Capturing a Chameleon

Capturing a Chameleon
Publishers Share Ideas for Managing the Changing Face of Media

By Anthony H. Sarmiento, CPA Journal Associate Editor

The NYSSCPA’s Publishing and Printing Committee’s biannual conference addressed the difficult media environment facing publishers and the opportunities that new technologies afford.

Speakers from leading book, magazine and newspaper publishers spoke to more than 100 conference attendees at the Marriott Marquis on Oct. 21.

Keynote speaker Kelly Conlin, CEO of Primedia, observed that the role of publishers is to deliver value in exchange for the contemporary reader’s scarce time and attention. An audience highly involved with a publication’s content will also be highly receptive to a properly targeted advertising message. Publishers can develop this connecting point between buyers and sellers, he said.

Conlin identified the “content-centered community” as the key strategy for publishers to pursue in serving increasingly important niche markets. Looking at the history of media, Conlin believes that “the specific always drives out the general.” He thinks that websites like Yahoo and MSN are analogous to the popular 1950s and ’60s general interest magazines like Look and Life that eventually witnessed their readership move toward more specialized publications.

Committee member Margaret Smyth, of Deloitte, then interviewed luncheon speaker Jane Friedman, president and CEO of HarperCollins Publishers, Inc. Friedman discussed the difficulty of running a business that must develop, market and sell 5,000 new and unique products each year—products she said have the shelf life of “milk and yogurt.” Over the next few years, Friedman expects the growing markets for book publishers to be found in e-books, large-print editions, and Spanish-language titles.

In response to a question from the audience, Friedman observed that the used book market is becoming a major challenge for trade publishers, just as it has been for educational publishers. She said that new book prices are probably too high, and is considering ways to deal with the issue.

Other speakers addressed changes in the retail marketplace, the opportunities of new media, and royalty issues.

Richard Lawton and Stephanie Justice, senior vice presidents of CMG, addressed the magazine distribution market. Lawton applauded new technologies that have provided more comprehensive sales data, allowing publishers to increase newsstand sell-through and reduce printing costs. Justice noted that the distinction between traditional and specialty magazine distribution channels is blurring as distributors seek to improve service levels and address retailers’ concerns about the magazine category. She also noted the striking effect Wal-Mart is having on the industry, in pushing pay-on-scan programs and simplified financial models.

Jason R. Krebs, vice president of sales and marketing at New York Times Digital, discussed the possibilities for generating revenue from online publications. He cited research showing that the web has certain advantages over other media in terms of reaching the right audience, and that it is expected to post stronger growth than other advertising media.

Barbara Sangiuliano, senior manager with Deloitte, examined the recent initiatives by many states to collect unclaimed property. Common examples of unclaimed property that publishers might hold include cancelled subscriptions, overpayments from advertisers, and uncashed commission checks. Sangiuliano warned that audits and penalty assessments are increasingly being used by states to offset other tax revenue shortfalls. In a high-profile case, New York Attorney General Eliot Spitzer found large amounts of unpaid royalties improperly held by music publishers.

From an operational perspective, Thomas Allen, senior vice president of accounting and rights at Random House, talked about recent trends in book contracts, author royalties, and advances, as well as new tools for tracking royalties and sending out payments.

The afternoon session featured a panel discussion by Smyth, committee chair Stuart Stoller, of the New York Times Company, and committee members John Rohan, of Hearst Magazines, and Janet Gervasio, of HarperCollins Publishers. They focused on expense reduction initiatives that publishers have undertaken in recent years.

Mark Klein, of Hodgson Russ, LLP, gave a tax update, noting that publishers can qualify for a manufacturing credit for publications completed in New York, even if the printing is done out of state.

Deloitte’s Rudolph Santoro and Grant Thornton’s Joseph Graziano provided an update on upcoming changes to accounting and auditing standards, including share-based payments, business combinations, minority interests, and liabilities and equities.

Stoller chaired the conference. Any members interested in learning more about the Publishing and Printing Committee should contact him at stollst@nytimes.com.