Business Overview

The magazine division, which includes Newsweek, Inc., and Post-Newsweek Business Information, Inc., recorded operating income of $44.5 million, an increase of 4 percent over $42.7 million in 1997. Revenue totaled $399.5 million, an increase of 2 percent from $389.9 million in 1997.

Newsweek turned in record operating income for the second year in a row, despite a difficult advertising climate worldwide and particular challenges in the tumultuous Asian market. The gain in Newsweek's operating income was fueled largely by careful cost controls and growth in the pension credit.

On the editorial side, Newsweek was widely acknowledged as the leader among news magazines on the year's biggest story, the Monica Lewinsky scandal. Newsweek also set the pace with its expanded coverage of science and technology, introducing a new supersection devoted exclusively to these subjects and publishing another edition of Computers & the Family, an annual consumer guide. The magazine also expanded its collaboration with Kaplan Educational Centers, introducing a new parent's guide to primary education. With the fall launch of, the magazine moved from America Online to the World Wide Web.

As anticipated, domestic advertising pages and revenues declined slightly in 1998. Contributing factors included two fewer special issues compared to 1997; a decrease in ad pages from U.S. automotive manufacturers as a result of the introduction of fewer new models in 1998 than in the previous year; and the migration of pharmaceutical ad dollars to television following a change in FDA rules on drug advertising. However, Newsweek made up much of that ground in other high-growth categories: technology; financial, insurance, and real estate; media and advertising; and government and organizations.

Once again domestic paid circulation remained strong at more than 3.2 million. The magazine's circulation strategy continues to yield the most long-term subscribers among the three newsweeklies, as well as the fewest subscriptions sold with premiums. Newsweek's U.S. edition reaches more than 19 million readers, according to the most recent MRI study. Moreover, Newsweek leads the news magazine field in both audience efficiency and quality, delivering more readers in the key groups that advertisers most want to reach.

Newsweek's International Editions experienced a difficult year. Asia edition revenues, both for advertising and circulation, were particularly hard hit by the region's financial crisis. In Europe advertising revenues benefited from the publication of a special issue on the birth of the Euro.

Newsweek remains the only news magazine with weekly foreign-language editions--in Japanese, Korean, and Spanish. An Arabic-language edition will be launched in 1999. Itogi, Russia's first independent news magazine, is also published in cooperation with Newsweek. In early 1998 Newsweek became the first American news magazine to publish and distribute a Chinese-language edition in mainland China, when "Your Child: From Birth to Three" was sold at newsstands there.

Newsweek Productions, which produces the PBS series "HealthWeek," also coproduced the PBS documentary "John Glenn, American Hero" with KCET/ Hollywood in October.

Post-Newsweek Business Information (PNBI) publishes controlled-circulation trade periodicals for the technology industry. During 1998 PNBI merged recently acquired publications and trade shows with existing products to become the leading magazine publisher and trade show organizer in the field of government information technology. The PNBI government effort is anchored by Government Computer News and Washington Technology, two tabloid periodicals, and FOSE, an annual trade show. Results for the year were affected by a downturn in advertising revenue for the computer trade publishing industry. However, PNBI saw significant growth in its TechCapital magazine, launched in 1997, which covers technology finance in the mid-Atlantic region. The company also operates Newsbytes News Network, which extended its reach during 1998 through new relationships with Yahoo Asia, CNNfn, Lexis-Nexis, Dialog, and others.

Newsweek lost a larger-than-life leader in 1998 with the death of editor Maynard Parker. For 30 years, Maynard gave his heart and soul to the magazine and its people, first as a legendary foreign correspondent in Asia, then as the architect of Newsweek's expanding international editions, and finally as my trusted editorial partner for the past two decades and head of all day-to-day editorial operations since 1991.

As he waged an apparently successful year-long struggle with leukemia and then battled the pneumonia that would ultimately take his life, it was hard for us at the magazine to imagine that anything could still his restless, relentless energies. Maynard was an old-fashioned editor in the very best sense, demanding more in quality and quantity of effort from those around him than even they dreamed possible--and then leading the celebration when reporters, writers, indeed, the entire staff, surprised themselves and invariably delivered excellence on deadline.

Maynard loved, to use his own favorite phrase, "scrambling the jets." When others flagged at the end of a long week or late-breaking news overturned best-laid plans, his drive and his superb instincts for a good story rarely wavered. Again and again, he called for fresher reporting, sharper editing, more compelling photography and layouts--all part of an effort to make each issue better and better. The readers have given us their proxies, we'd frequently remind each other, and Maynard never forgot the importance of earning that trust each and every week.

It goes without saying that replacing a Maynard Parker isn't easy. But again, thanks largely to his leadership, we have been fortunate to attract a gifted lineup of young editors. Maynard spotted many of them himself, and over the last decade, he inspired them, nurtured them, empowered them, and, yes, often drove them, to learn and to grow. In Newsweek's new editor, Mark Whitaker, and the talented team around him, Maynard recognized that he had shaped a more than worthy generation of successors. Indeed, it is in their good hearts and minds, in their willingness to demand much of themselves and those around them, and in their dedication to delivering the best possible magazine each week to our readers that Maynard's legacy retains a remarkable power throughout today's Newsweek.

     --Richard M. Smith, Chairman and Editor-in-Chief, Newsweek


A Place at the Table

By Lynn Staley,
Assistant Managing Editor/Design, Newsweek

It was not an auspicious beginning. My first job out of college was as a paste-up artist for a gritty alternative weekly in Boston. We worked on the second floor of a walkup on Boylston Street, over a pizza parlor, next door to a martial arts studio. On hot summer days the scent of day-old tomato sauce from downstairs mingled with the aroma of overtaxed black belt aspirants next door. And in the winter we huddled for warmth over the dryer attached to the stat camera. That stat camera was one of many tools I learned to use in those early days. There were X-Acto knives, Rapidographs, Letraset, and Rubylith, waxers, burnishers, and rubber cement erasers. Arcane artist stuff--very arcane.

By the early 1980s, I had taken a job at the Boston Globe, where text--heavy and gray--was king. Design was relegated to the fronts of the Magazine and Lifestyle sections, so on the editorial floor designers were out of the loop. And without a union card we couldn't touch anything in the basement where the paper was assembled. Retribution was swift for those whose fingers strayed, and I quickly learned to check page proofs with my hands clasped behind my back to avoid getting whacked with a metal ruler. Even when we got the chance, the tools were primitive: it took days to produce a simple chart or map.

Not anymore. Today, because of seismic shifts in technology and editorial culture, designers have superb machines and the run of the building at any first-rate publication. I've found my home at just such a place: Newsweek.

It might be Michael Jordan, the Brazilian economy, or "Shakespeare in Love," Shania Twain, massacres in Kosovo, or open source code. My job here is to make them visually interesting--to grab a busy reader's attention. Like its audience, the magazine is an animal with many interests, and the mix varies from week to week. But inventing creative approaches to familiar stories--Bill Clinton, news from Washington, foreign policy--is probably my most consistent challenge. One week the solution might be a photo illustration: Clinton gazes at a wall of Saddams under the headline "Déjà Vu All Over Again." Another week, it's typography: the actual words from the articles of impeachment enlarged to headline size. But we couldn't pull off any of this without the wise decision of Newsweek managers to make a place at the table for designers, who in turn are now armed with tools we couldn't have dreamed of next door to the martial arts studio.

First, technology. The Macintosh computer was introduced at the Boston Globe in the early '80s. My first had a screen about 8 inches on the diagonal and a hard drive that held 128 kilobytes. It was loaded with utilitarian typefaces and ran a clumsy application called MacDraw. But it allowed us to combine type with drawn images, and seemed revolutionary. Soon there were more typefaces available, better printers, faster hard drives, bigger monitors, and more complex applications. Eventually whole publications could be produced by simply hitching a bunch of Macs together. (I should make clear that I am a Macintosh chauvinist, so it pains me to admit that the PC also played a role in this progression.)

Moving design off the drawing board had other, subtler implications. As writers and editors began to use similar machines to do their work, a common understanding took hold. Sure, they were typing and we were drawing, but to those of us on the ground it felt as though a wall was coming down: because we could produce visual imagery at roughly the same rate the writers could generate copy, designers found themselves part of the action.

The moment that happened, we found that the competitive environment in which all of us work was growing ever fiercer. Newsweek must survive and thrive in a world in which readers are increasingly accustomed to a video-driven, visual culture. We all go head to head with information that's coming at the audience on screens--whether it's MTV or C-Span or the Internet. So graphics play an incredibly important role in enhancing the efficiency of the magazine for the reader. When it's all working together--the type faces, the heads, the call outs, the captions, the photos, and the diagrams--there really is no better or faster way to convey information and understanding than in the pages of Newsweek. Smart editors know that you can't get a visual pass--that you have to bring the same rigorous standards and energy to the look of the magazine as you do to the word side. Readers expect--and deserve--the best. At Newsweek they get it--and designers like me don't have to worry about getting our fingers whacked.