MEDIA FORUM: Can parochial UK publishers survive independently? What conclusions can we draw from Emap's imminent retreat from the US market? Is it an acquisition target? Alasdair Reid reports

Emap isn't the first British media company to swagger into the US

only to fall flat on its face. It probably won't be the last,

either.



Last week, Emap, a publishing company that has known decades of

uninterrupted growth in the UK, let it be known that it was pursuing the

sale of its US division - the magazine outfit formerly known as

Petersen.



Emap bought Petersen, which publishes more than a 100 hobby and

lifestyle consumer titles, including Motor Trend, Hot Rod and NFL

Insider, for pounds 720 million back in 1999. But it has performed

poorly and things are unlikely to improve given that the US advertising

market is already slowing.



Market analysts now value the business at less than pounds 500 million

and Emap sources are privately resigned to taking a significant loss on

a sale. Anything, they say, to rid itself of one of the biggest factors

depressing its share price.



Where now for Emap? And, indeed, are there wider conclusions to be

drawn?



Emap didn't mosey over to the US just for the sake of a change of

scenery.



And it wasn't just about corporate vanity - though there was a large

element of that. Emap has always thought of itself as irrepressibly

cocky and brash, a culture that's unashamed of its efforts, which

generate more heat than light.



So there was a tendency to believe that it would not only be at home in

the US publishing world (as perceived via the medium of cable sitcoms),

but that it'd be able to show it a thing or two. If you've spent a

decade shaking up the London publishing scene, it's only natural to

start believing that you're smarter than everyone else. Especially

Americans who, as everyone surely knows, are stupid, unsubtle, crass or

whatever.



But there was also an inexorable business logic at play here. The media

world will continue to consolidate - everyone agrees about that. And if

you're not buying you're going to be bought. Increasingly, successful

media properties will be global media properties. Global brands. If

you're not global then you will be swallowed up by someone who is.

Petersen was Emap's application to join the big league.



Has Emap now established once and for all its natural place in the order

of things? Can parochial UK publishers hope to survive as independent

entities? Will IPC, for instance, draw worrying conclusions from this

episode?



Paul Richards, an analyst at West LB Panmure, says it should be

remembered that Emap has significant interests in France and Germany.

And he argues that we shouldn't get too carried away with globalisation

theory. He states: 'It comes down to a question of whether magazines are

generally transportable.



We can all think of lots that are - Cosmopolitan, Elle and even FHM. But

I think even now, 95 per cent of the magazine business is local. On the

other hand, if you understand the UK market, there's no reason you can't

make that work for you internationally.'



And he takes a fairly charitable view of the Petersen affair. He

comments: 'I don't think we can say that Peterson was the wrong thing

for Emap but what we certainly can say is that it was the wrong time and

the wrong price. It's not a bad business but they bought at the top of

the market and you wouldn't want exposure to the US advertising market

right now. The clouds continue to gather over there. But I wouldn't read

too much into it where Emap is concerned. Europe is a good place to grow

and the company will still want to grow internationally. It certainly

has the management and the structure to do it.'



But isn't there a case for more fundamental gloominess about this?

British-made international magazine successes are rather thin on the

ground. And you could say the same about TV. Despite our smug belief for

decades that we made the best TV in the world, the world actually

watches Friends, not Babes in the Wood. And despite our certainty that

we know a thing or two about newspapers, our press is owned by Canadians

and Americans.



We're not much good at this media business, are we?



Sue Unerman, the director of strategic solutions at MediaCom, doesn't

believe that. She doesn't believe in mono-lithic thinking either: 'It's

true that magazine brands are increasingly global properties, but you

don't have to have huge acquisitions to achieve that. You can launch a

title in another market without that.



It's not necessarily a case of all or nothing - media owners do need to

think global but they can do that by having global properties rather

than networks. There are other ways to give advertisers what they want.

The balance that's hard to achieve is between the creative expertise in

producing great media brands and the commercial skills needed to make

sure you get a return on investment.'



But Murray Dudgeon, the New York-based executive vice-president and

worldwide operations director of Universal McCann, argues that Emap

actually got quite a lot right. He says that if you look back at the

past few years, the group's two real US successes have been the lads'

magazines FHM and American football title NFL Insider - clearly

demonstrating Emap's ability not only to import titles successfully, but

also to develop local product. However, if you look at the year-on-year

advertising pages sold (2000 versus 1999) for the group as a whole, it's

clear that the rest of the group's publications did not fare so

well.



But what can we learn from the whole episode? Dudgeon responds: 'While,

as ever, there is much hype associated with the constant consolidation

of media owners, there is no doubt that media groups with the ability to

really package up their channels are increasingly beginning to have a

real impact on the market. A softer economy will drive this even more,

not out of expediency, but necessity. In the UK, Emap has a much broader

base of different media types, which it has successfully taken to

market.



In North America, it appears it may not have built that base quickly

enough either through acquisition or new launches.'



Ian Clarke, an international group director at Starcom Motive, agrees

that we can't read too much into this: 'Of course global properties are

important but you can be a strong media owner if you have a strong

domestic business base - and advertisers will always want to use strong

indigenous publishers. They are most likely to reflect or lead trends in

lifestyles or attitudes. They are best at conveying a local cultural

flavour. And the thing about having a strong local business base is that

if they can stay independent, they can always look at diversifying

overseas at some point again in the future.'



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