Consumer Reports is struggling to change as it faces new competition. Can it reverse this downward trend?
A memo to Consumer Reports top managers in February of 2012 was blunt: “CR is not growing revenues or subscribers, and we are losing money. We must right the ship.”
The ship began veering off course in 2011 after many blockbuster years.
Consumer Reports and Consumers Union, the policy and action division of the magazine, showed a hefty profit of $21,414,103 for the fiscal year ending May 31, 2008. The next two years were profitable, too — $6.9 million and $912,031 — but the declines caused concern.
The bad news came in June of 2011, when Consumer Reports reported a fiscal year loss of $3,502,757. A new chief operating officer, Laurence Bunin, was brought on board five months later to try to fix things.
“He was there to shake things up,” says an employee who, like most people interviewed for this story, requested anonymity.
Jim Guest, chief executive since 2001, “realized he had real problems with the business, and for the first time, he turned the reins over to someone in a way I’d never seen him do before,” says a longtime employee. “With Bunin, he really handed over the keys to the kingdom and said, ‘Go for it!'”
“We need to get used to living with change,” Bunin wrote in a memo shortly after taking the CR job. “Change is never easy – and we don’t expect this to be easy.”
The memo, titled “Next Steps,” outlined the nonprofit company’s goals, including: “Build a more compelling and differentiated brand,” “right-size and realign staff levels across the organization,” and “return to healthy operating finances, meaning positive, growing margins.”
He warned that there would be layoffs at a place that rarely let people go.
“We are currently losing money,” Bunin wrote his senior managers. “This is not acceptable going forward and we are going to have to reduce expenses. The lion’s share of our expenses are staff.”
Consumer Reports doesn’t sell advertising and relies on print and web subscriptions ($29 and $30, respectively) and fundraising to pay the bills at its offices in Yonkers, New York. “CR magazine subscriptions [revenues] were $98 million in 2008,” Bunin’s memo reported, “and will be about $10 million less than that in 2012. In the same period, CR newsstand revenue has declined from $7.9 million to $4.5 million.”
Why the decline? “There are many more new competitors who are doing interesting things,” the memo said./CONTINUES Read More