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The industry today Publishing in the knowledge economy 8.9.2 Profitability Indications of profitability and productivity are drawn from only the largest companies in the industry, as reported in their reports and accounts and analysed by Prospect Shop. This data shows an increase in sales per employee but a slight fall in profit and return on capital. The rise in capital per employee is quite marked. Table 8.5 Financial data (based on leading 150 companies, but actually drawn from 112 that filed) 1997-98 1998-99 1999-00 Return on capital 36.6 33.2 28.8 Pretax profit margin 12.7 11.4 11.2 Profit per £ of pay 0.82 0.73 0.69 Return on investment 33.9 30.4 25.2 Stocks/sales 2.0 2.0 1.9 Pay per employee, £ 19359 20861 22283 Sales per employee, £000 124 131 136 Capital employed per employee, £000 44 46 54 Exports/sales 13.4 12.7 11.2 Debt/net worth 103.6 85.4 80 Source The Prospect Shop 8.9.3 International comparisons The data in Figures 8.11 and 8.12 shows magazine titles in different countries, in total and per million population, which shows the relatively large number produced in the UK, which outperforms the other major magazine producing countries (US, Germany and France) on a per capita basis. Magazines in the UK do not manage to secure as high a proportion of the available ad spend as several of their European counterparts (Figure 8.13). The study on EU publishing industry competitiveness, referred to in the newspapers and books sections above, uses a number of variables to rank the magazine industries of member states, illustrated in Table 8.7. It ranks only the industries of France, the Netherlands and Germany in the highest level. The UK falls into the next highest, presumably on the basis of advertising revenue and issue readership. The study identifies a regional grouping, including the UK, France and Germany, whose strengths are: • The consumer title segment • The ability to develop strong international titles • Good postal distribution systems Weaknesses in this region are: • Rising production and distribution costs • Saturated domestic markets This latter point would probably be disputed by UK publishers. In our interviews we asked all the consumer magazine publishers if they believed that there were too many magazines and they all said that the market was always evolving, giving rise to new opportunities. However, it is a function of the market’s maturity that new titles will tend to grow at the expense of others, and there is some evidence that new titles are not growing the market as much as they used to. The table on distribution structure shows very clearly the unusually strong role that retail plays in the consumer magazine distribution structure in the UK and conversely, the unusually high rate of subscriptions in the US. In business magazines, the prevalence of controlled circulation models in the UK compared with, for example, Germany, results in a very high level of subscription in the UK compared with Germany, but it is not out of line with other countries. > 51
Publishing in the knowledge economy The industry today Figure 8.11 International comparisons of title numbers Figure 8.13 Magazine share of total advertising spend France Germany Italy (1999) Netherlands Finland Sweden UK US 2000 4000 6000 8000 10000 • Consumer • Business 0 5 10 15 20 25 30 35 Sweden Finland Netherlands Spain Italy Germany France UK Source World Magazine Trends Source World Magazine Trends Figure 8.12 Titles per million 0 100 200 300 400 500 France Germany Italy (1999) Netherlands Finland Sweden UK US Source World Magazine Trends Table 8.7 EU competitiveness indicators Titles Advertising, Average issue Advertising Advertising per million % of GDP readership growth rate revenue per title UK 108 0.147 86.5 30.3 0.198656 Denmark 136 0.0681 98.5 30.5 0.313502 Finland 515 0.103 97 21 0.034458 France 47 0.189 95.2 28.7 0.765442 Germany 76 0.193 96.5 28.4 0.501871 Italy 177 0.106 71.4 25.5 0.186361 Netherlands 303 0.261 97.7 0.9 0.151069 Spain 58 0.122 55.2 39.8 0.262224 Sweden 52 0.081 90 1.8 0.297931 EU average 126 0.128 79 22.5 0.280405 Source Competitiveness of the EU Publishing Industries Table 8.8 Structure of distribution Consumer Business/professional Subscription Retail Subscription Retail UK 11 89 90 10 US 84 16 n.a n.a. France 31.3 68.7 93.5 6.5 Germany 48 52 78 22 Italy 27 73 n.a. n.a. Spain 5.5 94.5 95 5 Sweden 70 30 n.a n.a. Source World Magazine Trends 52
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