The challenges facing media giant IDG

Pat McGovern, chairman of IDG, on the evolution of media as it gets turned on its head

Investor interview by Bambi Francisco Roizen
March 24, 2010
Short URL: http://vator.tv/n/e85

Over the weekend, I enjoyed a celebratory dinner with my husband's clients. They just sold their company. The dinner discussion revolved around lessons learned about entrepreneurship. One lesson discussed was one that many successful entrepreneurs seemingly "always" learn. That is to never sell too much equity and lose control of the company early on. I then told them about my recent interview with Pat McGovern, who in 1964 founded IDG, a leading technology media, events and research company. Now as chairman and still active participant, Pat owns 85% of this 46-year-old media powerhouse, which is currently generating $3 billion in revenue annually. This is not a guy who sold out early, or ever for that matter.

But for Pat, IDG has always been a continuous entrepreneurial project as it evolved through the mainframe revolution, mini-PC revolution and the Internet revolution. 

In this first part of our four-part series, Pat talked about the biggest challenges facing IDG as the media industry, particularly the magazine industry, turned on its head in the past several years. IDG owns 300 magazine publications, but none of them shut down last year. Yet 367 magazines shuttered in 2009, while 64 went online only, according to MediaFinder.com.

"We found our weekly publications have put their bulk of stories on the Web," he said. "The magazines are more feature oriented… longer pieces."

Only one IDG magazine shut down in recent years - InfoWorld. The shuttering of the magazine was a test, explained Pat. It turned out to be the right move. Despite cries that losing the magazine would reduce InfoWorld's visibility because there would be no "copy of the magazine on the desk," the online-only site flourished. The editorial team could focus solely on the online edition and the magazine went from breakeven to a 35% operating margin with the Web-centric model. 

So, why not shut down all magazines?, I asked. 

"As long as the print publications can make a profit, it can stay," said Pat. 

How did they survive the meltdown? I followed up.

"We took some steps, the tabloid format we made into magazine size. The number of pages per issue went from 140 to 160 down to 36 to 48 pages. And, the circulation sizes were reduced, as IDG turned off readers who didn't have much buying power. The effect was to still give advertisers a lucrative target market, but shaving costs from IDG's expense structure.

What's the future of IDG's magazines and advertising this year and beyond? I asked.

For his answer, watch the interview.


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