FOLIO:: What was the takeaway from the first half performance?Marcom: The big challenge for the first half was that games advertising was really weak in the September to December period compared to the year before. The second half will be strengthened, thanks to the E3 games expo and a lot of new activity following that for the rest of this year into the next fiscal year.The combination of the severe recession and the relentless digital advance has clearly left the industry reeling. But these factors are forcing healthy change—the historic over-reliance on ad revenues to offset low consumer pricing for instance, has been shown to be barely sustainable during this recession. FOLIO:: Where do you expect to see growth coming from? Where do the print titles fit in?Marcom: As the dust settles from the combined impact of recession and the disruption to the newsstand last year, it looks like the real consumer appetite for our magazines is still as healthy as ever. We are spending a lot of time this year thinking about the fundamentals—improving our retail management, driving up pricing, improving our cover designs, working hard on ad sales staff development and relations with our core customers. Online, it’s all about building better user experiences to increase engagement at our core vertical sites. We are particularly excited about the growth of a couple of new products. Guitar Aficionado, a luxury lifestyle title launched last year by our music group, is building readership fast and opening doors to advertisers such as Ralph Lauren and Porsche who never knew Future before. Our quarterly World of Warcraft: Official Magazine, published in partnership with Blizzard Entertainment, is leveraging decades of experience in games—we are marketing subscriptions exclusively online to World of Warcraft players, and shipping tens of thousands of fans around the world a lavishly illustrated magazine every quarter. The economics are very sweet. World of Warcraft: the Official Magazine is not a newsstand product, it’s a premium priced subscription product. The basic rate for four copies per year in the U.S. is $39.95. It’s marketed almost exclusively online through World of Warcraft’s own channels. That means the conventional economics—direct marketing, newsstand distribution—all fall away so you just have a very clean equation and you can put the investment against quality editorial. Our customer publishing segment is up 24 percent in revenue in the first half of 2010 and that’s another $500,000 of revenue. It’s a model we talk about when approaching other partners. For that to work, you need some kind of massive audience passion around a particular brand or game. The model of sharing risk upfront with our marketing partner and sharing rewards down the road is one we continue to have conversations about. We just announced a partnership with Best Buy for @Gamer. There is a lot of science about how we’re targeting prospects. Best Buy has a large database of customers and we’ll know how to target the magazine and tailor the product as it gets larger.And we are kicking around at least three or four new brand ideas—all of which, as it happens, seem likely to have a printed product as their foundation.FOLIO:: With the wholesaler collapse, 2009 was a rough year on the newsstand for much of the consumer category, including Future US. How have you responded? Howare newsstand sales trending in 2010?Marcom: The collapse was painful, but we’ve come out of it with a much surer grip on how we run the business. We have adjusted draws and distribution footprints, and expect to see both good gains in efficiency this year and also volume recovery across our core titles. Beyond that, I think the newsstand settled down to a much more predictable pace. We’ve done a lot of work to make draws more efficient and we’ve looked closely at the distribution of print, fine-tuned and restocked outlets that disappeared during the disruption last year and had another look at where we place copies. It’s a lot of basic hard work looking at where we’re putting the inventory. The shutdown of Anderson News in February 2009 plunged the newsstand efforts of many consumer publishers into chaos, but few were as affected as Future US. In 2008, Future US was among the top 20 newsstand publishers based on retail sales, according to a report by FOLIO: sister magazine Audience Development. However, in 2009, the combination of newsstand disruption and the drop in advertising around video games (games account for half of Future US’s total revenue) forced the company from profitability.In the first half of fiscal 2010 (ended March 31), revenue fell 10 percent to $33.5 million, due in part to a 6 percent planned reduction in the number of published products and a 23 percent drop in advertising revenue. But the company is looking to bounce back, putting a new contract in place with Time Warner Retail and improving to a 2 percent circulation loss in the first half of fiscal 2010, compared to an 18 percent drop in circulation in the first half of fiscal 2009, despite 50 percent fewer specials. FOLIO: speaks with president John Marcom [pictured above] about the plan to return Future US to profitability.
Review • Lincoln Amazon Prime Amazon Ford More about 2019 Ford Edge SE FWD Auto Tech Car Culture 2019 Ford Edge takes few risks Preview • Having a package delivered can be an exercise in unnecessary stress if nobody’s home. Key by Amazon lets couriers drop packages inside cars or houses, and now, it’s expanding to a very popular automaker.Ford Motor Company announced on Tuesday that it has teamed up with Amazon to bring Key’s benefits to eligible Ford and Lincoln vehicles. Amazon Prime’s delivery service will be granted one-time access to a vehicle, allowing them to drop a package in the trunk and lock everything back up, giving that parcel a safe place to hang out during the workday.Not every vehicle is eligible for this service, though. First, there’s the matter of the car. Ford vehicles need to be from the 2017 model year or later, and it must be equipped with FordPass Connect, the automaker’s connected-car service. Lincoln vehicles are limited to the 2018 model year or later, and they need to be signed up for Lincoln Connect. Second, there’s the matter of location. Key by Amazon In-Car is only available in certain US cities, and folks can find out if they’re in the right location on Amazon’s website.Enlarge ImageJust make sure you leave enough space in the car for the package to be delivered. Couriers shouldn’t have to wade through stinky soccer equipment and Sun Chip crumbs to find a spot for the item. Ford Once all that’s squared away, the owner needs to download their connected-car app, whether it’s FordPass or Lincoln Way. From there, the app will need to be linked to the owner’s Amazon Prime account, which will enable the in-car delivery service. Owners receive notifications before and after delivery, as well as confirmation that the car is locked. Access can be blocked at any time, and packages can be rescheduled for drop-off on a different day, need be.Prior to Ford’s announcement, Key In-Car deliveries were limited to Buick, Cadillac, GMC and Volvo vehicles, but it’s constantly expanding its service area. Of course, if people don’t want to grant access to their vehicles, Key’s delivery service can also drop packages inside a person’s home or garage, although not everyone will be on board with the idea of letting a stranger into an unattended home.This is just the beginning for Ford’s connected-car offerings. Both Ford and Lincoln are also working to bring mobile car wash services to owners. It’s working with Spiffy, Rub A Dub and Sparkl to offer on-the-spot car washes wherever the services are available. This, too, can grant one-time access to the vehicle so that the detailers can work their magic inside and out. 2016 Ford Explorer review: Go road-tripping in Ford’s updated, EcoBoost-powered SUV Share your voice null 2019 Ford F-150 review: Popular pickup keeps on truckin’ Ford Lincoln 0 Tags 47 Photos More From Roadshow 2020 BMW M340i review: A dash of M makes everything better
AUTUMN OF THE PATRIARCH: The government should expedite Air India’s sale by increasing the higher FDI component for foreign buyers who can employ the right professional expertise and marketing know-how to turn around the beleaguered airline.Creative CommonsBad mergers create bad blood – in the skies and on the ground. When the government merged India’s two state-owned airlines in 2007, Air India and domestic carrier Indian Airlines, the combined entity would soon grow into a megalith symbolising all the shortcomings of India’s public sector.In just a generation, competition from the private sector, rising fuel costs as a percentage of operational expenditure, strikes by opposing factions of pilots, freebies and upgrades to politicians and bureaucrats, and huge discounting would move the Maharaja from monopolising air travel to being only India’s third largest airline with a 11.8 percent market share.But the literal bottomline here is: Air India has lost money almost every year since its merger despite the UPA II government infusing Rs 30,000 crore into Air India under a financial restructuring plan (FRP). Total equity infused in the airline thus far is Rs 22,280 crore. Banks currently have an exposure of about Rs 53,980 crore.A diverting fact is that state-owned Air India utilised government bailouts while launching price wars with other airlines as part of its survival requirements, leading to the logical conclusion that the government was helping subsidise monopolistic behaviour.Another FRP by the present BJP dispensation to infuse Rs 42,182 crore as additional equity over 22 years has been delayed as the airline grapples with the problem of handling over Rs 50,000 crore in debt, of which an estimated Rs 23,000 crore is by way of aircraft loan advances. It is a no-win situation exacerbated by the airline’s asset deterioration down the years and its inability to even control its operating losses since 2011.Last year, for the first time in about a decade, Air India managed to post Rs 105 crore in operating profit (net loss after tax in 2016 — Rs 3,836.77 crore) on the back of fresh capital infusion from the government and lower ATF prices. But was the intangible benefits of holding on to a 13 percent market share worth splattering more red ink on a battered balance-sheet? The government didn’t think so. Its decision to divest the national carrier spoke of the triumph of experience over, often unrealistic, hope.Dreams Un-linedThe national career was a symbol of public sector ingenuity and operational inventiveness down the decades till its much- ballyhooed merger with Indian Airlines. Then, the losses started piling up with fresh competition from the private sector on key sectors within India. Even Vijay Mallya’s doomed Kingfisher took valuable market share away from Air India. Middle East carriers like Emirates, Gulf Air and Qatar Airways gained top-of-the-mind recall for expatriate travellers to destinations like Dubai, Abu Dhabi, Riyadh, Jeddah and Muscat.For a government long in denial about the dismal picture which Air India presented, the benefits of disinvesting the airline in a single swoop are far more than taking a piecemeal approach as recommended by critics who suggest that it retain 51 percent in the asset-heavy airline. Air India owns prime land in cities like Mumbai, Chennai and Kolkata, the sale of which, disinvestment supporters expect will vault the airline out of troubled times. But this asset class, going by the airline’s own assessment, would yield only Rs 10,000 crore which is not a scratch on its huge debt burden. Raghavendra NThe Dreamliner aircraft and its entitled pilot crews have remained a thorn in the airline’s flesh to this day. Pilot strikes and mutinies since 2012 and largescale operational mismanagement took the airlines to a new low. The airline incurred operational losses of Rs 5,537 crore in 2012 (or Rs 15 crore every day). Subsequent years were not too different, though going by the government’s claims, Air India was actually paring down its losses fiscal after fiscal.Minister of State for Civil Aviation Jayant Sinha had exuded confidence about the airline’s performance since last year, and earlier this year, asserted that it would show operating profits of Rs 300 crore in 2016-17, and the government had no plans to privatise the airline – till the latter poured cold water over his enthusiasm by announcing that a disinvestment program to sell the airline and recover its losses would soon be underway.The Comptroller & Auditor General (CAG) made things stickier when it said that the airline had actually posted operating losses of Rs 321.40 crore in the April-June period of 2015-16, when the government had claimed a profit.But Air India said that its operational performance targets were in line with the turnaround plan. A spokesperson said that “considerable improvement” in on-time performance at 78.2 percent was achieved in 2015-16 as compared to 68.2 percent in 2011-12. The available evidence didn’t justify the airline’s claims.Taking the debt-free roadThe logical answer to Air India’s problems is privatisation — but politicians and bureaucrats, who misuse India’s flag carrier as much as its employees do –, would baulk at such a move. Air India has been surviving on the Rs 30,000-crore bailout package put together by UPA-II in 2012 to help its turnaround, as well as debt relief provided by public sector banks. It is estimated that even a well executed asset sale may not fully cover the airline’s liabilities, and taxpayers cannot escape footing part of the loss — either directly in case the government pays off the airline’s creditors, or indirectly if the public sector banks write off their loans to the airline.The three options on the table could be a full 100 percent selloff, a 74 percent stake sale or retaining a 49 percent share in the airline, as per a tentative note from the Department of Investment and Public Asset Management (DIPAM). Raghavendra NThe decision to form an Air India-specific Alternative Mechanism to take forward the disinvestment plan is timely. But this Mechanism should first shed clarity on how the eventual sale will be executed — whether the airline will be fully privatised or hived off asset-wise to interested bidders like IndiGo, which has expressed interest in buying out the carrier’s international operations and peak hour landing slots in airports like London and New York. These slots if sold should fetch the government at least Rs 3,000 crore.A sale of market slots in airports like Delhi and Mumbai would be attractive to foreign airlines to invest in India, though the government’s stakeholding and quantum of divestment will come under their scrutiny before entering the bidding fray. Experts have suggested that the value of the heritage Air India brand can’t be overlooked either, when even Kingfisher’s hostile lenders valued that brand at Rs 160 crore.If both foreign and prospective domestic buyers like Indigo, are allowed to bid freely for the airline, more value could be realised from a sale. There have been suggestions to add more value to the airline’s assets by hiving off non-core assets with high profit potential into a shell company and demerger and strategic disinvestment of profit-making subsidiaries. This make sense only if the government considers making key changes in its FDI policy to allow foreign investors to buy a more substantial stake in Air India. If it is possible to invest 74 percent FDI in telecom, then why not in aviation?The highly rated Tata-Air Asia Berhad JV which saw Air Asia grabbing a foothold in the huge Indian market, has still not fulfilled its initial promise. Going by the record, almost all airlines that have lost money have only themselves to blame. Their painpoints include inefficient operations, aggressive expansion without consolidation, balance-sheets which are leveraged unduly high, improper route planning and wrong pricing of tickets. These factors have contributed more to the downfall of many an airline meeting its Waterloo in the Indian aviation market, rather than the market itself — which is growing and has many milestones ahead of it. Carriers like IndiGo have excelled in the same market. Stabilising Air India will be an important step ahead for Indian aviation. For a start, in the event of a successful sale, the government and its ministries must start seeing Air India as a revenue source and not a revenue generator.
The BJP was on Wednesday set to sweep the Delhi civic polls, leading in over 140 wards and has won six wards so far, according to the Delhi State Election Commission.The Aam Aadmi Party, was at second spot, leading in 40 wards and has won one ward so far.The Congress was at third spot, and was leading in 28 wards.In the East Delhi Municipal Corporation, the BJP has won two wards — Ramnagar and Krishnanagar.In the South Delhi Municipal Corporation, the BJP has won three wards — Janakpuri West, Janakpuri South and Vishnu Garden.In North Delhi Municipal Corporation, the BJP has won Rajinder Nagar.The AAP has won Shakurpur in North Delhi Municipal Corporation.