Transformando Los Medios Impresos

Conventional wisdom says newspaper and magazine publishing is a dying business. Based on our work with print media companies in north and south america, europe, and asia, we believe that the conventional wisdom is wrong.

in most countries, print media companies continue to have commanding brands and strong consumer relationships. in developing economies, they are still growing, as incomes and education levels rise. (see exhibit 1.) some print-media companies in developed countries continue to generate enviable cash flows. at the same time,

Exhibit 1 | Markets Are Evolving at Differing Speeds

Print advertising CAGR (%) 20062011

United States Japan United Kingdom Canada

Print circulation CAGR (%) 20062011

–12.0 –9.7

–3.2 –1.6

Newspapers

–8.8

–2.7 –4.1

–5.6 France –3.1 Germany –2.8

–4.3

–0.3

0.8 0.3

South Korea1 –2.6 Australia –2.0

Russia –1.3

Brazil 4.5

2.6 2.7

Mexico1 5.0 China 8.5

3.2 1.8

India1 13.9

–15 –10 –5 0 5 10 15 20 –10 –5 0 5 10 15 20

Print advertising CAGR (%) 20062011

Print circulation CAGR (%) 20062011

Not available

United States Japan1 –11.9

–4.8

–2.6 –2.9

–3.9

–3.3 –4.3

5.7

Magazines

United Kingdom Canada France Germany South Korea Australia Russia Brazil Mexico China

India1

–11.7 –9.4

–3.2

5.9

6.3 6.3

–2.5 –2.0

0.6

–6.2

Not available 4.0

Not available 3.1

16.7

–15 –10 –5 0 5 10 15 20 –10 –5 0 5 10 15 20

1.4

11.0

Sources: ZenithOptimedia; Editor & Publisher International Yearbook, Japan Newspaper Publishing & Editors Association; U.K. ABC; Newspapers Canada; OJD; IVW Statista; Korea ABC; Australia ABC; Federal Agency for Print and Mass Communications of the Russian Federation; ANJ; IVM; National Bureau of Statistics of China; Information Broadcasting Ministry of India; U.S. ABC; MIAC Statistics Bureau; Magazines Canada; VDZ; IVC; FIPP; World Press Trends.

1Includes 2005–2010 print circulation. 2011 CAGR circulation data have not been released yet.

The Boston Consulting Group 3

Transformation for print media companies means a complete overhaul in how they think, plan, operate, and define success.

there is no question that demographic evolution, technological revolution, and changing preferences for how people consume media have made deep inroads into circulation and advertising.

Most companies have responded predictably and appropriately by cutting costs, but this is only a short-term and, ultimately, an inadequate fix. some have attempted to transform their businesses and organizations for the digital age, but they have had a hard time hurdling a very high bar—managing short-term performance in order to meet shareholder expectations while also putting in place the longer-term initiatives that will generate growth in revenues and earnings for the future.

transformation means enduring change. transformation for print media compa- nies means a complete overhaul in how they think, plan, operate, and define success in virtually every aspect of their business. the critical question facing newspaper and magazine publishers, including those in countries where the transition to digital is still in its infancy, is this: how do they balance the twin goals of maintaining short-term performance while planning and executing a long-term vision for a very different future, given that legacy businesses still drive the major- ity of revenues? How do they buy time from investors as they adapt to the realities of a perpetually changing marketplace?

this report provides an answer. it is not a silver-bullet solution—there are none of those, of course. it is not easy, it is not quick, and, importantly, it is not about trading print dollars for digital pennies. the companies we have worked with have found transformation time consuming, complicated, and often frustrating, made all the more so in a world characterized by continuing uncertainty. success depends more on execution than insight, and the time frame required is likely to be three to five years, although we also argue that it is essential to show measureable progress much more quickly than that.

as our report on leading transformations and driving organizational change sets out, there are three interconnected steps: funding the journey, winning in the medium term, and building the right team, organization, and culture. (see Leading Transformation: Conversations with Leaders on Driving Change, BCG report, october 2011.) success in each step depends on the others: you can’t win without funding, and you are unlikely to get the time necessary to build the team and organization without notching some early wins. (see exhibit 2.)

this report discusses how to execute each step of the transformation, including the importance of developing an overarching strategy to serve as its guide and demon- strating success at each stage—as well as maintaining the effort, energy, attention, sequencing, and focus on execution needed to pull it off.

Developing the Overarching Strategy

no one starts a journey without a road map. similarly, transformation requires a clear strategy, understood by all involved—a one-time reset of direction to guide the company’s actions and decision making that can also serve as a periodic reminder that transformations have multiple steps and take time. in a world of

4 Transforming Print Media

Exhibit 2 | An Integrated Strategy Drives Transformation

Overarching strategy

Initiatives

Enablers

Goals and metrics

Source: BCG analysis.

Building the necessary tea organization, and culture

Values

Vision

S

trategic principle

s

Funding the journey

Winning

in the

medium term

ms,

digital-driven change, the strategy will likely involve a shift away from, or a broad- ening of, the company’s historical mission of creating content and distributing print products.

the strategy will have several intertwined components. Companies must first define (or affirm) their values and purpose—the company’s reason for existence from which management needs to develop a vision for the future. this is both aspirational and attainable within three to five years. the vision leads to a set of strategic directives that frame where the company will and will not play and how it will win. examples include achieving a given rate of sustainable organic growth or determining the need to acquire new capabilities or market access through M&a. these principles underpin choices for investment and action in the future.

the strategy will point to specific areas of action or investment, initiatives that collectively drive the organization toward tangible end-state outcomes that the business—or, as is often the case with media companies, the portfolio of individual businesses within the company—agree to achieve. it should include specific initia- tives for each of the three stages of the transformation—funding the journey, winning in the medium term, and building the right team, organization, and culture—and make clear how each step relates to the others. it is essential that everyone, from investors to business unit publishers and editors to other employ- ees, understand the importance of how operating performance will be improved in the near term. they must also understand where the investments will be made in order to generate growth over time—and how the capabilities necessary to make this growth happen will be built.

Clear road maps and milestones for progress should be laid out so that, first, the organization has interim goals to work toward, and second, the markers can serve as points for reporting back and demonstrating tangible headway. there are models and benchmarks that can be helpful. for example, investors often expect widening

The Boston Consulting Group 5

With the strategy set, the first transforma- tional step is to unlock cash that can both help pay for the journey and buy time with investors.

profit margins as evidence that growth will not come at the expense of the health of the business. BCG’s research into value creation among 1,600 companies, each with more than $1 billion in annual revenues, showed that 68 percent of value-cre- ating growth companies improved margins. and there are multiple avenues to longer-term growth. in the same study, among those companies generating growth over the medium and longer term, 18 percent did so by finding new growth sources in their core businesses, 36 percent moved into adjacent businesses, and another 36 percent grew by expanding into new frontiers.

it is also critical to coordinate the business strategy with the investor and financial strategies. too frequently, companies are focused on the first and ignore or under- estimate the importance of the latter two. We all know that financial markets doubt the ability of print media companies to complete the transformation jour- ney and that employees are often even more skeptical. only five of the top-20 publicly traded print-media companies worldwide (with more than 50 percent

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