NatMags Steals a march on IPC

Whoops! Just as IPC Media executives were popping the champagne corks in anticipation of their much-feted acquisition of Gruner & Jahr’s UK magazines, along comes NatMags and dashes their flutes to the floor.

G&J had looked vulnerable for some time. The raw energy which propelled the Bertelsmann subsidiary to the UK in 1986 evaporated long ago. The circulations of Prima and Best are not, even now, to be sniffed at, but they are a shadow of what they were in the late Eighties. At that time, G&J inflicted great damage on Britain’s ‘Ministry of Magazines’: IPC. So much so that some thought it was irremediable.

But they were wrong. IPC staged a remarkable recovery. It stemmed the decline in its women’s weeklies, made inroads into the glossies (with Marie Claire), reinvented the TV guide market and more than proved its capacity to innovate with the likes of Loaded.

So there was an agreeable irony in the aggressor being swallowed by the aggressed. More importantly, the deal was logical – a good fit – and accepted as such in the City. IPC needs all the favourable investor sentiment it can get, because it is perched in a delicate position. The leveraged buyout from Reed Elsevier more than two years ago has resulted in a company chained to an accelerated earnings treadmill. The end in view for Cinven, IPC’s main shareholder, is either a successful flotation or a trade sale at a fat premium.

The G&J deal could have been very useful. It would have bulked up the women’s weeklies and offered ad, print- and paper-buying ‘synergies’. Conversely, failure to deliver will not only disappoint expectations (always unwise with investors) but call into question IPC’s deal-making capacity.

So plaudits to NatMags and its wily managing director Terry Mansfield for pulling off a carefully-timed coup. The NatMags deal is all the more surprising for being completely atypical. No one can remember with certainty the last time NatMags made an acquisition, although Mansfield doubtless recalls the occasion, a decade or so ago, when NatMags lost out to IPC over the auction of Living and Family Circle.

The truth is, in a secretive week-end deal, NatMags could not resist outbidding IPC. As Mansfield is fond of saying, NatMags is a subsidiary of one of the world’s largest publishing houses, Hearst, and Hearst can write a very big cheque.

But once the euphoria has died down people may well ask: why? Certainly the deal propels NatMags – whose circulation figures have been a little flaccid of late – unequivocally to the number three UK position, behind IPC and EMAP. But where exactly do the G&J magazines fit into NatMag’s monthly portfolio? The smart answer is they don’t – by design. Mansfield views the deal as his debut in the weekly market, which will be a first for Hearst as a whole. Prima will presumably be aligned with Good Housekeeping.

Yet for all that Mansfield may crow about having the Daily Mail and Daily Express of magazines in his stable, he has a long way to go before he can effectively challenge IPC’s weekly might.

Expect more acquisitions on both sides.

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