This time last year, Future Plc was negotiating to get its acquisition of TI Media approved by the UK Competition & Markets Authority. It was a momentous time as the company prepared to spend £140m on a deal that would add 38 magazines including some of the country’s most famous brands like Country Life, Woman & Home, Homes & Gardens, Decanter, and Wallpaper. Acquisition of the publisher formerly known as IPC Media and Time Inc UK would increase Future’s revenue by some £200m. But then the pandemic hit and the UK went into its first lockdown in March 2020.
CEO Zillah Byng-Thorne momentarily worried about the existential threat to the magazine market. She tried, unsuccessfully, to renegotiate the deal with Epiris private equity which itself had acquired the company for £120m scarcely two years earlier. Despite the wobble, the Future CEO was locked into the deal and became increasingly convinced of the potential of TI Media which she had first identified as a possible target back in 2016.
Indeed, Future had actually outbid Epiris in the original 2017 auction by owner Time Inc, only to lose out because its deal was conditional on the approval of public company shareholders. When that deal was delayed by Meredith’s acquisition of Time Inc itself, Byng-Thorne had flown to New York to try and persuade the new owner to accept her much improved offer of £150m rather than Epiris’ £120m. But even a 25% premium was not enough: the US company just wanted to get rid of the UK subsidiary as quickly as possible.
So Epiris completed the acquisition. But, within weeks, the newly-appointed TI executive chairman, Bernard Gray, was hosting a dinner at London’s Ivy restaurant to suggest that Future should acquire some of the portfolio. Gray’s guest glazed over as he likened his situation to having bought a cow at the market price; now he would become a butcher earning his profit by offering cuts to different people. He thought Future would be keen to buy just the specialist monthlies Epiris didn’t really want. But Byng-Thorne wanted the whole company or nothing.
Her confidence in an expansive strategy had grown in the two years since she had first bid for Time Inc UK. Back then, it would have been truly transformational, a huge leap. But Future had since become a £1bn company with a track record of successful deals, including the $133m acquisition of US digital media company Purch in 2018. Future’s development of proprietary tech systems had made it into a highly efficient acquisitions machine. It knew what it wanted.
Meanwhile, Epiris was beginning to wish it had never heard of TI Media. Its first year was choked by boardroom strife at the troubled magazine company, culminating in Bernard Gray’s departure after nine months of confusion over who was meant to be managing the business. Epiris had enough and told CEO Marcus Rich (who had been sidelined by the former chairman) to ask Future if it still wanted to buy the company. The answer was ‘yes’.
Two months of silence was followed by quick-fire negotiations and – eight weeks later – a signed deal in November 2019. Epiris pushed the talks along by suggesting it had a rival bidder (whispered to be the Daily Mail group) ready to step in if the deal was not signed. But the five-person Future negotiating team was not fooled: the data room had been hastily prepared for them, and they were asking for information that wasn’t readily available.
Then the pandemic hit. Future suggested using shares to reduce the upfront cash – which would actually have been a big win for Epiris because they have doubled in value in the 12 months since. But the seller was playing hardball and refused to modify the deal other than by suggesting a smallish loan note. Future was forced to get on with it. But it had also noticed that TI Media’s TV and women’s weekly sales through supermarkets and convenience were much more stable than many of Future’s magazines which depended on disrupted high street newsagents and travel outlets. Things were nowhere near as bad as Future had feared.
Once the deal was approved by the CMA regulator (subject only to a handful of divestments), Byng-Thorne and her team got to grips with the novel task of integrating a people-intensive business by video. Like half the world, they rapidly got used to Zoom and Google Meetup for everything from ‘meet and greet’ staff meetings and large-scale town halls, to consultation about possible redundancies, and lay-off decisions.
But it was a huge challenge for a company which had carefully refined its people strategies through successive acquisitions. This was different and, for a short time, became what Future people describe as “an absolute war” with TI Media employees over Future’s proposed changes to what were considered outdated (and expensive) redundancy entitlements. It always looked like a daring strategy, ahead of the real task of consultation over redundancies.
In the face of fierce and united opposition from TI employees, Byng-Thorne backed down and withdrew her proposals. She accepts the plan had been a mistake and says that not implementing it cost Future “only” £5-6m, a mere blip in what became £20m annual cost savings, including some 200 redundancies, mostly from TI’s 1,100 employees.
It was an uncharacteristic mis-step by the nothing-left-to-chance Future CEO who had little opportunity for personal persuasion. But it may also have reflected her lack of magazine industry background. Let me explain. TI / IPC had been the industry’s largest and most successful magazine publisher for more than 50 years, with the strongest brands, the largest portfolio – and also, arguably, the best remuneration and contracts. Big brands, big teams and big money.
While industry insiders traditionally sniped at the bureaucratic “ministry of magazines”, many IPC employees thought their brands were the superlative best long after they had been clipped by fleet-footed rivals and digital newbies. For many years, the deficit from the company’s generous final salary pension scheme had constrained investment. But erratic strategies – and four owners in 20 years – had also fostered employees’ mistrust of management. TI Media could be a very political place.
That mindset may co-exist with a view that Future – founded memorably by TED boss Chris Anderson in the sleepy-stylish city of Bath in England’s south-west – was somehow inferior to the company based 120 miles away in Central London. Iowa-based Meredith Corp executives would recognise the ‘big city’ attitude towards out-of-towners from the icy reception when they arrived to take charge at Time Inc in Manhattan.
TI / IPC had been in decline since the days when it was regularly making profits of almost £100m. It suffered from under-investment in digital and much else. But longtime custodians of former TI magazine brands may still think of Future as an arriviste. It’s the sense, as one Future executive put it, of: “We’re somewhere and you’re nowhere”.
That was one painful lesson learned by the Future CEO who, almost alone among her senior team, had never been much of a magazine reader. But, on the flipside, there was her growing realisation of the online and US potential of the legendary UK brands. The “new” Future had been built by growing audiences, now it also had brands to exploit.
That is the 2021 promise of Future Plc as it accelerates the digitization of its print-centric portfolio. It’s also part of what pleasantly surprised the CEO who had under-estimated the scale economies that her enlarged company would enjoy – courtesy of the sleeping giant that was TI Media. Even the slowly declining TV and women’s weeklies, that had long accounted for the majority of TI/ IPC profits and have deterred many would-be bidders over the years, have now become powerful generators of cash for Future.
Although the £594m acquisition of GoCompare price sites complete next month, TI Media was every bit a game-changer for Future Plc. It has changed a men’s interest media business into one whose audience is now 50:50. It has created a whole new world of e-commerce possibility.
In 2020, Future made operating profit of £93.4m (+79%) on revenue of £339.6m (+53%) with organic growth of 6% and net debt reduced to £62m. More than 60% of the revenue came from digital ads and e-commerce, and less than 20% from print ads and newstand magazine sales. Its content now reaches 1 in 3 online users in the UK and US.
The company whose 22 years since IPO have been punctuated by more bust than boom, now has a market cap of £1.7bn. Its portfolio of digital and print brands has a substantial stake in homes and women’s interest media, in addition to traditional strengths in consumer tech, gaming, and men’s lifestyle.
It’s been the kind of breathless ascent that can worry Future investors who had been surprised by both the TI Media and GoCompare deals. But the CEO, who is redefining “magazine-media”, has learned the hard way about persuading sceptical staff and shareholders. She can’t wait for the lockdown to end.
