Why swimsuit issue is huge for Sports Illustrated

It draws in 7% of the magazine's annual revenue and is driving video views and app downloads.

By Jonathan Berr Feb 13, 2013 10:38AM
Image: Young woman sitting on the hood of a car -- rubberball/Getty ImagesUpdated 3:38 p.m. ET

One of the few things that Time Warner's (TWX) beleaguered Time Inc. magazine business can count is the Sports Illustrated swimsuit issue.

The issue is one of Time's top sellers, accounting for some 7% of Sports Illustrated's annual revenue, Forbes recently noted.

The magazine's advertising revenue last year was about $568 million, which would mean the issue -- and its associated calendars and other products -- generated more than $40 million in 2012, according to Publishers Information Bureau data from the Association of Magazine Media. That doesn't include the millions it generates in sales for swimsuit designers and accessory makers featured in the issue.

As AdWeek
noted, last year's swimsuit issue got 34.5 million video views. A free mobile app got 482,000 downloads in its first week. That's why Time Warner executives are anxious to bolster the brand. They are probably livid that a fashion blog leaked the identity of cover model Kate Upton before the issue was published. Amazingly, that's the first time that's happened in the swimsuit issue's 49-year history. 

Time Warner's publishing business, by far the media conglomerate's smallest, generated $3.4 billion in revenue last year, little changed from 2011. The business has been fading for years and recently announced plans to shed about 6% of its staff. Some investors have been pushing Time Warner to get rid of the magazine business for years.

The company may finally be succumbing to this pressure. According to reports in Bloomberg News and elsewhere, Time Warner is in discussions to sell all or part of its magazine business. In one scenario, Time Warner would retain Sports Illustrated, Time and Fortune.

Magazines as a whole are struggling. As The Wall Street Journal noted, newsstand sales plunged 8.2% in the second half of 2012 and paid subscriptions showed a 0.7% gain. Digital-edition sales are showing big gains, but they only account for 2.4% of the industry's overall circulation, the paper says.

If it were feasible, the company would gladly put out swimsuit issues for other titles such as Fortune and Golf magazine.

Jonathan Berr does not own shares of the listed stock. Follow him on Twitter @jdberr.

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Feb 13, 2013 5:02PM
The swimsuit issue is and has been the most popular issue of S.I. for years.  That said, I just wish it mirrored those past issues in the 80s and 90s that not only showed bikinis but also had articles about the places those bikini's were photographed at as well as in dept articles about sports and athletes rarely covered in a normal S.I. issue.  In short people I'm talking content.  Today's swimsuit Issues may have girls on par with past issues, but its lacking substance. Sort of like a pretty girl you talk to at a party because she's pretty, but start to lose interest in because she has nothing to say about the world she lives in.
Feb 13, 2013 8:30PM
It is really the ONLY issue of SI worth buying....
Feb 13, 2013 12:48PM
Not surprising: pro sports are so completely boring and monotonous that it takes gambling and girls in bikinis to make it interesting.
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