There are no prizes for guessing publishing trends or for predicting that digital media is eating into print; the real contest is to assess the pace of change, and the length of the journey. There is an entertaining and never-ending story of large groups selling their print media to smaller companies who – surprise – manage to generate substantial profit growth from jettisoned brands.
In the UK, the privately-owned Mark Allen Group (MAG) has put together a B2B portfolio largely comprising magazines rejected by companies like RELX and Haymarket. MAG is actually no slouch at developing events and also all-digital media. But it’s still easy to joke that the publisher (whose headquarters is a converted London church) is an unfashionably print-centric publisher with unfashionably high profit margins. It still faces the challenge of digital but, meanwhile, there’s plenty of print profit to fund the longer-term transformation. What’s not to like about acquisitions that have averaged a four-year payback, with some as low as one-year? That’s why MAG expects £60m revenue (and £12m EBITDA) in 2022: a 4x increase in 10 years – and little debt.
There’s a similar UK story emerging in B2C where another family-owned company, Kelsey Media, has also been buying up unwanted magazines. In the past 13 years, the 33-year-old Kelsey has spent some £21m on magazine acquisitions which have more than doubled the revenue of a company. Some 50% of that investment has been made buying more than 20 magazine and event brands in the last six years, from the likes of Haymarket, Future, Time Inc, Archant, and Bauer.
The acquisitions strategy seems transparent.
Owner Steve Wright is always interested in the cars, transport and machinery markets – the roots of his company – but he seldom passes up an opportunity to look at almost any magazine for sale – just in case he can make some good profit even in a “new” market. That’s why he publishes Psychologies and Top Sante under licence in the UK, and why its eclectic porfolio includes everything from Cage & Aviary Birds and Vineyard to Coast, Clay Craft, Crop Production, Fishing News, and SciFi Now.
The portfolio seems like the very definition of opportunistic buying since it includes Haymarket’s former gadget magazine Stuff whose acquisition by Future had been blocked by competition regulators because it competed with T3. The former Time Inc UK’s Amateur Photographer and World Soccer is a similar story. Their acquisition – as part of Future’s £140m bid for Time Inc UK – had been similarly blocked. It gave Kelsey the opportunity to get the profitable magazines for nothing – and also to receive a “dowry” estimated at £500k to expedite the deal. As if to underline its good fortune, Kelsey scored record profits for its first issue of World Soccer (the magazine’s 60th anniversary) which now shares the staffing of Kelsey’s pre-existing Match magazine. The company snapped up Coast and Psychologies from Hearst, Boxing News from Newsquest, and Outdoor Fitness from Bauer. You get the picture.
That opportunism has helped Kelsey to build a magazine business which has had its best-ever result – in pandemic year 2021:
| £m | 2021 | 2020 | 2019 | 2018 |
| Revenue | 26.8 | 21.4 | 24.3 | 25.0 |
| EBITDA | 4.1 | 1.9 | 0.9 | 1.9 |
| Margin | 15% | 9% | 4% | 8% |
The company – which employs some 100 people – ended 2021 with net cash of £3.7m, and 62% readership revenue (divided equally between newsstand and subscriptions). Of the 29% of advertising, only 3-5% comes from digital.
Its 100 magazines are in seven broad categories:
- Classic & prestige cars
- Farming, fisheries and smallholding
- Health Active Living
- Hobbies
- Peformance & modified cars
- Technology
- Transport & Machinery
Kelsey had started mainly in motoring where it struck early gold with classic cars. It now publishes more than 30 car magazines. In 1993, it had launched Tractor & Machinery (“the world’s best-selling tractor magazine”), the flagship of a portfolio of transport and machinery magazines.
Three markets (cars, farming & fishing, and Healthy Active Living) account for 63% of all Kelsey revenue. But B2B magazines (farming, food, fisheries and transport) is 15%.
Steve Wright, having opportunistically built his business, will become more strategic. It is almost 20 years since the former investment analyst (almost reluctantly) joined the business started by his father in 1989. Of the company’s five largest revenue brands (Amateur Photographer, Psychologies, Stuff, Coast, and Tractor & Machinery), only the one was published by Kelsey back in 2003 when Wright joined the family firm.
The fact that four of his largest revenue brands (and three of the largest circulations) are significant consumer magazines underlines the future need for Kelsey to ensure its best profitmakers are not hobbled by a long tail of smaller publications. But it must also work to develop the undoubted potential of its B2B portfolio.
Kelsey Media – and the larger Mark Allen Group – are the perfect picture of sharp-eyed entrepreneurs seeing opportunity in unloved brands at a time when traditional media companies can’t wait to rid themselves of print.
Those opportunities will continue for a time yet, not least in events, which continue to suffer post-pandemic upheaval. And many specpubs will thrive endlessly in print or digital. But the real challenge, especially in B2B, is to leverage these traditional brands to create the exclusive information, peer-to-peer networks, and data that can deliver longterm digital profit growth. Mere magazines can help build the runway to the future – once they dial-down the M&A opportunism.
But that requires real focus, investment, and some talent beyond the world of magazines. One imperative is ensuring that fundamental innovation is not ancillary to current profitmakers: longterm R&D is too important to risk suffocation by traditional media. Lively, independent companies in the UK and elsewhere have benefitted hugely from peers which have under-estimated the continuing profit in print. But it’s still only a matter of time.
