Yesterday news broke that Time Warner was spinning off all of its magazines into an independent company. That includes the four most valuable brands in the Time Warner magazine empire, Time, Fortune, Money and Sports Illustrated. Why did Time Warner executives suddenly reverse course and jettison all the magazines instead of keeping the four biggest as they had previously intended? Because those executives had lost faith in the future of the magazine businesses. Now, Time Warner executives are far from infallible -- remember that AOL merger at the peak of the market? -- but for those of us paying attention to the sports media market, it's still an alarming move, SI has gone from the most valuable non-network brand in sports media a generation ago to a precarious position where its future as a major media brand is far from assured.
The decision to spin off SI isn't that much of a surprise since Turner recently bought Bleacher Report, an online venture founded in 2007, for around $200 million. If Turner was going to spend $200 million for Bleacher Report and end the CNN affiliation with Sports Illustrated in favor of Bleacher Report, it was hard to argue that SI made much sense under the same corporate structure. Why did Time Warner need two different sports entities?
Put simply, it didn't.
But for those interested in sports media the rapid decline of SI's newstand sales -- down 56% since 2007, the year Bleacher Report was founded -- and the loss of Turner/CNN as a major backer raises an interesting question, how long will the SI magazine exist in print form and can SI survive as a major force in today's market?
SI's descent has been a slow slide, preciptated by difficulty leaving behind print dollars to chase Internet dimes.
As recently as last year do you know what the posted rate was for a full-page ad in Sports Illustrated?
$392,800!
When you were making that kind of money, it was hard to get very excited about the opportunity of the Internet. You want to know who the companies were that got very excited about the opportunity of the Internet? The ones that didn't have the ability to sell full page magazine ads for $392,800.
In the halcyon days of print, the magazine business was amazing. Hell, all of print was. You might read the articles, but the magazine or newspaper existed for one reason -- as a mobile ad device to deliver advertisements to your doorstep. Yep, the first mobile ads were in print media.
As a result of the print dollars rolling in, SI.com was a wasteland for far too long. Internet dollars grew slowly, why give away the magazine content for free online if you could sell it for lots more money in the magazine? Why sell unlimited digital ads when your magazines ad pages were limited? Why turn a great business into a mediocre one, one that would require the loss of jobs? Better to hope that the Internet wasn't slowly killing print.
As a result tons of upstarts began to walk on SI's turf. Eventually SI got into the Internet age, but by then SI's business was horribly fractured, a house divided against itself.
Which American media companies have managed to survive half print and half Internet? The Wall Street Journal and The New York Times. And both of these companies have had substantial wobbles in the process.
There aren't any companies doing very well in the world of sports.
You can't use ESPN as an example because ESPN makes six billion dollars a year off its cable networks and ESPN the Magazine is effectively a vanity project that represents a tiny speck of the overall company. Sporting News is online only now. The Athlon preseason magazines are trying to stay afloat and slowly losing ground to all the digital previews that exist everywhere on the Internet.
Yahoo, Fox, CBS, NBC, SBNation, the Bleacher Report, and other major online properties, they don't have to worry about a print cohort making their news distribution more awkward and strained.
The closest media company in the world of sports who is trying to finesse SI's dual print and online structure is USA Today, which is spending gobs of money on its new online identity in hopes of becoming an online destination as the Gannett newspapers shrink. Will they manage to pull off the transition? Who knows.
Which raises the big question: Can any sports media print and digital duality survive in today's era without a major corporate benefactor to support both avenues of distribution? Basically, what makes Sports Illustrated different from The Sporting News, another venerable publication that recently ceased publication and now exists as an online only brand?
The easy answer in the wake of Time Warner's proposed divesture of the magazine is -- nothing.
SI is a dead magazine walking.
That's troubling because I'm 33 -- confession, I'm still old school, I subscribe to the print New York Times, SI, and the New Yorker -- and remember what it was like sprinting to the mailbox as a kid to see what was on the cover of the latest SI. I remember reading the magazine from cover to cover in an age when many of us stuck with bad newspapers in mid-major cities were never exposed to great long form sportswriting. SI was a lifeline to a lot of us, a window into a larger sports world beyond the AP feed and a box score. But does anyone under the age of forty look forward to the arrival of SI now? Is there a single kid in America who sprints to his mailbox to see whether or not the latest SI has arrived? I doubt it. Because by the time SI arrives all of the news is already out there, usually for days in advance, often as well or better written by other publications that you can read for free on the Internet.
So what's the future of SI?
It's not very bright, a company half digital and half print cannot stand. Eventually the magazine will die, it's just a matter of time. Maybe that happens in a decade, maybe it happens in fifteen years, but sooner -- and I'm betting on sooner -- or later it won't make sense to still publish a print-edition of SI. This means SI's real future is entirely online.
The issue with this is that SI has a company structure predicated on the obscene profits of the magazine industry. How quickly can a company retrench and become as lean as the Internet demands? And does SI's brand even work as a major site on the Internet? Keep in mind that no one goes to SI for scores or games or the nuts and bolts of the contests themselves, we go for sound writing and analysis, the kind of long form profiles that used to only exist in SI.
SI employs too many people to make a living on that brand on the Internet.
Yet if SI starts chasing pageviews online like the Bleacher Report or SBNation it risks devaluing the brand that people have come to expect. Uh, oh, that's already happening? Look here are 16 things you probably don't know about Shaq!
I don't blame them for that, SI is in a tough place without the Time Warner connection.
If it doesn't chase the pageviews online then there's no way for the company to survive in a crowded marketplace absent a large corporate benefactor underwriting substantial costs for a small and declining profit.
So what's the future of SI?
The future of SI is probably to become a larger site's Grantland, a serious and well-written examination of sports for a niche audience. ESPN.com recently announced that Grantland averaged 2.2 million unique visitors a month in 2012. SI's audience was much bigger than that in 2012, but that was with the CNN traffic firehose and with a much bigger full-time staff. Without a major media partner SI's traffic will decline relative to its competitors. That's not necessarily a bad thing, a decline in traffic can lead to an increase in quality of readers, but it definitely signals a different path.
In the next several years could NBC or Yahoo or Fox decide to buy a devalued SI brand and incorporate it within the structure of their own sites as a Grantland competitor.
Definitely.
But let me leave with you with a more jarring question, if you could buy Deadspin or SI right now, which property would you rather own for the next generation online?
I bet just about every single one of you wanted Deadspin.
Which is just amazing to think about.
