Bauer Media pays $40 million for Pacific Magazines
The big question for consumers is which of their favourite magazines will survive Bauer Media buying rival publisher Pacific Magazines from Seven West Media.
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The big question for consumers is which of their favourite magazines will survive Bauer Media buying rival publisher Pacific Magazines from Seven West Media.
In what some have described as the “Hunger Games” of magazines, closed door meetings and staff briefings have been taking place with redundancies expected and several high profile magazines to be closed following the $40 million sale of Pacific Magazines to Bauer.
“It is like the Hunger Games,” said one high profile magazine editor. “Everyone is obviously very emotional and many are understandably nervous. They’re not going to keep two magazines that essentially sell the same thing.”
Plans are rumoured to be underway for titles like Woman’s Day and New Idea to be merged while there are question marks over the future of magazines including Who, NW, marie claire, InStyle, Harpers Bazaar and Elle.
“Given the track record to date, Bauer has moved swiftly with axing titles like Cleo and Cosmopolitan,” another industry source said.
“It is hard to imagine a world where they are going to keep all titles, unless they intend to really combine all the back end, which they have already done with some titles. They will concentrate on hero brands but we will have a situation where they can’t all be a hero brand. “What it will do is give Bauer more control of supermarket baskets at check-outs because they will just have more volume.”
Bauer is paying Seven West Media $40 million for all titles in the Pacific Magazines brief.
Seven also gets an added sweetener of $6.6 million of advertising in Bauer Media titles.
The move comes as new Seven boss James Warburton rationalises the business to pay off debt after the company posted a $444.4 million loss in August.
Bauer chief executive Brendon Hill however claims there won’t be any magazine closures but conceded there would be job losses as operations are consolidated and Pacific staff move from the current Eveleigh headquarters to Bauer’s Park Street CBD office.
“We are not planning to close anything at all,” Hill said. “We are really confident in the future of this industry and in the combined strength of the portfolio. They all have very unique audiences, that is the beauty of magazines. They all operate great in this competitive market we are in now so there is no need to change that.”
Of redundancies, he added: “We are working through that process but just as a business generally, when you do these types of mergers generally, there are back office synergies.”
Current Bauer titles include TV Week, The Australian Women’s Weekly, Gourmet Traveller, Elle, Harpers Bazaar, Inside Out and Australian House and Garden. Pacific Magazines titles include New Idea, Better Homes and Gardens, marie claire, InStyle, Australian Women’s and Men’s Health, Home Beautiful and That’s Life.
Breaking down the figures, for example, New Idea has a reach of 1.41 million readers each week, compared with Woman’s Day at 1.51 million while Who is at 487,000 versus NWs 225,000 according to the latest emma data. All four however are declining in readership with New Idea down five per cent on last year and NW dropping 11 per cent.
Insiders at Seven say Pacific could move out of its Eveleigh headquarters within six to eight weeks with Bauer based on Park Street in the Sydney CBD.
“The sale of Pacific Magazines is another major initiative aligned with our strategy to improve balance sheet flexibility and simplify the operating model to enable greater focus on growth initiatives,” Warburton said. “The team at Pacific have been at the forefront of our group’s transformation and have done a tremendous job at repositioning their business, but there can be no doubt that there is a greater future within a larger scaled magazine group.”
Media analyst with Fusion Strategy Steve Allen said Bauer over the next 12 months will look very carefully at which titles competing for the same shrinking pool of readers — such as Women’s Day and New Idea — will survive.
“They will look at what is making money … They will rationalise it over time,” Mr Allen said.
“The more popular women’s titles will be the ones most affected,” Mr Allen said.
The deal means fewer players in the magazine market but Mr Allen said the Australian Competition and Consumer Commission was unlikely to block the takeover.
“This is clearly a declining industry, the only survivors will be the fittest and the biggest,” Mr Allen said.
“They will have a serious look at this but, on previous form, they are unlikely to block it.”
For advertisers less competition in the market would mean fewer discounts on the price they pay to buy advertising space in Bauer’s expanded portfolio of magazines, he said.
Originally published as Bauer Media pays $40 million for Pacific Magazines