Seven to consider Pac Mags offers

Seven West Media is open to offers for its Pacific Magazines business after Bauer Media made a takeover approach.

Seven West Media is open to ­offers for its Pacific Magazines business after it emerged Australia’s biggest magazine publisher Bauer Media made a takeover ­approach.

It is understood Seven has asked other parties to sign a non-disclosure agreement in relation to Pacific Magazines after The Australian revealed Bauer expressed interest.

Pacific publishes magazines including Marie Claire, New Idea and Better Homes and Gardens, while Bauer publishes The ­Australian Women’s Weekly and Woman’s Day.

Bauer and Pacific, the country’s second largest magazine publisher, would control about 80 per cent of the magazine market if the two businesses merged.

This would have serious implications for other magazine publishers because the combined Bauer and Pacific would hold significant clout with advertisers and dominate print audiences.

As is usually the case, price is expected to be the key to any deal.

Pacific’s earnings before interest and tax more than halved to $9 million for the year ended June 30, 2016, largely due to a big investment in its digital capabilities, but also due to the migration of eyeballs and revenues online.

Revenue slipped by a relatively slim 8.6 per cent to $201m.

Generally, vendors of print ­assets could not hope for a sale price of more than two to three times earnings but Seven would expect some value to be attributed to the digital investment and potential synergies to be extracted from a trade sale.

Magazines are under intense pressure from the migration of eyeballs and revenues to online alternatives. Bauer last week ­announced it would axe teen magazine Dolly after 46 years due to its target audience increasingly accessing content on smart phones at the expense of print.

Consolidation is a logical ­defence against such pressures due to the ability cut unprofitable titles, exploit back office synergies and gain greater scale.

Bauer chief executive Nick Chan knows Pacific well after running it for 10 years until 2013 when he was appointed Seven’s chief operating officer. Mr Chan started at Bauer in July and the approach underlines the new boss’s desire to move quickly to combat structural challenges.

Pacific hit its biggest-ever advertising revenue share versus Bauer of 47.8 per cent this year, according Standard Media Index.

Competition tsar Rod Sims told The Australian last week he would countenance a range of new online competitors to the magazine industry and consider the market for specialist publications should Bauer proceed with a takeover of Pacific.