Television Is Changing. Can Any Magazine Keep Up?

The New York Times > Business > Your Money: "Inside TV, aimed at young women, is an important step in Gemstar's bid to revive its sagging fortunes. Much of the problem lies with its most visible businesses: the once mighty TV Guide, with a circulation of more than nine million a week, and the TV Guide Channel, which offers scrolling basic cable listings in 77 million homes.

The two businesses account for more than half of its revenue, and both are in trouble. Subscribers, particularly younger television viewers, are jumping to interactive program guides - essentially search engines for TV listings - and advertisers are following them. The company posted a net loss of $94.5 million last year on revenue of $732 million, and its stock has been hovering only slightly above its 52-week low of $3.97.

Gemstar has interactive guides of its own. It started an updated product called i-Guide last August and has entered into a joint venture, called GuideWorks, to develop products with Comcast. Whether they will grow enough to assuage concerns about the future of the TV Guide franchise is unclear, particularly because viewers who sign up for an on-screen guide will have less need for TV Guide magazine and the TV Guide Channel.

Recent advertising numbers for TV Guide have done little to convince skeptics. The magazine had almost a quarter fewer ad pages this year through its April 3 issue, compared with the same period last year, according to figures from the Media Industry Newsletter. Among major weeklies, only USA Today Sports Weekly fell further. Many, including Us Weekly and People, increased 15 percent or more.

In a presentation to Gemstar's biggest investors, the company identified a quandary for TV Guide, 95 percent of whose circulation is by subscription: a large portion of the subscribers are "traditionalist," "older, 65-plus" and "more analog," compared with those who are listed as younger and "digital." Mr. Loughlin did not say what percentage was in the "older" category, but he conceded that TV Guide's subscribers were unlikely to impress the advertisers in a more upscale publication like, say, Vanity Fair. "It's a mass book," he said of TV Guide. "It isn't Traditional Home."

In its 2004 annual report, Gemstar acknowledged a "substantial decline" in program advertising - the ads for particular movies and shows in the listings. It added that the decline of these ads, the core of TV Guide's ad revenue, "could be permanent."

Consumer ads are not faring much better. In the interview, Mr. Loughlin said a decrease in pharmaceutical advertising hurt ad revenue in the first quarter. And, in general, TV Guide's readers are not the kind of consumers whom advertisers are most eager to reach. According to calculations by Mediamark Research, an audience research firm, the median household income of TV Guide readers is $48,516, about $3,000 less than the national median as computed by the firm. The median age of TV Guide readers, 44.1, is about the same as the age of USA Today readers, but it is still older than the 18-to-34 group that many advertisers covet - hence the need for Inside TV.

Circulation revenue is also a problem. In a recent regulatory filing, Gemstar suggested that some subscribers received the magazine at very low cost.

Gemstar has struggled with two possible strategies for TV Guide, according to people who previously worked at the magazine or had discussed working there. One would have been a radical change in TV Guide itself, with a more targeted circulation. The other option, the road apparently taken, was to create satellite magazines and to leave TV Guide more or less as is. Rupert Murdoch, whose News Corporation owns 42 percent of Gemstar, warned Mr. Loughlin not to alienate TV Guide's existing readers, according to someone who has discussed strategy with Mr. Loughlin.

The first issue of Inside TV features Eva Longoria of "Desperate Housewives" on the cover. As a sign of the competition it faces, Vanity Fair, In Touch and The Star also had "Desperate Housewives" stars on covers of issues at checkout counters last week.

There is no shortage of celebrity magazines. Just this month, American Media Inc., which publishes The Star and The National Enquirer, said it planned to start Celebrity Living Weekly. The new offering looks like a low-cost version of In Style, the celebrity lifestyle magazine from Time Warner, which also publishes People.

Other competitors are In Touch and Life and Style, from Bauer Publishing USA. And still more rivals may appear: Wenner Media, which already publishes Us Weekly in a joint venture with the Walt Disney Company, has said that it is thinking about starting another celebrity magazine.

The reinvention of celebrity magazines has increased competition not only for reader loyalty and access to celebrities, but also for space in the magazine racks at supermarket checkout counters. These recast magazines, which emphasize bright pictures over text, rely on impulse buying by food shoppers looking for a bit of fun.

As a result of that competition, the cost of renting supermarket space has climbed sharply. Magazine executives say their companies have to pay a one-time set-up fee of as much as $70 for each "pocket" in a rack, although Mr. Loughlin said Gemstar paid much less when setting up distribution for Inside TV. Still, it doesn't help Gemstar that the biggest supermarket magazine distributors are owned or controlled by competitors - Time Warner, American Media, Hearst and Condé Nast.

One indication of the depth of Gemstar's problems is the extent of a recent executive shakeup. Its chief executive, Jeff Shell, quit last December. And on a single day last month, three other executives left: Ian Aaron, president of the TV Guide Television Group, which includes the TV Guide Channel; Douglas Macrae, president of the company's consumer electronics division; and Gloria Dickey, executive vice president for administration.

The News Corporation has sent over two of its executives to help Gemstar: Richard Battista, the former executive vice president for business development and strategy at the Fox Entertainment Group, is the new chief executive, and Anthea Disney is the new executive chairman. Ms. Disney retains her job as executive vice president for content at the News Corporation.

JOHN MOTAVALLI "