Felix Dennis has a habit of boldly going where no man has gone before. The “tree-hugging”, maverick millionaire publisher of lads’ mag Maxim has built a stable of lifestyle, computer and driving titles in the UK. But after nine successful years, he is said to be planning to sell the bulk of his US operations. The move will further hit the confidence of British publishers who have had little luck across the Atlantic.
In 1999, EMAP bought Petersen in the US, but sold the division for one-third of its purchase price two years later. Around the same time, BBC Magazines hired a private equity firm to acquire US magazines, but the plan was soon shelved following the dot-com crash. Gruner & Jahr, part of Germany’s Bertelsmann media group, also ended its 30-year presence in the market last year when it sold its four US titles to Meredith Corp.
In stark contrast, US giants such as CondÃ© Nast, Hearst’s The National Magazine Company and AOL Time Warner – which owns IPC Media – have experienced smoother and more successful transatlantic transfers to British soil.
Few can understand the reasons behind the exit of Dennis Publishing – the only real British success story in the US. Dennis exposed the US public to a feast of flesh with the launch of Maxim in 1997. The lads’ magazine, with reported sales worth $40m (&£23m) and 2.5 million subscribers, was joined by gadget magazine Stuff and music monthly Blender in the US.
So profitable has Dennis’ foray into the US market been that the venture is said to have bankrolled his publishing ambitions in the UK, allowing him to acquire Viz and Bizarre, and more recently launch Inside Edge and motoring magazine Test Drive.
In 2003, Dennis is reported to have expressed an interest in selling his US venture to put the proceeds towards planting forests in the English countryside. Now, Dennis Publishing UK has scoffed at rumours of a US sale, while Dennis Publishing US failed to return calls as Marketing Week went to press.
Speculation or not, sources remain convinced that Maxim’s declining fortunes are failing to sustain Dennis’ interest. One insider says: “Maxim was once a huge phenomenon in the US, but with increasing competition it is going off the boil and losing both circulation numbers and advertising revenue.” EMAP launched FHM in 1999 in the US to rival the title.
The fact that Maxim has been delisted by number one US retailer Wal-Mart does not help. Nicholas Coleridge, UK managing director of CondÃ© Nast, adds: “Maxim has been in trouble with the moral majority of the US for a long time, something that the advertisers would be wary of.” Another rival publisher adds: “Most American magazines are written for advertisers rather than readers, because they are wholly reliant on advertising revenues.”
And BBC Magazines managing director Peter Phippen, formerly of BBC America, says: “It is difficult for a small player to enter the US market, and EMAP’s experience reinforces that view. Our best-selling newsstand titles do not translate very well in the US, where subscription is the favoured channel.”
Sources say that Maxim’s average US newsstand circulation has slumped from 900,000 a month to less than 500,000, while Stuff and Blender are no longer profitable titles. The scale of the business in the US is fundamentally different, with advertising at the forefront of every publisher’s thinking. It could just be enough to persuade Dennis his US adventure is coming to an end.