The deal to sell Bauer Media Australia and New Zealand was made at 3.30am Wednesday morning. Chief executive of Bauer Media ANZ Brendon Hill and his management will be staying on under the new owners Mercury Capital.
Hill managed to get a couple of hours sleep before he fronted staff to confirm the transaction at 10am this morning via an all-staff Zoom call.
Hill told Mediaweek he expects after regulatory approval is granted the transaction should close in about four weeks.
Mercury Capital has been persistent with its pursuit of the media business. It claim close to a transaction last year, but held off until the Pacific Magazines $40m acquisition was completed.
Hill wasn’t able to discuss the price, but if it was close to the speculated $50m for all the brands in both countries, it was a bargain. Bauer Media bought the ACP Magazines business for $525m eight years ago without the Pacific titles.
Mercury weren’t the only potential buyers with at least one group of off-shore investors getting serious last year too. “We have talked to anyone who was seriously interested and gone through the process with them,” Hill told Mediaweek. “Mercury seemed like a really good fit for us with the calibre of its management team. Bauer Media was very keen to make sure the brands went to a company that could provide the support needed to make sure they flourished.”
New Zealand-born Hill said the Kiwi connection was of some comfort. “There are a few Kiwis there. But a lot of Australians too, particularly at the Mercury business in Sydney.”
Hill and his staff have been through a lot over the past couple of years navigating a troubled sector with an owner that wanted to exit the country.
“I am really looking forward to working under the new owners, especially on the innovation and diversification programs we have been working on. Mercury will bring a lot to the table in that regard.”
It was too early to talk about further investment in the existing brands, said Hill. “In the next few months Mercury will have some workshop sessions with our leadership team to further understand the business. From that we will refine the strategy and go from there.”
There is no immediate plan for a business name. “But we will need a new one,” stressed Hill. “It might be a minor thing. But with Bauer and Pacific coming together its needs a fresh start so it will be great to come up with a new name, a new narrative and a new approach.”
Exiting New Zealand
When asked about the Bauer Media decision to close down and quickly exit the New Zealand market this year, Hill said: “For me it was difficult personally.” Hill worked in the New Zealand business as publisher and then managing director for seven years before returning to Australia to take over as CEO 12 months ago.
“I had a lot of good friends at the New Zealand business and it had a great group of people working there. However we were the only product in supermarkets that was banned from being produced, even though our printers and distributors were operating. The cash flow impact was very severe, and we didn’t know how long the ad market was going to be down because of COVID.”
Hill said the Bauer family did the right thing to close the business properly. “All staff got paid out and all creditors are getting paid out and Mercury can now sell those assets to new owners if it wishes. I am very confident those titles will be back in some form.”
Bauer Australia is still publishing New Zealand editions of the big five titles – Woman’s Day, New Zealand Women’s Weekly, Lucky Break New Zealand, New Idea and That’s Life!
There has been an active sale process underway for the other titles in New Zealand with what Hill called “a lot of interest”. That will be a decision Mercury will now make the call on.
How long will Mercury hold its magazines?
Private equity owners get in, work on the assets, and then get out. Hill has yet to hear about Mercury Capital’s long term plans. “From what I know about the company they do tend to hold companies for a long time as an investment as opposed to the traditional PE model.”
Magazine sector resurrection
“With all the major titles now in one place we can do a better job of marketing ourselves,” Hill told Mediaweek. “We are about to launch a ‘Why magazines’ campaign. That’s something that hasn’t been done for a long time and we can start conversations about the medium in general.”
Hill said it was his intention to work with the current portfolio of brands as it stands. “However if consumers change their tastes and want to stop buying a particular product, which happens often for FMCG items, the company would look to close it down and start a new brand. We have to act like that too, even when it is tough if a brand has a long legacy. We need to make sure brands are profitable and consumers really want them.”
Hill named of a number of new products the company has launched, but have found challenging to get attention in the media. “People still want to talk about the closure of Cleo. It needed to change and we tried to, but sometimes you just need to move on.”
Suspended titles Harper’s Bazaar, Elle, InStyle and others
“We are still aiming to return those titles in September or October. The ad team are actively selling those issues in market and there has been some good support in recent weeks from the luxury sector which is pleasing to see. As soon as the advertising returns so will the magazines. It has been very hard on the staff of those titles that they are not being published at the moment.”
Newsagent and supermarket activity
Despite the closure of many outlets including railway and airport newsstands, Hill indicated there had been strong demand elsewhere for the group’s titles. “It has been outstanding the stability of some titles through the crisis. The hard thing for us at retail was obviously outlets where people travel. We are lucky to have a high percentage of newsagent and supermarket sales. Subscriptions have also been very strong too.”