PUBLISHING AGENCIES: WHO OWNS WHO? - Independent publishers are now facing competition from the giant media groups as the contract publishing race for ownership hots up

The battle for ownership in the contract publishing world has only just begun. Four of the top ten contract publishers are still privately owned, and the fragmented nature of the business suggests that a spate of acquisitions and mergers is just around the corner.

The battle for ownership in the contract publishing world has only just begun. Four of the top ten contract publishers are still privately owned, and the fragmented nature of the business suggests that a spate of acquisitions and mergers is just around the corner.

WPP's entry into the market in June 2000 with the purchase of Spafax (formerly Aspen Publishing) was yet another reminder that the communications giants mean business when it comes to contract publishing.

The major drawback for large communications companies wanting to buy into the customer publishing sector is supply. There are very few substantial companies. Though there are plenty of smaller players, these are generally not what the giants are after. Very few of those that have a turnover of more than several million are still up for grabs.

Omnicom owns three of the top ten contract publishing companies: Redwood Publishing, Premier Media Partners and Specialist Publications. Other media groups which have an interest include Chime Communications with AMD BrassTacks, and Publicis, which has entered the market with its own start-up, Publicis Blueprint.

The rest are either owned by publishers or entirely independent. William Reed owns Citrus and the Eastern Counties Newspaper Group owns Summerhouse Publishing. Dennis has Dennis & Beyond and Associated, Haymarket and Conde Nast all have their own contract divisions.

John Brown, the nearest rival to top dog Redwood, is joined in the top echelons by Centurion PPL, River Publishing and TPD Group. All remain private companies, although none rules out a deal if the right suitor came along.

Graham Lake, the managing director of the TPD Group, argues: 'As an independent we can forge our own path and run with our own beliefs without having to go to a man in a suit.'

Forward returned to private status in June when it bought back the 50 per cent stake owned by M&C Saatchi's Megalomedia. Neil Mendoza, Forward's chief executive, says: 'You can be nimble and there are less worries about conflict.'

Ultimately, Forward returned to private status because, Mendoza says: 'We want to have our own strategy. We want to invest in our business, but Megalo-media has different priorities.'

Sitting happily and firmly on the other side of the fence is Jason Frost, the managing director of Publicis Blueprint, which was formed directly by its advertising agency parent when Asda - a major Publicis client - wanted to publish a customer magazine.

Frost claims that Publicis Blueprint is consequently the first contract publisher to be truly integrated into a larger agency structure. He says it is difficult for companies such as Redwood to adapt completely to working as part of an agency group. 'They try to reshape but they are publishers at heart,' he says. 'They have ink in their veins.'

Craig Waller, the chief executive of Premier Media Partners, sees no such obstacles. Premier was wholly acquired by Omnicom's DAS in 1998 and Waller sees only benefits in the change of ownership. 'Omnicom lets us get on with it and gives us support when we require it. You can tap into what you want - usually it's finance for new ventures.' And Premier has certainly seen the need for investment. It opened an office in New York last year.

Waller continues: 'The sheer professionalism of Omnicom - the exposure to how the large agencies are run and how they get the best out of their marketing services groups - is invaluable. When we pitch, it is always to marketing people, so to turn up and be part of such a respected group gives you an immed- iate advantage.'

However good it feels to be part of a major group, one of the key attractions has got to be crossover. No contract publisher could make a deal with the likes of Omnicom or WPP without getting seriously excited about the prospect of having access to so many new clients.

Premier shares BA, Rolls Royce and Bentley with other Omnicom agencies, but none of these were direct referrals.

In reality, it seems, most agencies guard their relationships very carefully.

Duncan Grant, the managing director of Dennis & Beyond, was previously a director of HHL, a forerunner of Premier. He remembers: 'The business development theory is good but I can't think of a single DAS referral that resulted in a significant piece of business. The concept sometimes came up as part of a strategic review between the client and the agency, but it always inevitably drifted away again.'

There is no common ground to be found in the realm of client services, either. While Frost and Waller claim that the agency environment makes client service more 'natural' and 'profes-sional', others focus on publishers rather than account handlers .

Grant has seen contract publishing from all angles. He left HHL to set up his own company, which he sold to Dennis in 1997. Being owned by a publishing company is, he claims, the best solution.

'Dennis is a progressive, 'can do' company with resources. The publishing environment is a plus because you have a wider breadth of editorial resources at your disposal,' he says.

He can even come up with a concrete example. When pitching for the Vauxhall business, Dennis's ownership of Auto Express proved a trump card. Grant was able to guarantee that Auto Express contributors would be working on the Vauxhall magazine.

But while everyone is busy defending their own corner, big business may eventually make all the decisions for them.

As in the rest of the communications industry, the giant predators are snapping up the start-up minnows just as fast as they can reproduce themselves, while private companies such as John Brown can still go from strength to strength quite independently.



PRIVATE PUBLISHERS: A HANDFUL OF THE TOP PRIVATELY OWNED AGENCIES

JOHN BROWN

Established: 1996

2000 turnover: pounds 20 million

Major clients: Abbey National, Debenhams, Ikea, Orange, Virgin Atlantic, Virgin Trains, Waitrose, Esporta, WH Smith

The company was split into two divisions in 1986 to separate its consumer newsstand publications from its contract titles. John Brown also has two foreign subsidiaries, The Magazine Factory in Paris and John Brown Custom Publishing in New York.



PPL CENTURION

Established: 1971

2000 turnover: pounds 22 million (estimated)

Major clients: Chartered Institute of Personnel & Development, Chartered Institute of Purchasing & Supply, Unions Today, The Royal British Legion, The Scouts Association

Although 85 per cent of its turnover comes from contract publishing, Centurion also makes money from subsidiaries such as Centurion Media Sales and Centurion Media Services.



RIVER PUBLISHING

Established: 1994

2000 turnover: pounds 10 million

Major clients: BMW, IBM, Superdrug, Holland & Barrett, Flightbookers, Merrill Lynch

Jane Wynn and Nicola Murphy bought out the other two founding partners to assume full ownership of the company in January 2000. River also sells ambient media and has three other divisions: Catfish (catalogue and brochure production), Deep Consultancy (brand and strategic marketing consultancy) and RiverNet (internet design and build).



TPD GROUP

Established: 1988

2000 turnover: pounds 7 million

Major clients: Alliance & Leicester, Goldfish, Microsoft, ONdigital, RAC, United Airlines

TPD derives around 75 per cent of its revenue from contract publishing. The company positions itself as a 'media-neutral' customer communications agency offering print and online solutions, brochures, catalogues, sales support material and data management.



FORWARD

Established: 1986

Major clients: Tesco, Patek Philippe, Egg, Nasdaq, NCR, Lloyds TSB, BT

Forward, once recognised as one of the top three players in the market and the largest privately owned one, now considers itself to be competing in the broader CRM arena, rather than simply publishing, though it still publishes magazines for many clients (including those listed). It was 50 per cent-owned by Megalomedia, which is affiliated to M&C Saatchi, until April 2000 , when it returned to management ownership.



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