On the day that Variety laid off another 15 staffers including top editors Michael Speier and Dade Hayes, president and publisher Neil Stiles told TheWrap that the leading trade is still “extremely profitable” but has plans to start charging for new online content.
Despite the new layoffs, “Variety is an extremely profitable franchise,” Stiles said. “It’s not some basket case. Is it less profitable than it was? Absolutely. Give me an American corporation that isn’t. Part of the reason we let people go is because times are tougher. We’re trying to take advantage by restructuring.”
Variety continues to struggle with depressed advertising revenues, and just last week it chose a new editor to replace Peter Bart, the highly paid, longtime leader of the newsroom. His former deputy, Tim Gray, now leads editorial.
Clearly there has been a housecleaning at the top. Speier was executive editor, and Hayes was assistant managing editor. There was no word on how — or whether — either would be replaced. Stiles said features executive editor Steven Gaydos and managing editor Kirstin Wilder will be staying on.
Stiles said his plan to sustain Variety would not include charging for news content on its website Variety.com but charging for “things to actually help you do your job.” He declined to give a specific example, but observed: “A company that we work with really closely, TVtracker.com, has a bunch of data points about TV development which they put online. If you’re in the TV business, that’s an absolute life line.”
Stiles said Variety’s own reporters, rather than research marketers, are meeting with industry professionals to find out what kind of online products they need and would pay for.
In a Tuesday morning email to staffers, Tad Smith, CEO of Variety parent company Reed Business Information, said Reed would be laying off 7 percent of its workforce and require remaining workers to take mandatory leave. In addition, he cautioned that the company “may need to make additional reductions to fit the business conditions,” and remaining employees will be required “to take mandatory unpaid days off.”
The memo attributed the decision to “our quarterly forecast for the full year and the revenue outlook [that] continues to concern us.” According to Smith, Reed’s financial projections are “worse than our already conservative expectations for 2009.”
Variety used to make 30 to 40 percent profit after taxes, according to former executives. Stiles declined to say how profitable the trade currently is.
Another six editorial staffers were let go in addition to Speier and Hayes, and seven others elsewhere in the company. In January, Variety laid off 30 staffers from editorial, sales and corporate departments, including such heavyweights as marketing chief Madelyn Hammond and top reporter Anne Thompson, leaving an estimated 100 on the staff at that time.
The trade’s main competitor, the Hollywood Reporter, has also been struggling and laid off 12 staffers in July and another 12 in December.
The big question for Variety, of course, is whether, aside from cutting off heads – notably, heads at the top — they have a plan for moving forward. In an interview following his promotion to editor, Gray told TheWrap he was not sure which direction he’d be taking Variety.com, which has lost audience in the past year.
"If I knew the answer to that, I’d be the richest man in world," he told TheWrap. "I’ll have meetings with Neil (Stiles) and Brian Gott, the publisher. But it’ll be an evolution, rather than a revolution.”
For his part, Stiles insisted that he and Gray do have a plan to keep the paper in business — beginning with making Daily Variety, Weekly Variety and especially Variety.com more distinct. Variety.com — like many sites — has lost subscribers because much of its content is available for free.
“News online isn’t going to cut it. You can’t make money from ad-based news,” Stiles said. “The weekly and the daily need to define their own space, their own reason to exist. Most publishers are to some extent putting what is in print on the web. It has to be more than that. It has to differentiate itself.”
He added, “We have a hard-to-get to audience. They’re a very, very valuable audience,” he continued. “So, why would you offer low-end clicks per thousand? It’s not in the context of what they do for a living. It’s a very traditional targeted circulation model.”
Robert Dowling, former editor-in-chief and publisher of the Reporter, told TheWrap that Variety’s plan to put necessary industry tools behind a pay wall on the website is an excellent one. But, he emphasized, the company also should be targeting technology companies as potential advertisers rather than relying on studios as their main source of advertising.
“Advertising has taken a nose dive, but there are still billions of advertising dollars out there. It’s up to those who have creativity to go out and get it,” said Dowling, who consults and regularly writes about the industry on his blog, Hollywood — It’s Not What You Think.
“I think covering those companies and getting them to spend money are two different things. What are the strategies for going after some of these companies? Maybe it’s gong to take time and different approaches. These are companies that want to be part of entertainment — how do you get them to participate?”
“It could be the end of the trade, but it doesn’t have to be,” Dowling said. “That would be a terrible thing for the business.”
Stiles said that Variety has had content-sharing partnerships and sponsorship with MSN and Yahoo!, but they are not targeting technology companies as potential advertisers.
“We could get them to advertise, but I don’t know what they’d get out of it other than vicarious relationship with the industry and some kind of consumer traffic — but that’s not really us,” Stiles said. “It wouldn’t replace the studios.”
“Variety has been successful for the length of time it has because it didn’t stay with vaudeville and silent movies. There are changes in the industry — that’s what YouTube is, that’s what Hulu is. But the ad model that goes with that is not as good as the ad model that’s on television. You’d be going from profitable to nonprofitable.”
As for whether there will be more layoffs at Variety, Stiles says there are — unfortunately — no guarantees.
“In this economic climate I think it would be very difficult for anyone in my position to say, ‘We’re done.’ If the market conditions stay as they are now, I think we’re good until the end of the year. But I don’t have a crystal ball.”
