You don't have to read the National Enquirer or Star to know that Amy
Winehouse and Lindsey Lohan had a tough 2008 when you can hit up
PerezHilton.com or TMZ.com for the latest dirt. Despite the modern
fixation with celebrity, the rags that purvey the misfortunes of
troubled stars also took their lumps last year, according to a DeSilva
+ Phillips LLC analyst's report.
Magazines for the star-struck
are one facet of the "celebrity economy" that Ken Sonenclar of media investment bank DeSilva + Phillips examines in his report "Lost
in Transition: The Revolution in Celebrity Media."
"The concern
across the magazine industry now is that the sharp and sudden downturn
that began in the fall of 2008 will end very differently than prior
dips," Sonenclar writes. Results for 2007 were strong, with nearly
13,000 ad pages sold by the top celebrity and entertainment magazines.
But the number fell to about 11,700 in 2008. With the dual threats of
the recession and competition from the Internet, Sonenclar suggests
that total ad pages could "easily drop to 10,000" in 2009.
There are no shortage of Web sites dishing celebrity news and gossip.
In addition to standard-bearers Perez Hilton and TMZ, other popular
celebrity blogs include OMG.com and StarPulse.com, among others that Sonenclar calls the "Mastercard-funded Davids." The
success of these Web sites and blogs has brought ill tidings for the print Goliaths of big media companies.
"Perhaps the most rattling news concerned the
November sale of TV Guide to OpenGate Capital for $1," Sonenclar
writes, acknowledging that the buyer assumed around $50 million in
deferred subscription liabilities, on top of the sale price.
Still, Rupert Murdoch's News Corp. dished out $3 billion for the publication in the late 1980s.
"How
the magazine is worth nominally .000000001 percent of what it was 20
years ago (and a third of what a single copy costs at the newsstand) is
a story for a B-school case study, but what's most noteworthy now is
that the sale excludes TVguide.com and the TV Guide Network cable
channel, which were sold separately in January to Lions Gate
Entertainment, the Vancouver-based film company, for $255 million,"
Sonenclar writes. "That's where the seller realized growth and value."
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Chris Nolter
See the "Lost in Transition: The Revolution in Celebrity Media" report from DeSilva + Phillips
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