Bauer Media's takeover of Pacific Magazines gets ACCC green light

The merger of Australia's two biggest magazine publishers will be completed within two weeks after the competition regulator decided it would not oppose the $40 million deal.

Bauer Media, publisher of Australian Women's Weekly and Woman's Day, will go ahead with its takeover of Seven West Media's Pacific Magazines, owner of New Idea and WHO, after the Australian Competition and Consumer Commission decided the deal would not substantially lessen competition and was in the best interests of the industry.

Bauer chief Brendon Hill will lead the newly combined business.Credit: Jacky Ghossien

ACCC chair Rod Sims conceded that while there was 'notable' competition between the magazine titles owned by the German-owned publisher and Seven, closures were inevitable regardless and the deal would not affect the quality or pricing of rival publications.

"When we went down every rabbit burrow, we found that it changed our view and so we’ve come out and cleared it," Mr Sims told The Sydney Morning Herald and The Age. "Woman’s Day and New Idea on the one hand, and Take 5 and That’s Life! are each other's closest competitors. But...firstly, there are a lot of people that buy both magazines, so we convinced ourselves that it was unlikely that they would close one of them. In terms of investment, they had already cut back a fair bit and our judgement is the consumers won’t suffer much more of a decline in quality than they otherwise would."

Another factor, the ACCC said, is that consumers see online content as an alternative and that this would prevent Bauer Media from raising the price of its products or reducing investment in content.

"The significant declines in the circulation and revenue experienced by many magazines are sustained, substantial and likely to continue, resulting in less investment in content and fewer retail promotions. We note that some magazine titles have already closed, and others are likely to follow, regardless of this deal," Mr Sims said.

Bauer Media's local business is formed by what was once ACP Magazines, which it bought from Nine Entertainment for $525 million in 2012. Nine is the owner of this masthead.

The ACCC's decision is significant for Seven, which is under significant financial pressure as it tries to reduce a $541 million net debt pile. The sale of Pacific Magazines to Bauer Media was the first major move made under Seven's new chief executive James Warburton, who later revealed plans to acquire Prime Media Group and sell West Australian radio business Redwave. The Redwave deal proceeded, but the Prime merger was rejected by shareholders including Antony Catalano and regional TV mogul Bruce Gordon.

Mr Warburton welcomed the ACCC decision and said the company would receive $6.6 million worth of advertising from Bauer over the next three years as part of the sale. "Pacific Magazines has always been an important part of Seven West Media and will leave a lasting legacy, and I want to personally thank the hard working and dedicated team who have worked tirelessly to transform the business in response to changing market conditions," Mr Warburton said.

Bauer Media and Pacific Magazines have already pushed on with post-merger plans, which were in place to proceed following the ACCC's initial decision date on December 19, which was delayed after the ACCC raised a statement of issues about the tie-up of direct rivals.

Executives at Pacific Magazines, including Louisa Hatfield, Nicole Bence, Will Everitt and Lucy Chesterton, were informed they would not be transitioning to Bauer Media.

In an internal note to staff on Thursday, outgoing Pacific Magazines chief executive Gereurd Roberts, who was appointed Seven's chief digital officer late last year, said those who had accepted offers from Bauer would commence employment on April 9. Those not transitioning will meet with Seven executives this week to receive a notice of termination, but some will be redeployed into the wider business. Seven is also meeting with new employees who commenced work for the business in the last three months to confirm whether Bauer will transition them to the newly merged company.

"We will always have very fond memories of our Pacific Family - the extraordinary people who have been key to making our business a success – and we look forward to acknowledging all at a later date," Mr Roberts wrote.

Bauer Media chief executive Brendon Hill, who will lead the merged business, was unavailable for interview or comment. The deal is expected to be completed by April 9.