Nobody needs reminding that a large number of paid-for magazines are at risk, especially in countries like the UK and Australia where newsstand and supermarket displays stoked consumer demand across 20 years of booming circulations. Magazine sales have now been in sharp decline for the past seven years. The cold fact is that many paid-for titles are in terminal decline and – to judge by the limited number of closures – are also in denial.
As if that was not enough, the digitalisation that brings retailers into media has seen ecommerce leaders like ASOS and Net a Porter pushing ‘backwards’ into free magazines. In the UK – arguably the birthplace of ‘customer magazines’ and ‘content marketing’ – the four largest circulation titles are published by supermarket groups. The country’s erstwhile customer magazine specialists (now called the Content Marketing Association) claim that 25% of all ‘content’ is produced by non-publishing brands. And almost half of the total circulations of the 100 largest UK magazines are free.
It is easy to believe that free titles (as well as online) are squeezing the life out of the UK paid-for magazine market. So, it is ironic that the major magazine company which looks best set to carve out a new ‘cross-media’ role has its roots in sponsored publishing.
The story started 90 years ago.
In 1923, the fledgling British Broadcasting Corporation launched Radio Times, which – with the introduction of TV in 1936 – became the world’s first listings magazine. The magazine (launched as a riposte to daily newspapers’ demands to be paid for publishing programme listings) has long been one of the UK’s most profitable. Weekly circulation peaked at 8.8 million copies in the 1960s, and Radio Times achieved a world record 11.2m copy sales with its celebrated Christmas issue in 1988. The following year, the BBC decided it wanted more magazines.
The result was the acquisition of London-based customer magazine pioneer Redwood Publishing which had launched pace-setting titles for American Express, Marks & Spencer and British Rail. It seemed like an odd, too-commercial deal for the BBC. But Redwood’s pioneering founders Mike Potter and Christopher Ward had an innovative plan for the world’s oldest broadcaster: they launched some of the first ‘TV masthead’ magazines: BBC Clothes Show, BBC Gardeners’ World, and BBC Top Gear.
They were the foundations for a successful specialist magazine portfolio across almost every area of the BBC’s television output and with over 60 international editions. But rival publishers screamed “foul” as the tax-funded broadcaster promoted its competitive magazines in airtime that money couldn’t buy. The industry protests intensified and the original Redwood customer magazine business was eventually sold back to its founders in 1993. But the BBC continued quietly to build its portfolio of magazines linked to TV programmes, including Good Food, Top of the Pops, Music, Sky at Night, History, and Nature. It was part of the quasi-commercial BBC Worldwide which exported programme content, channels and merchandising to help fund domestic TV, radio and online services.
In 2004, the BBC stepped back into controversy with a decision to invest in enthusiast publisher Origin (opposed by near-competitor Future). And in 2007, it made what proved to be an extravagant acquisition of the Lonely Planet travel guides (attacked by Time Out).
They proved to be two commercial steps too far and led, in 2011, to the BBC portfolio of 34 magazines and children’s comics being put up for sale. The auction was won by media-savvy Exponent private equity which paid a much-less-than-predicted £120m to buy BBC Magazines, before merging it with clever digital specialist Magicalia, to become Immediate Media.
Today, Immediate is the £150m publisher of more than 50 magazines including Radio Times, Olive, Homes & Antiques and You & Your Wedding, and digital brands such as MadeForMums.com, loveyourhair.com and visordown.com. It has a profitable and suitably complicated relationship with the BBC on whose behalf it publishes Top Gear, Good Food, EasyCook and Lonely Planet Traveller; and other titles under licence including BBC History, Gardeners’ World, Focus, and the CBeebies children’s portfolio. It sounds tricky but the BBC brand is valuable. And the wholly-owned Radio Times is still highly profitable.
Immediate is bursting into life just as the UK’s largest magazine groups Bauer and IPC Media are looking like slow-footed magazine conglomerates in a world where there is little advantage in scale and less profit in hard copy. They may also be showing that the whole process of digital reinvention depends on breaking up (or disrupting) traditional hard copy businesses – a lot more than tweaking the structure.
That is why Immediate Media is starting to look like a winner, with new-style management, a fresh approach to magazine-centric media and less of the historical baggage that impedes digital progress elsewhere.
It starts with CEO Tom Bureau, one of a new breed of 40-something cross-media bosses who span the divide between digital ‘natives’ (born in digital times) and immigrants (the rest of us). Their experience combines traditional media and digital insurgency, giving them a better chance of getting the balance right.
Bureau saw the potential of online in the early 1990s. He co-founded Business and Technology magazine. When it was sold to Dennis Publishing in 1996, he and his partner cannily kept the online technology with which they then developed the Silicon B2B tech site.
Their Silicon Media Group had a glittering launch in 1998 among the dinosaurs at London’s Natural History Museum – intended to symbolise the death of print journalism. But four years later, Silicon fell victim to the dotcom collapse and to disastrous expansion in France and Germany. In 2002, the company’s assets were sold to CNET for a small fraction of the £30m that shareholders had invested.
For Tom Bureau, the tough reality was his business school. He bounced right back as UK managing director of CNET. In five dramatic years, he steered the US-owned company from a single business information site to become the UK’s biggest online-only publisher. Its five UK web sites (CNET, GameSpot, silicon, ZDNet UK, and AtLarge) had a reach of 10million unique users – then some 31% of the total UK online population – and were highly profitable. The whole CNET international business was acquired by CBS in 2008. But not before the CEO had left to become “a digital entrepreneur”.
In 2007, he teamed up with Exponent to bid for the specialist division of EMAP consumer magazines. His consolation (when cash-rich Bauer trumped all bidders) was to become CEO of Magicalia. And then, in 2011, came Exponent’s winning bid for BBC Magazines – some 50% less pro rata than Bauer’s eye-watering EMAP purchase. (And, since then, divergent trading has widened the gap.)
Eighteen months later, there is still plenty of excitement around the vision for a 21st century cross-media group, enabled by the strengths of the former BBC business, including:
- The highly-successful Radio Times, generating at least 50% of the company’s profit
- Top Gear, Gardeners’ World and Good Food: three strong special interest magazines with a combined monthly circulation of 600,000
- More than 1million subscriptions, a leading position in the UK where most magazine publishers are now paying the price for being seduced, in good times, by the quick-fire sales of the newsstand. Easy come, easy go.
The powerhouse Radio Times was, ironically, one reason why the BBC’s magazines auction fell short of expectations. Analysts simply found it difficult
to make convincing long-term forecasts for a mere listings magazine – despite the sector’s difficult-to-believe resilience in the UK. Somehow, even though most of the country’s national daily newspapers offer free listings magazines and increasing numbers of people use electronic programme guides, the huge appetite for these paid-for TV weeklies continues. The circulation market leader is IPC Media’s flagship What’s on TV, selling 1.2m copies with total revenue of some £35m. But Radio Times is even larger with revenue of at least £55m. It has almost 900,000 circulation (25% of which are subscriptions) at a premium price of £1.60 (10p up this year), compared with What’s on TV’s 50p.
Over recent years, the Radio Times profit has consistently been in the range of £15-20m, so Immediate’s most successful magazine is helping to underwrite the company’s strategy of transformation. The magazine that helped depress the auction price of the BBC business is, perversely, the reason it is worth so much more. In many ways, of course, Radio Times is much more than a listings magazine. It has a substantial volume of non-listings content and, crucially, the kind of resonance enjoyed in other countries by the Australian Women’s Weekly and Time magazine. All three are powerful brands and legendary magazines with the opportunity now to reinvent themselves – before it is too late.
Radio Times’ solid readership is clearly key to Tom Bureau’s strategy in more ways than just bankrolling it. His company is full of talk about “insights”, integrated media and customer engagement. And, for all the fact that it has taken over an established stable of magazines and hundreds of people from the BBC (albeit with a pioneering tradition of TV tie-ins), Immediate really is a new company, with a level of optimism rare in an industry battered by all things digital.
Immediate has put together a team that blends experience in magazines, ecommerce, and pure-play digital. The head of strategy is a one-time P&G brand manager who has lived the Bay area life as a manager in eBay and Ancestry.com. Other key people include the former Hearst leader of the brilliant Runners World which built a powerful ecommerce business (taking marathon bookings and selling kit) before most publishers had even considered that magazines might not be the whole future.
Insiders are high on their open-faced CEO: “Tom is an expert at setting the right business culture. He gets the best out of his people and ensures people are developed and supported. This is combined with a very keen strategic eye. He is brilliant at explaining the big picture and is hugely motivating to work for.” Bureau this month addressed the annual conference of the resurgent UK Professional Publishers Association where the country’s magazine people had been reminded of the cheery possibilities – but also the chilling reality of their current 78% dependence on hard copy revenues.
If the talk-the-talk scenario made the Immediate Media boss feel smug, he didn’t show it, telling his peers: “We want to think more like a retailer. Our ambition is to change our centre of gravity from print towards being a content platform and services business, which means putting brands at the centre of our strategic development and looking at the business models beyond print.”
The first tentative evidence of Immediate’s ecommerce ambitions is RT Travel, an online holiday and travel sales service which exploits Radio Times’ long tradition of reader offers. “One of the things that was clear on Radio Times is that most of our commercial relationships with travel partners were in the readers offers space, so it was a relatively straightforward commercial evolution to move them into this new space.” Bureau predicts travel revenues of some £5m and he’s now looking to extend the transactional model to Gardeners’ World (lots of seeds, bulbs and garden tools to sell) and You and Your Wedding where he has cast envious eyes at New York-based The Knot whose integrated media business profitably embraces ecommerce, events, video streaming, and publishing.
Drawing on a familiar theme, Bureau told his London audience: “Retailers have been good at becoming publishers, it’s about time publishers got good at becoming retailers. We’ve done some testing which shows that you get much better results if an offer is deeply integrated into a brand and the brand values. It is essential to focus on the deep collaboration between our editorial and brand teams and transactional teams. We’ve invested in creating an offer that is embedded into the product, strong in its own right but has the benefit of being a platform to drive a transaction.”
But, while media content, brands and relationships can enhance ecommerce, retailing calls for new skills, ‘machinery’ and customer service with which few publishers are familiar. In fashion – the most active media-ecommerce battle ground – that brings in curved-ball factors like return rates of sometimes over 60% as customers try-before-buying: obstacles to profit and practicality. When asked whether Immediate’s transactional model would cause conflict with regular advertisers, Bureau said: “I guess we’re all having to become good at judging our commercial relationships. But, obviously with brands such as You and Your Wedding, we could move into selling honeymoon offers which may be more complex, so it’s on a case-by case basis.”
However, keeping the editorial teams on board with the changes was “a work in progress”, said Bureau. “We’re shifting away from being a magazine publisher to being a content development business, and I have explained that the role of editors is even more important in that process, as the guardians of the brand.”
What the Immediate boss skated past was any admission that the real challenge is to slip quietly into a world where the ambassador for the brand will not necessarily be the editor. The days of the Prada-wearing devil may not quite be gone but the custodian of a cross-media brand will be the person who best understands readers/ users and that is increasingly likely to be a digital native in tune with the analytics and real-time behaviour of customers.
The whole Immediate project is work in progress, not least for the private equity owner which will, customarily, be looking to get its money out in the next 2-3 years. So Exponent is hoping that Tom Bureau’s dreams will be starting to come true during the next 12-18 months – and that means striking ecommerce gold in one or more sectors, sharply increasing digital revenues, and also steadying magazine circulations. The next ‘for sale’ prospectus needs to be able to describe the company as much, much more than a magazine publisher. Not easy, of course. But it is starting to look achievable.
The strategy requires some imaginative partnerships, especially with retailers. And there have been rumours of talks with the John Lewis Partnership, the UK’s adored middle-class retail chain (and excellent ecommerce operator). That is just the kind of deal that Immediate (with its BBC ties) could pull off. But the publisher might be wondering whether it should, instead, go the way of Hearst UK. The US-owned magazines giant uses the fast-growing online retailer The Hut as a ‘white label’ provider rather than having an upfront partner with which it would, otherwise, have to share the branding, profits and repeat business.
The retail challenge for media companies is emphasised in the UK by the largest supermarket group’s Tesco Media site which offers ‘integrated media’ campaigns to major consumer brands via its web sites, customer databases, in-store promotions – and its own magazines. That and the developing online activity of upmarket supermarket group Waitrose (which also has its own magazines and fledgling online ‘TV’ channel) emphasise the growing ‘new’ competition for traditional media.
Immediate has the clear opportunity to turn Radio Times into a major ecommerce brand encompassing not just travel but also finance, healthcare and also, of course, gardening (with Gardeners’ World). Those are the natural territories for the magazine’s largely ‘grey’ audience, and it could come to dominate this moneyed market ahead of suitably-placed newspapers like the Daily Telegraph which have been just too distracted by their perceived need to find younger readers to pacify display advertisers.
The major Radio Times opportunity may, though, be to create a big new ecommerce brand that will appeal to a much broader audience than the magazine. Immediate’s use of the ‘RT’ brand for its travel ecommerce is unlikely to be adequate. So the magazine could become the power behind a major ecommerce brand and/or partnership to match that of Saga (now also private equity-owned), whose mighty UK business mushroomed from travel into media and financial services. And, perhaps, it would be able also to create a winning online TV brand for its high-value audience. (Will Radio Times have some breakthrough deal to announce at a 90th anniversary party in September?)
Then, perhaps, Immediate will be looking to do something special with its food magazines Delicious and Olive: An ecommerce tie-up with a supermarket chain? And Tom Bureau has learned enough about The Knot to want to replicate that model in the UK, even though the market seems fragmented by regional shows and magazines. Almost before the ink was dry on the BBC deal, the company acquired You & Your Wedding and Prima Baby & Pregnancy from Hearst, to complement its existing magazines Practical Parenting and Perfect Wedding and the MadeforMums digital brand. So they may be only a few steps away from joining it all up in a cross-media, ecommerce-funded wedding and baby network.
The strategy will also include expansion in exhibitions and live events, a natural cross-media platform for magazine audiences. The company recently acquired The Triathlon Show and operates what it claims is “the world’s largest family history event” so they are on the way. And events can drive ecommerce and video to feed into online TV.
Immediate still has plenty of the sub-scale hobby and leisure magazines that weigh down some of its peers – and many are not even listed on its web site. But it has the opportunity (and motivation) to become the model for magazine-centric companies.
It is the company which bought a strong, insanely profitable, vintage magazine called Radio Times and a portfolio of successful magazines some owned, some licensed, and some controlled still by the State owned broadcaster which ‘sold’ them. And a database of 1 million subscribers. When you’re looking for a UK publisher which can use still-powerful magazine brands, audiences and market-view to create future-proofed cross-media, Immediate Media is the one to watch.