Wagadon faces uncertain future

The news last week that Conde Nast was terminating its relationship with Wagadon, leaves the company with several urgent and unsavoury options: find a new partner, find a new backer, sell or fold.

Conde Nast has sold its 40 per cent stake in Wagadon back to its 60 per cent owner and editorial director, Nick Logan. Savings that Wagadon would have leveraged through its association with Conde Nast will disappear, including better deals on overheads such as distribution and paper costs. As a result, costs will spiral.

Wagadon’s stable of titles has had an annus horribilis. The five-strong portfolio was reduced to four after men’s title Deluxe, launched in April 1998, closed after only eight months last December.

Earlier this month, Frank, its monthly women’s title which launched in October 1997, was reduced to a quarterly, and will be redesigned as a fashion magazine .

Its flagship title, The Face, style bible of the Eighties, suffered a circulation decline of 29 per cent year on year in the last set of Audit Bureau of Circulations figures, dropping from 100,744 to 71,381. Arena, its men’s title, dropped 30 per cent year on year from 86,922 to 60,949. This market, headed by FHM, which has a circulation of 750,000, has seen phenomenal circulation growth.

The only ray of sunshine for Wagadon appears to be the biannual men’s fashion glossy Arena Homme Plus, which is understood to be highly profitable.

Under these circumstances, Logan could have backed himself into a less than advantageous position.

“I’m wondering why anyone would want to buy Wagadon,” says Simon Timlett, head of press at media agency Optimedia. “And I’d question whether any of its brands could command a high price in the market. You can now pick up people who used to read The Face in other titles.”

Movements of editorial staff through Wagadon’s doors exposes the depth of its problems. Tina Gaudoin, launch editor of Frank, left in spring 1998 after a few months in the post. The magazine’s deputy editor and senior fashion editors soon followed.

And Adam Higginbotham was sacked this April as editor of The Face after only a year in the job. His predecessor, Richard Benson, who presided over the title’s biggest fall in sales, has been rewarded with a promotion to group editor.

Such instability will be a significant obstacle to an outright purchase of the whole company, and the belief is, buyers will wish to pick off individual titles. The fact that Conde Nast has withdrawn its stake throws doubt over a wholesale disposal of the company.

Chris Shaw, managing director for Universal McCann, argues that Conde Nast became involved with Wagadon in its heyday in the late Eighties for several reasons. “Conde Nast would have taken a stake in Wagadon to make money, perhaps to create a subsidiary company or long-term partnership, or may have hoped to get added value by learning something about Wagadon’s approach. “The fact that it has withdrawn suggests at least one of these objectives has not been fulfilled.”

Names which have been mentioned as potential buyers for part or all of the Wagadon stable include EMAP, IPC, German publisher Axel Springer, and Time Warner, which two years ago bought trendy interiors title Wallpaper.

A purchase by EMAP would not be unprecedented. EMAP bought FHM in 1994 from Tayvale and turned it into the most successful glossy in the men’s market.

Neil Carter, media analyst at Dresdner Kleinwort Benson, says: “EMAP and IPC would be the leading candidates. However, EMAP tends to go down the organic route and IPC is working its way towards an initial public offering, and so it wouldn’t help the company it if were seen to be taking on ailing titles.”

Lorna Tilbian, media analyst with Panmure Gordon, says: “EMAP might buy and while it tends to grow its own, this does fit in with its roster of men’s lifestyle magazines. EMAP could slightly reposition the titles while the cost of circulation, advertising, distribution and other overheads could be shared.”

Other options for the company include a venture capitalist backed buy-in. Some mention James Brown as a possible contender for this.

Problems at the company have been brewing for some time. The Face’s original style-conscious editorial has been aped not just by the likes of Dazed and Confused, but in the mainstream press by national papers and men’s magazines.

And the broad demand for magazines which incorporate style and fashion has prompted exponential growth in the past five years, resulting in a fiercely competitive market.

The future for Wagadon looks tough over the short term. It would be ironic if the publishing group instrumental in creating the highly successful men’s market, as well as boosting the style pages of the nationals, lost its way in a market it did so much to create.

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