It takes years to build a company. It takes about forty minutes to wind one up. In a Bloomsbury hotel last week a random assembly of pensioners, long-time investors and former employee shareholders of EMAP met to rubber stamp the sale of the company's magazine and radio assets to H. Bauer, the German publishers of Take A Break, Bella, TV Quick and other women's weeklies. We held up our voting cards as if the decision hadn't already been taken by a handful of fund managers. A few questions were put, along the lines of "was this really the only course of action?" and "how secure are people's jobs?", questions which the chairman Alun Cathcart was able to field with the precise opposite of charisma that is called for on these occasions.
Nobody mentioned that this meant another of Britain's major magazine companies in foreign ownership, possibly because they didn't want to be the first ones using the expression "the Germans". Hachette is French and IPC is American, as are Conde Nast and National Magazines. Only Future, Haymarket and the BBC among the majors remain in British hands. The parallels with the Premiership are strong. How come overseas investors see value whereas, as Cathcart correctly pointed out, the UK stock market prefers to put its money elsewhere?
Maybe it's the difference between an investor and a buyer. The story is already gaining ground that Heinz Bauer, the fourth generation of the family to be at the helm of this private company and, according to Forbes, merely the 410th wealthiest person in the world, swung the purchase over the competition because he was the only one at the table who could tear off a cheque for the full purchase price of £1.4 billion there and then. It can't have been as simple as that but the story illustrates the advantage that a private company enjoys in negotiations like these.
Herr Bauer's company is less vulnerable than most to advertising downturns. He doesn't have to persuade any teenage scribbler that there will be jam tomorrow. They only have to look at the 175 million weekly copies that he already sells ever year. He won't be in any hurry to move them online. At the stroke of many noughts he becomes the leading magazine publishing company in Britain as well as Germany and no doubt thinks about what former EMAP titles he can take into the emergent markets of Eastern Europe and beyond.
Ironically, EMAP's troubles can be traced back to 1998 when they made the cardinal error of travelling the other way and buying a publishing company from the Americans. When transatlantic transactions like that take place in any sphere, it's like Captain Mainwaring buying from Sgt Bilko. You fear it's only going to go one way.
Following the meeting a bunch of the company's former executives were waiting outside as the pub across the road opened its doors. Having ordered their drinks they addressed the company's demise with that peculiar combination of sentiment and bitterness that characterises corporate wakes. There was a time when EMAP was the city's darling, recalled a Large Orange Juice. Ah, but that was also the time that magazine sales were breaking records every year, pointed out a Pint of IPA. Ever since then, interposed a Guinness, the company had been in the business of promising the City that two plus two was about to make five. Yes, I remember when masthead programming was going to make magazine companies rich, added a Bloody Mary, wiping a tear of hilarity from the corner of her eye. Then there was buying magazine companies overseas, recalled Fizzy Water. Don't get me started on the internet, muttered Large Gin and Tonic. The Large Orange Juice sighed and said he felt deeply uncomfortable the first time he heard somebody use the expression "leveraging the synergies between magazines and radio".
The talk grew darker when it turned to more recent events. When the Boston Consulting Group came in, they sniffed round the place and then made the suggestions you would expect them to. Plenty of talk of content, platforms, hubs and cost-cutting. Why not use one editorial team on Heat, Closer and Grazia? (Why not use one consultants report and send it round from company to company because it always says the same bloody thing?) It may not be entirely satisfactory to point out that magazines don't behave like FMCG but over the last twenty years millions of pounds have been wasted proving it to be the case. In June of last year Simon Stewart joined EMAP as Chief Marketing Officer across magazines, radio, web and the rest, in the hope that his experience in the drinks industry and widely hailed "outside-in" perspective could transform the company's marketing. The night before the shareholders meeting it was quietly announced that he was returning to the drinks industry.
Any day now EMAP's problems will be Bauer's. It couldn't come at a tougher time. The publishers of the mass-market women's weeklies are already getting their bad news out ahead of the ABC figures. The EMAP titles, as they were prepared for sale, had not been spending the marketing money they normally would do and are unlikely to be outperforming the market. Will Bauer face the future with a platform-agnostic's breezy and baseless optimism or will they go below and ride out the storm like ancient mariners? It's perfectly possible they don't know themselves yet and their profile in the UK industry is so low they won't have any trouble keeping the lid on whatever they decide. I don't think they'll be larging it. But either way, it's going to be a bumpy ride.
Monday, February 04, 2008
The end of EMAP: director's cut
My piece in today's Guardian about the end of EMAP was the victim of a misunderstanding about length. Here's the full version:
Posted by David Hepworth at 7:17 am