Future Plc is the UK-based, transatlantic magazine-centric group whose revenues soared from £66mn to £825mn during a momentous eight years when an operating loss of £10mn was transformed into profit of almost £300mn. Under 10-year CEO Zillah Byng-Thorne, the emphasis on proprietary tech, eCommerce and, increasingly, acquisitions culminated in 2022 profit growth of 37%. The setbacks of covid had been more than compensated by a WFH boom in tech eCommerce.
But, by the time the CEO had been succeeded by Jon Steinberg in April 2023, everything had changed. Last year, revenue fell by 4% – the first setback in almost a decade – and profits were down by 6% after a year in which the company struggled to maintain its peak 35% EBITDA margins. The reversals were reinforced by a 4% decline in the company’s 400mn total audience.
It was, to say the least, a tough start for Steinberg, former BuzzFeed president and founder of Cheddar News.
Suddenly, the c£1.5bn of acquisitions under Byng-Thorne, which alone had seemed to justify the £294mn profit in 2022, started to prompt questions about the levels of organic growth in a listed company whose enterprise value had peaked at almost £4bn.
Longtime analysts sensed a recurrence of the earnings-growth problems suffered by a quite different version of the 39-year-old company more than a decade previously. Others wondered whether the sprawling business was suffering from the loss of the hyper-active, outgoing CEO who had made it all work. Others, inevitably, were less kind. It has seemed like a perfect storm of eCommerce falling back after the WFH boom, digital ads decline and magazines not recovering from the pandemic, especially in the UK.
By the time the new CEO was explaining away his 2023 inheritance and talking up the Growth Acceleration Strategy, Future’s prospects had all changed: the falling revenue and profit would be followed by (probably) more of the same in 2024 and, inevitably, a reduced profit margin. Steinberg’s response was a plan to: ramp up US revenues and concentrate investment on the brands that promised the best growth, led by new spending on 200 additional recruits.
They will include 40 new sales people under newly-appointed New York-based chief operating officer Eric Harris. The CEO told investors: “The US digital advertising market is seven times the size of the UK market. Yet, as it stands today, our US digital revenue is only twice the size of our UK revenue. The delta is driven by disparity in leadership positions between the UK and US and a more established UK sales team. In the UK ,our well-established team is able to drive a higher value mix of advertising revenue through a greater share of direct sales, premium programmatic advertising and branded content. The resilience of our UK business highlights the strength of what we have built and gives us the confidence that we can replicate this successful playbook in the US and to reach relative parity in each geographic region.”
His plan neatly divided the portfolio into three categories:
- “Hero brands” : 12 top earners accounting for 50% of revenue and (my estimate) 75% of all profit
- “Halo brands” : 70 lower-growth but profitable brands (30% of revenue)
- “Cash Generators”: 150 brands (20%), mostly UK print magazines
But, to some investors, the categorisation of “Hero” brands lacked conviction, partly because they were not identified and, partly, because the plan was not part of any management reorganisation of the company and its diverse portfolio.
Future continues to avoid identifying its “Heroes” which, curiously, conflict with the 23 “main brands” identified in the 2024 Annual Report. But they may include: TechRadar, GamesRadar, Tom’s Guide, Who What Wear, GoCompare, The Week, Marie Claire, Living etc, Woman & Home, Country Life, Wallpaper and Kiplinger.
It is possible that making clear the distinction between the Top 12 and the rest of the brands would become more controversial for employees themselves. But describing the portfolio in this anonymous way raises more questions than it answers about the company’s growth prospects.
Let me explain.
First, for all its undoubted digital smarts, the Future portfolio is actually dominated by print magazines. Half of the top 12 are brands acquired from TI Media and Dennis Publishing, as parts of a £440mn splurge on 50 UK-based magazines in 2020-21. The five (excluding Marie Claire) that remain predominantly print magazines, incidentally, lost about 10% of their paid circulation in the UK during 2021-22.
Second, while the “Hero” brands account for 50% of Future revenue, GoCompare itself accounted for 20%. This was actually the first time the price comparison site had exceeded its 2019 revenue, before acquisition. With likely 25% EBITDA margins, GoCompare might have accounted for 14% of total Future profit in 2023 and 28% of its UK earnings. But the £158mn price comparison revenue in 2023 means the £594mn acquisition price in 2020 is still more than 3x revenue and perhaps 15x EBITDA – three years after the purchase.
Third, some £50-60mn (12%) of Future’s UK revenues are generated by fading weekly women’s magazines including Woman’s Weekly, Woman, Woman’s Own, Chat, TV Times, and What’s on TV, all part of the 2020 acquisition from TI Media (ex IPC and Time Inc UK). TV listings magazines continue to be major profit earners for Future and also its UK competitors Bauer and Burda, despite inexorable declines in circulation and revenue. Future’s What’s on TV, TV Times and TV & Satellite Week, which lost 12% of their combined weekly copy sales during 2021-22, are believed still to account for some £30-40mn of revenue and – even now – almost £10mn of profit. But they have scarcely ever merited even a mention in the company’s annual report or on the corporate web site in the past four years. The seemingly guilty secret might also explain Future’s reluctance to reveal that these (still) major profitmakers are not among the “Hero” brands. Presumably, they’re Cash Generators which would be sold if only someone would pay a price that made it worthwhile. Otherwise, it’s all down to maximising the profit – and fighting to slow the decline.
Inevitably, traditional publishers must seek to use magazine brands and audiences to build a digital “runway” but Future’s 2020-21 acquisition of so many more magazines has sharply increased its dependance on print. That might be a tough enough counter-weight of people and revenue to frustrate digital developments. But it’s exacerbated by the sharp decline in Future magazines. In 2023, its UK print revenues fell by 9%, not helped by the magazine sector’s continuing loss of advertising market share.
But it gets worse.
In 2022, the last available circulation figures show that the company’s 12 largest magazines – with total copy sales/ subscriptions of 1.6mn – declined by 10%. The decreases even included stalwart brands like Woman & Home (-16%), Country Life (-9%), The Week (-5%), and the relatively new The Week Junior (-8%). The three TV listings magazines were collectively down by 8% and the four women’s weeklies by 11%.
The fact that some aggressive pricing may have mitigated revenue losses serves only to challenge the CEO’s assertion of the “resilience” of Future’s UK business which is 40% dependance on magazine revenue. Separating GoCompare from affiliate eCommerce revenues shows that the price comparison site was its only growing UK revenue stream in 2023:
| Future Plc UK revenue £mn | 2023 | 2022 | Change |
| Magazines | 195.8 | 215.3 | -9% |
| Go Compare | 158.0 | 146.2 | +8% |
| Digital ads | 86.9 | 89.8 | -3% |
| eCommerce | 35.9 | 48.2 | -26% |
| TOTAL | 476.6 | 499.5 | -5% |
By contrast, the American business (40% of total Future revenue) is much more digital and accounts for 45% of Future’s total non-magazine revenue. Further, its margins and revenue/head are boosted by a headcount less than one-third of the UK. Apart from all else, it underlines how the labour-intensive nature of print magazines is a double-whammy for a whole company whose digital ambitions are represented by a disproportionately small share of the workforce:
| Future Plc £mn Yr end 30/9 | UK* | US |
| Revenue (% of total) | 476.6 (60%) | 312.3 (40%) |
| Operating profit | 140.5 | 115.9 |
| Margin | 29% | 37% |
| Headcount | 2,200 | 700 |
| Rev / head | £217k | £446k |
Less than a year after he became CEO, Steinberg’s view of Future’s strengths and weaknesses might just include:
Positively, it has some strong media brands not just the 12 unidentified “Heroes”. It also has some very strong digital revenues including its foundation business in technology (Tom’s Guide and TechRadar) and Marie Claire/ Who What Wear. The Week is a strong transatlantic brand and it has smaller gems like Country Life, Decanter, Wallpaper, and Kiplinger. It has strong niche brands across Homes, Cycling, Sports, Music and Boating, many of them capable of international as well as digital expansion. Even now, its cashflow is strong (90% of EBITDA in 2023). This is a company which really understands how specialist audiences can create digital gold. If only it could afford to divest the long tail of brands it doesn’t need…
Negatively, it seems possible that some 50% of Future’s UK portfolio could generate almost 100% of the profit in a streamlined business. But a fundamental reorganisation would require substantial investment and cause major disruption, perhaps with little prospect of disposal prices to justify the upheaval. This challenge is exemplified by the 400k-circulation women’s weeklies and also the 700k TV listings magazines. Together, these seven magazine brands may have £60mn revenue, but the c£10mn TV listings profit feels especially threatening. For all the fact that the UK’s TV listings magazines have continued to be super-profitable despite digitalisation and free programme guides, What’s on TV’s 25% copy sales decline during 2019-22 shows it’s only going one way. It may seem perverse to include GoCompare as a weakness but this very cyclical – and expensively-acquired business – is an almost autonomous company. The UK’s financial regulations – tightened in recent years – prevent any sharing or integration of price comparison customer data on the lines once espoused by Future. And, however strong, is The Week really a core brand for Future in the UK and US?
But this is a listed UK company with an enterprise value – even now – of more than £1bnn:
| Future Plc Yr end 30/9 £mn SnapShot | 2024* | 2023 | 2022 | 2021 | 2020 |
| Revenue | 794 | 789 | 825 | 607 | 340 |
| EBITDA | 246 | 277 | 294 | 215 | 93 |
| Margin | 31% | 35% | 35% | 32% | 27% |
| EPS | -15% | -14% | +24% | +77% | +57% |
| Ent. value | £1.1bn | £1.2bn | £1.3bn | |
Beyond the disappointment of a revenue slowdown after almost a decade of strong growth, the CEO’s plans to revitalise digital sales, especially in the US, are sound. That’s what Jon Steinberg knows best.
The trouble is that the strategy risks being upset by the sheer weight of a declining print magazine portfolio. In 2023, Future published 101 magazines and 743 bookazines; 71% of magazine revenues were in the UK. Most of its people are involved in magazines.
You can sense the danger of this dependance on print, regardless of the company’s digital progress.
On the basis of the 2023 results, a 20% reduction in UK magazine revenue would require no less than a 50% increase in UK digital ads just to stand still. In the short-term, this might be balanced by GoCompare’s cyclical growth but affiliate eCommerce revenue may always be vulnerable to the muscle of Amazon and Google.
Future’s print-dependance surely dictates the need for Steinberg to go much further than merely explaining the company’s challenges by brand categories. He might just seek to improve dramatically the focus and manageability of his listed company in four specific ways:
- Short-term: Identify the core market sectors for investment and maximum digitalisation, presumably including: Tech, Homes, Personal Finance, Fashion and Entertainment. In multi-brand sectors, consider merging some print magazines to maximise profits and focus digital development on the strongest digital and/or print brands.
- Medium-term: Seek to de-merge the News and TV Listings brands into separate operations with one or more Joint Venture partners. Upfront consideration could be reduced in exchange for a guaranteed stream of profit payments for Future. UK daily news brands, including the Daily Mail and the Telegraph, could, perhaps, offer the cost and revenue synergies to make such deals work. The Week might attract a high-priced US buyer.
- Long-term: Find a partner/ buyer for GoCompare. There may need to be a discussion with founder Peter Wood who is now Future’s second largest shareholder.
- Medium-term: Divest unwanted brands.
Across the Atlantic from Steinberg’s new home, the eerily similar DotDash Meredith has also been wrestling with the pressures and pitfalls of print. But it has been more actively going ‘all-digital’ with magazine brands. For all the evident disappointment of the Meredith acquisition, the previously all-digital CEO Neil Vogel might have found it easier to scrap print although he’s got his trials too with magazine profits he simply can’t afford to sell (Is People magazine a giant version of Future’s TV listings challenge?)
But back to the achievable goals of Future.
Jon Steinberg could establish his digital-focused core group and, increasingly, use his best print brands to facilitate that. He may need to be able to do that having separated out the challenges of soundly profitable businesses (TV listings, The Week, and GoCompare) and finding a buyer(s) for a slew of magazines that would still be very profitable for other publishers. In the UK, successful niche magazines like Motorboat & Yachting, Guitarist, Horse & Hound, Golf Monthly, Digital Camera, FourFourTwo, Music Week, and SFX would not be unwanted for long. Future’s largely US-based B2B portfolio (including the SmartBrief newsletters) might also find a ready buyer as/when the company can accept a dilutive price.
It’s a tough task, of course. But Future’s next transformation will be much more achievable with its current level of profit, cash flow, US growth prospects and a “beatable” £1bn enterprise value. And a CEO who will be “new” throughout this year, before the company celebrates its 40th anniversary in 2024.
