Faced with higher costs and lower sales, Rodale Press is dramatically downsizing its direct-response book operation, a move that will eliminate 148 positions. In a letter to employees, Rodale president Steve Murphy wrote that the company's book business "continues to deteriorate in terms of profits and securing readers. In addition, customer feedback and high book returns have told us that many of our books have suffered in quality and content in recent years."
To address its problems, the new benchmark for publishing new titles in the direct-response division will be "100% dependent on editorial quality. We're getting out of the habit of releasing titles to drive top-line growth to meet a planning goal. The pendulum has swung to editorial driving the process," Murphy told PW. He estimated that the direct-response group will release about 50 titles next year, concentrated in its traditional subjects of health, fitness, gardening, parenting and spirituality.
As part of its restructuring efforts, Rodale will change the mix of books it publishes to include more externally authored and acquired books. It is also reducing the time it takes to get a book to market from about two years to nine months. In addition, Rodale is centralizing marketing and creative functions.
The reorganization will not affect Rodale's trade book operations, which Murphy said he plans on expanding. The unit will publish 90 titles next year, compared to 81 in 2001. Marc Jaffe will continue to oversee both the trade book and direct- marketing operations, with Amy Rhodes and Stephanie Tade continuing to report to him. Neil Wertheimer, v-p and publisher of direct books, has left the company. Tami Booth, editor-in-chief of women's health books, has been given greater responsibilities in the direct marketing segment and will assume some of Wertheimer's duties.
Since his appointment in April 2000, Murphy has been steadily upping Rodale's trade book operations while reducing its direct marketing business. The reduction of Rodale's direct marketing arm reflects an industrywide trend that has seen a number of companies either exit the direct marketing field, such as Time-Life Books, or reorganize, such as Reader's Digest.
Murphy's actions occur against a backdrop of returning the magazine and book publishing company to profitability. In a letter to the staff just prior to Murphy's own memo, members of the Rodale family, who own the company, said more changes were needed if the company was to end two years of losses. The book division has been losing money since 1997, and the entire company showed a loss in 1999 and 2000. The company is on track to be profitable this year, due largely to cost-cutting measures that have saved the company about $40 million. Despite the improved financial picture, the Rodales told employees that "our book business continues to suffer. That is why... we have made the necessary decision to cut our staff and costs even further."
The direct-response business has not been helped by the anthrax scare. Murphy said Rodale "is doing what we can" with suppliers to maximize security. He also noted that Rodale's marketing pieces are "well branded." Still, he acknowledged that it was "too early to tell" if public concerns about the mail will affect the company's response rate.