The Digest is a bit slimmer today, as the folks in Baltimore are preparing for... er... Snowmageddon. Expectations are for another 10-20 inches on top of the 30 already clogging the streets and weighing down roofs.
"I don't know what happened, it used to be three times that big." I was eating breakfast at the famed News Café on Ocean Drive in South Beach with David Eifrig. After we ordered, Dave told me to check out the newsstand inside. I returned five minutes later unimpressed. There was a single room with four or five magazine racks – no better than your typical bookstore. I told Dave most of the extra magazines they carried in the past were probably shuttered.
At that moment, my cell phone buzzed with an e-mail from our editor in chief, Brian Hunt, subject line "magazine destruction." The link he included led me to a New York Times story about the sad state of the magazine industry... Circulation for U.S. magazines fell more than 2% in the second half of 2009. Single-copy sales, which are more lucrative for publishers, fell more than 9%. Some of the better-known titles that plunged include:
W, down 41.7 percent to about 25,000 for an average issue; Newsweek, down 41.3 percent to about 62,000 (Newsweek had decreased the number of copies on sale, noted a spokesman); SmartMoney, down 37 percent to about 26,000; Time, down 34.9 percent to about 90,000; Good Housekeeping, down 30.7 percent to 395,000; and Redbook, down 30.1 percent to 126,000.
I've been cutting some expenses lately, and the first thing to go were several magazine subscriptions I didn't really need. Each time I canceled one, I thought, why do I pay for this when I just read all this stuff for free on the Internet?
The death spiral of traditional print media is one of the biggest, most obvious examples of a new technology making an old one obsolete that I've ever witnessed firsthand (an economist named Joseph Schumpeter called the phenomenon "creative destruction"). Expect a consistent decline in circulation numbers from here.
With Manhattan real estate prices down some 50%, some of the city's original real estate families are considering investments. These families – the LeFraks (Guggenheim), Rudins, Roses (Museum of Natural History), etc. – were muscled out of boom time deals by the bigger and better-financed speculators. With the highly leveraged players defaulting in record numbers, the more conservative New York families are shopping around. This from the New York Times:
A group led by the LeFraks is interested in buying Stuyvesant Town and Peter Cooper Village, a complex of 11,227 apartments near the East River whose current owner defaulted on $4.4 billion in loans. The Rudins and other families are looking at the Carlton House, an apartment-hotel building on Madison Avenue that is for sale. The Dursts, who like the Rudins and the LeFraks are in their fourth generation in New York real estate, are looking to buy a stake in the $3 billion skyscraper under construction at 1 World Trade Center.
These families buy a few choice properties in every economic cycle. They are typically more conservative on their underwriting and development than their publicly traded brethren. They invest more equity in their deals and rarely sell. They're looking to earn money on their family fortunes instead of management fees (as was the case during the boom). Their involvement, like that of Sam Zell, is a promising sign a floor is forming in high-end commercial properties.
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"Please, Please, Please stop writing how the good old USA is going to go broke. GE for that matter too. You, Sir, are apparently as dumb as a rock laying in the yard. Now you beat me to it in today's Digest, but I for one can sleep so much better at night, now knowing that THE truth has come out. Per Treasury Secretary Tim Geithner, The US will NEVER lose its AAA credit rating. Nuff said!
"Hey, wait a minute. Wasn't that the same guy who was in front of a bunch of congressmen getting grilled for bailing out Goldman, err AIG at 100 cents on the dollar for their credit swaps etc. Jeez from goat to hero in a matter of weeks. That's good politicking!
"Porter, in all seriousness, I had coffee squirt out my nose Sunday when I heard Geithner say that!!! I'm glad you were able to comment on that today, even though your ass deep in snow. Stay warm!" – Paid-up subscriber Steve
"I can't believe a little snow is going to shut you down for a week. Up here in northern Michigan, we would be inclined to label you a bunch of 'snow pus**es.' Hell, within 24 hours of getting 30 inches of snow, our school buses will be doing 55 mph going down my road. Suck it up and do something unique you and your kids will remember the rest of your lives, (like building snow forts and sledding runs).
"I would also like to comment about Brian, (the 21 year old with ADHD). I have an adopted son with similar problems, and like Brian, has had to be on different medications throughout his life. While the mix of medications that Brian is on would suggest something more advanced than just ADHD, these kids need these medications just to function, not hurt themselves, and co-exist with family and society. This is evident as he is 21 and still must be driven around by his mother, whether for safety or trust issues. I have nothing but the utmost respect and sympathy for his mother. And BRIAN, -- this message is for you! NO PERSON, WOMAN OR MAN, WILL EVER LOVE YOU MORE THAN YOUR MOTHER. The sooner you realize this, the better both your lives will be!" – Paid-up subscriber "Snowman"
Ferris comment: One thing to keep in mind, "Snowman," there are people and houses in Maryland. This makes it far harder to find places to push the snow.
"Your response to Brian was very well done. I really can see danger with this young man. His family is really all he's got, and he's ungrateful for them, it sounds like. I've dealt with many street people who suffer from mental illnesses or chemical abuse. My observation is that these people end up at the church doorstep asking for money and food because long before they became financially indigent they became relationally bankrupt. In other words, they burn their bridges with everyone in their lives and end up out on the street more comfortable with total strangers than family and friends. I'm afraid Brian is heading in that direction if he's not careful." – Paid-up subscriber Craig Spicer
Regards,
Dan Ferris and Sean Goldsmith
Medford, Oregon and Miami Beach, Florida
February 9, 2010