After a new dawn IPC fails to shine

This time last year the management of IPC Magazines was heralding a brave new dawn for the newly independent company. The all-new IPC, previously part of the Anglo-Dutch group Reed Elsevier, had just completed a 860m management buyout backed by venture capitalist Cinven.

It’s true the company has had a number of triumphs in the past year, notably the well-received Loaded Fashion, which launched in August, the Link House deal in October that brought IPC 27 new titles, and the joint venture with Kerry Packer’s Australian Consolidated Press in the same month, which gave it a foothold in the Australian market.

However, observers are now wondering whether the deal with Cinven has lost its sheen. IPC has only launched three titles in the past year: Loaded Fashion, Beautiful Homes and Living Etc. But it has closed its South Bank special projects division – the source of many new magazine ideas.

And a procession of high-profile individuals have left the company. Marie Claire publishing director Heather Love departed in March to become a consultant at the BBC. Then, in June, circulation director David Greene joined The Independent and Sally O’Sullivan, editor-in-chief of Ideal Homes and several other titles, left to set up publishing company Cabal. South Bank managing director Chris Boyd parted company with IPC in October, while in November Marie Claire lost its editor Juliet Warkentin to textiles group Arcadia.

Other thorns in chief executive Mike Matthew’s side include disappointing six-month Audit Bureau of Circulation figures in August across most titles, virtually flat first half profits and damaging rumours in The Evening Standard that one of IPC’s debt financiers, Goldman Sachs, is looking to offload its debt after finding the going tougher than expected.

Matthew concedes: “In the most general terms, no one would say it’s been anything other than a very challenging year.”

Paul Richards, an analyst at Panmure Gordon, agrees: “It has been a difficult year for IPC. With a management buyout, you need to do your best to hang on to staff to really get people motivated. If you’re now working from 8am to 8pm instead of 9am to 5pm and really sweating, it can be difficult.”

One former senior executive goes as far as to say: “New IPC is a bit like New Labour. There were a lot of promises made and nothing has changed.”

In IPC’s defence, some observers believe the situation is inevitable. Matthew explains: “After a buyout of this size, it would be truly surprising if there was no change.”

Matthew points out that IPC has attracted a number of high-profile individuals, such as former United News & Media executive David Arculus, ex-Flextech executive Rita Lewis, who replaced Love, and Isobel McKenzie-Price of Grner & Jahr, who took over from O’Sullivan.

Others point to IPC’s bullish 9m marketing push as a sign of its confidence in the weeklies market.

Cinven, at least, remains upbeat about IPC’s prospects. Director Dick Munton says: “We are very happy. We are not preparing an exit for the investment.”

Sue Unerman, director of strategic solutions at Mediacom TMB, also comes out on IPC’s side: “The buyout might have taken a long time to bed in, but I believe that 1999 is going to be IPC’s year. The image I now have of the company is of a group of people who have focus.”

Another senior media buyer comments: “It’s now in the business of making money and wants to be a public limited company in a few years’ time. In order to get there, it needs to make some tough decisions.

“IPC can’t really launch something massive [as EMAP did with Red] on the back of the new regime. It is more likely to be very cautious and plan it down to the last detail, as the company always has done.”

Comparisons with EMAP and the National Magazine Company are inevitable. While NatMags saw increases across all its titles in the last set of ABCs, only one of IPC’s South Bank publications recorded a circulation rise.

The Red success story, coupled with FHM’s seemingly unstoppable run, took the sting out of any disappointing figures for EMAP. And EMAP’s expansion overseas, with the likely purchase of US publisher Petersen for $1.5bn (900m), will put extra pressure on IPC.

“There is a real race on in terms of international expansion,” says Jackie Almeida, former media director at CIA Medianetwork. “Some would argue that EMAP is winning. And the first to get a proper network on a global scale will be in the best position. EMAP seems best placed to do this.”

Others have criticised the unwieldy structure of IPC, described by one rival as “leviathan-like”, which makes it less able to respond to market changes. Nimble publishers such as Cabal and NatMags have more manageable portfolios. IPC is conducting a full-scale strategic review that could have implications for its existing structure, although Matthew would not be drawn on the details.

This year looks like being hard for all magazine publishers. A downturn is expected, and consumer publishing is always one of the first areas to suffer. Meanwhile, a new rival – in the shape of media giant Time Warner – is about to enter the European and UK consumer market for the first time. It will be a force to be reckoned with.

But, having weathered last year’s storms, IPC should find this year easy by comparison.

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