We take it for granted these days that where media companies are
concerned, big is beautiful. You have to be a global player - you must
be prepared to take the battle to the competition’s backyards before
they take it to yours. You need to be able to reap the benefits of
economies of scale and guarantee clout in all sorts of negotiations,
from buying paper clips to selling advertising. You need to have access
to cross-media promotion. The case is clear. You’d be a fool to argue
otherwise.
Unless, of course, you happen to be in certain sectors of magazine
publishing.
Magazines might just be different. Publishers have a unique dialogue
with their audience. They live and die on their ability to act as
weather vanes - being able to divine what their readers want.
Monolithic mega media corporations, with their impenetrable layers of
middle management and their committee structures, aren’t very good at
the weather-vane business. Small is nimble. Big is numb - or even
dumb.
And there’s the technology argument too. Economies of scale? The advent
of desktop publishing ushered in a new age of do-it-yourself magazines,
didn’t it? All you need these days is an idea, some whizzy software and
bags of attitude. Surely, the days of publishing monoliths like IPC are
numbered.
We could be about to find out. IPC is up for sale. Its owner, Reed
Elsevier, seems reluctant (perhaps predictably) to try anything clever -
at this stage the plan is to sell it as a job lot. Price: pounds 1
billion.
That, though, may not be the last word. Some analysts are pointing out
that inverse gestalt rules could apply - the sum of the parts could be
very much greater than the value of the corporate whole. And even if
Reed does insist on selling as a job lot, it’s easy to envisage a buyer
wanting to sell on at least some of the titles.
Is IPC as we know it doomed? Can any one company ever hope to
understand, let alone manage, a portfolio as diverse as Mizz, Golf
Monthly, New Musical Express, Marie Claire, Woman’s Weekly and What’s on
TV?. Surely the best solution for all concerned would be for, say, the
National Magazine Company to acquire the glossy monthlies, Attic Futura
the teen titles, Bauer the weeklies. Or should we hope that a Time
Warner or a Bertelsmann steps in with ’business as usual’ signs?
Surprisingly, many planners and buyers admit that they’d be sad to see
IPC go. Paul Mukherjee, the press buying director of the Network, is
one. ’It has changed out of all recognition in recent years. It has
restructured its management teams. It has not just launched titles, but
created new market sectors. It doesn’t focus on problems, it deals with
long-term solutions. I wouldn’t worry if it ended up as IPC as was, but
just owned by someone else,’ he says.
Mukherjee’s main worry is that the wrong company will buy it for the
wrong reasons. He adds: ’IPC actually makes margins of around 22 per
cent.
There are those who might want to buy it for that reason alone. I don’t
think that TV companies such as Carlton or United News and Media would
have the right intentions. I wouldn’t be keen on Hearst (parent company
of the NatMags) either. My biggest fear is that we could lose a
powerhouse in the market - in terms of the business as a whole. It’s
good for competition.
Of course, you could argue change is inevitable and for every door that
closes, 16 windows open. In some respects, having IPC divided into a
handful of competing companies might be good for advertisers - but in
the long run, I do think those companies would represent a diminished
force.’
A couple of years ago, Derek Morris, the managing partner of Unity,
delivered a scathing speech about wasted potential at IPC. Has anything
happened in the meantime to change his mind? No, not really, he admits:
’There is much to be nostalgic about at IPC, but perhaps it is time for
change.
At times, the company has exhibited the characteristics of a supertanker
- slow to change and caring more about volume than anything else. My
wish is that the talent within the company is released so that they can
be innovative and more creative. Consumers and advertisers will then get
better products. So yes, I favour the idea of splitting the company into
its separate parts.’
But Morris fears that other magazine publishers will consider buying IPC
merely because it is big - absorbing it will multiply economies of scale
they already enjoy. ’They could reckon on sizeable savings in
distribution, paper and printing and on retail margins. I fear that
readers will be the last to be considered,’ he says.
Many believe that we’re about to enter the most exciting time in British
magazine publishing since the German invasion ten years ago. Chris Shaw,
the joint managing director of Universal McCann, certainly thinks
so.
But he firmly believes that it would be wrong to dismember IPC. ’I think
the City analysts have got it wrong again,’ he states. ’Out of the whole
portfolio, only a few titles make serious profits. Unbundling would
expose the others.
It will be cleaner and simpler to sell the whole lot. And I believe
there are some serious potential buyers out there. This could tempt
Murdoch to come back into magazines. I hear whispers about Kerry Packer.
And the German publishers - Springer, Bertelsmann and Bauer - would have
to be considered. The front runner, though, has to be United News and
Media. IPC would fit perfectly into its media portfolio.’
Roy Jeans, a director of Initiative Media, agrees the Ministry of
Magazines has been unfairly derided by those on the outside.
’It was inevitable that competitors would erode the massive market share
enjoyed by IPC in the early 80s. Over the past few years it certainly
feels as if IPC has been fighting back - but nothing is sacred. If BMW
can buy Rover, then IPC can certainly be bought by Emap or Conde Nast.
As long as its ultimate owners invest in the products and offer
advertisers greater choice, then we will be happy.’
