How rival magazines will operate under one roof after buy out

For decades they were bitter rivals, but now glossy magazines New Idea and Women’s Day will now be under the same roof.

For decades they have been locked in white-hot competition to snare scoops on the royals, Hollywood celebrities and even Australian B-listers.

And now the glossy magazines New Idea and Women’s Day, which saw their battles brought to life in the miniseries Paper Giants, will now be housed under the same roof.

Bauer Media, which oversees magazines once owned by Kerry Packer, will pay $40m to acquire Pacific Magazines from the Kerry Stokes-controlled Seven West Media.

The deal means some of Australia’s best-known titles, including Bauer’s 86-year-old Australian Women’s Weekly and Woman’s Day, will have to learn to co-exist with Pacific’s New Idea and Better Homes and Gardens.

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The deal, foreshadowed by The Australian on Monday, will bring together more than 50 gossip and lifestyle magazines, including fashion titles Elle, Marie Claire and Harper’s Bazaar, under one roof. The sale by Seven also ends long-running free-to-air television links to the women’s magazines brands that were for years the staples of many Australian households.

Bauer’s local boss Brendon Hill says the merger of Australia’s two biggest magazine groups will boost the German family-owned publisher’s firepower with advertisers, and help it compete against the technology giants Google and Facebook and social media that consume so much reader attention.

Once were rivals - MA GS

“It will help build a more sustainable business for the future, not just for us but also for the whole industry,” Mr Hill told The Australian.

“The digital market has evolved so quickly, we need scale to compete with Google and Facebook, and so combining these magazine audiences and digital audiences gives us that scale to have a more sustainable future.”  Bauer, which entered the Australian media market by splashing a hefty $500m for Packer’s ACP Magazines in 2012, is under pressure to lift its audience and advertising revenue as customers turn to social platforms such as Instagram and Facebook for the latest stories and videos. It also has also been cutting costs across editorial, marketing and advertising to offset falling revenue and circulation.

Meanwhile, Pacific has been overhauled under the leadership of Gereurd Roberts, with all staff writing for both online and print publications. He has also focused on expanding its digital offering, including more videos.

Mr Hill, who took the helm from Paul Dykzeul at the end of May after four years running Bauer’s New Zealand operations, said the focus for the merged business would be “high quality content and digital development” and ruled out any magazine closures in the short term.

“No, these magazines all work together now. They’re all targeted at very different groups, and there’s very little overlap between them in terms of readers,” he said.

Bauer’s Woman’s Day has weekly readership of 982,000, while Pacific’s New Idea boasts 848,000, and the crossover between the two audiences is 25 per cent, according to Bauer, citing a 12-month rolling average weekly readership figure from Roy Morgan.

“There’s no immediate plans for any closures,” Mr Hill.

Pacific Magazines’ New Idea

Peter Fray, the director for the Centre for Media Transition at University of Technology Sydney, who worked at Mr Packer’s now-defunct The Bulletin magazine, said the tie-up was a reflection of the “world we live in: it’s get big or get out”.

“By merging does it mean that we’ll prolong plurality or diversity of titles, and indeed sacrifice diversity of ownership for keeping titles alive, and we don’t really know the answer to that,” he said.

Mr Fray said the earnings potential of media companies continued to fall.

“Once upon a time they were cash cows and now they’re not; they’re relatively small operations now,” he said.

Ben Willee, general manager and media director of ad agency Spinach, believes there “has to be rationalisation”, particularly in women’s magazines.

“There’s a lot of other categories, certainly in high fashion. Elle and Marie Claire would be an obvious example there,” he said. “Under one roof it doesn’t make commercial sense to run two titles like that in the long term.

“There’s no doubt magazines have lost a lot of audience and the reason for being is challenged by the internet and digital, but what’s really been a bigger issue for them is that media buyers, who are mostly young and urbanised, often place money into mediums that are a reflection of their own habits.

“And given they’re not consuming as many magazines as they used to, the loss of revenue to that sector is probably higher than it deserves to be, based on its loss of audience,” Mr Willee said.

Bauer Media’s Woman’s Day.

If the merger is approved by the competition regulator, News Corp Australia’s magazine division, which consists of Vogue, Vogue Living and GQ, will be its main rival. News Corp Australia also publishes The Australian.

The magazine deal is the third under new Seven boss James Warburton as part of his efforts to overhaul the media company. It comes just a few days after Seven unveiled its merger with Prime Media, valuing the regional broadcaster at $65m, and the sale of West Australian regional radio broadcaster Redwave to Southern Cross Media for $28m.

Mr Warburton said the sale of Pacific was “another major initiative aligned with our strategy to improve balance sheet flexibility and simplify the operating model to enable greater focus on growth initiatives”.

Seven said the sale proceeds would be used to pay down debt, improving “balance sheet flexibility and simplifying the organisation to focus on its content-led growth strategy”.

Seven and Bauer have also struck commercial arrangements, including advertising spending commitments, the ongoing production of the Better Homes and Gardens television program, and sharing lifestyle content under a long-term agreement. Seven will receive $6.6m of advertising on Bauer Media assets over three years.

Mr Roberts, who is expected to be appointed Seven’s new digital boss, has remained silent on his future plans.

Bauer expects to wrap up the merger at the end of the year or early 2020.