is one reason why the Adweek websites look so primitive. Editors don't have the tools to change them. Allowing the editors of the various magazine brands to actually control the staff that maintains their web sites would go a long way to making these properties more attractive to readers and thus advertisers.

The external problem is one you cannot solve. You already know how the web is grinding the news business into disaggregated dust. But there's a structure to the Adweek market that also militates against it. It looks like this:

At the top is Ad Age, the oldest and biggest brand in the business. It has a mag/web audience that is larger than Adweek's but about equal to the Adweek/Mediaweek/Brandweek combo combined.

At the bottom is MediaPost. It publishes only on the web and thus probably has the smallest and least established combined mag/web audience. But because it does not have those legacy print costs, and only publishes on the web, it is a nimble beast.

Adweek et al are thus squeezed between the two. Not as large as Ad Age, but not as nimble as MediaPost. With the advertiser base for all three of these brands being disaggregated by the web, it will take a canny owner indeed to rescue the titles.

( graph of traffic at Adweek, Ad Age and MediaPost -- click to enlarge.) Oddly, the one publishing group that has the chops to do it is Haymarket, which owns Campaign, PRWeek Mediaweek in the UK and the Brand Republic group. Notice how Haymarket already owns two brands with the "-week" suffix. And notice how much more impressive the Brand Republic web offering is. The Adweek group would fit seamlessly within it, and come under the control of managers who really know what they are doing.

Your problem is that by paying $70 million you will need to make that money back somehow. Selling Adweek on to Haymarket may require too high a price. In which case, you're stuck with a business problem to which the only answer is to relentlessly grind down your margins until MediaPost or Ad Age -- both privately held -- falters. Good luck with that.

Sincerely, Jim Edwards, former managing editor at Adweek and a former senior editor at Brandweek.

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