The closure of News Corp print titles, and the subsequent closure of many of Bauer Media’s titles after its sale to a private equity firm, has left some in Australia’s media industry claiming that publishing is dead. TMSN speaks with media consultant John Blondin about why the current market presents opportunities for the publishers that understand the economic environment and how it impacts their business.
There’s no doubt that 2020 has been a tumultuous time for Australia’s publishing industry. In May, News Corp announced that over 100 of its local and regional newspapers would close completely or become digital-only.
In July, Bauer Media announced the completion of its sale to investment firm Mercury Capital, and a week later announced the permanent closure of eight of its print titles.
Commentary around the closures has centred around Bauer Media’s inability to adapt to a digital-first market, the death of print journalism, and the overall decline of Australia’s publishing industry.
But are these assertions correct?
Media consultant John Blondin doesn’t think so. He believes the industry is transforming, and with a career that has spanned 40 years in Australia’s media industry, he knows a thing or two about understanding and building value in media titles.
He’s published award-winning B2B, B2C and custom magazines in the hospitality, liquor and sports industries, and was Chairman of Publishers Australia, the former industry body representing B2B, B2C, custom and digital publishers within Australia. Blondin remained on the Publishers Australia board for over 10 years, and in 2011, he was inducted into the Publishers Australia Hall of Fame.
He’s also been honoured with a Fellowship of the Australian Marketing Institute after receiving the institute’s Marketing Excellence in Media Strategy and Planning award.
Today, Blondin provides marketing and media advice, with a focus on helping media owners develop successful exit strategies and navigate the media mergers and acquisitions (M&A) market.
“I work with media companies to build equity in their business,” he says.
“I understand the value of their print, digital, events and associated assets in a constantly shifting market. I also enjoy working with companies who wish to build equity through acquisition and brand extensions, and use my network to add value to the process.”
So what does Blondin make of the recent print title closures and the future of Australia’s media industry, and where to from here?
Lyndsie Clark: There’s been a lot of negativity about the newspaper and magazine closures from larger Australian media organisations recently. Should niche publishers see this as a reflection on the wider media market?
John Blondin: The structure of the ‘big end of town’ publishers is totally different to SMEs who are generally run by an owner or partners who have built the business up from a very small base through either acquisition or brand extension, or generally only have a small suite of media products.
Companies like Bauer Media and News Corp. are run by media executives that, to a certain degree, have no real skin in the game. They haven’t mortgaged their house or guaranteed borrowings or debt.They can afford to say: “If certain media assets aren’t working in our structure and to our KPI’s, let’s drop them and focus on other things.”
We can see this now with Bauer Media’s move into the insurance market – they’ve collaborated with others to launch an automotive insurance brand targeted at the female market, which plays into its strength in marketing to a female audience. It makes a lot of sense. Others are also looking outside of traditional media offerings.
But initially, Bauer came into Australia and paid Alan Bond-type money for brands that they ran down and eventually sold for virtually taking over the running of the operations, and now as we see private equity involved. They generally close non-performing brands. They cut and slice costs and within a few years, look to sell off the assets.
I’ve been involved in those sorts of deals before. When Cirrus Media bought Reed Elsevier through a private equity play, for three years I was engaged to assist in selling most of those assets to various publishers throughout Australia and overseas.
Simply put, the big end of town publishers will close titles that don’t suit their business strategy, and some of those titles will be profitable with smaller more cost-efficient publishers flagging the opportunity.
LC: How does this affect smaller or niche publishers?
JB: A smaller publisher can look out for these opportunities. If the titles being closed or put up for sale are in the same sector as their existing titles, it can be a bolt-on business, which is a very cost-effective acquisition. Or the purchase could offer a complementary brand that opens up a wider audience for engagement, with the opportunity to create an event and/or other revenue generating initiatives from the joint brands.
It can also be an opportunity to take out a competing brand, and not let someone else acquire or launch something against them.
I look out for these opportunities all the time and as a consequence of that, there was one particular title in News Corp’s recent newspaper closures – Big Rigs – which appealed to a publisher who I knew and have done business with before.
As you recently reported, Big Rigs has been acquired by that publisher who has cut out the competition and is creating a good platform to grow a really excellent brand alongside his other automotive titles and associated assets.
News Corp had made all their staff on Big Rigs redundant. But their staff ended up doing well because they were paid a redundancy fee, and now they’ve been re-employed. So you feel good about those deals – saving a brand and creating or continuing employment for the staff.
In general, News Corp’s closure of many of its newspapers has created a lot of opportunities for others – particularly those that are local – to resurrect the titles.
LC: Is there anything that smaller publishers can learn from the way larger publishers think about their media assets?
JB: Today, it’s important to remember that it is a media communications market, not a magazine market, and it relates to a suite of communication products compared to days gone by where the focus tended to be on a magazine and website with possibly a newsletter. There’s distinct media markets in the imparting of information within the consumer and B2B space, and then there’s events and other revenue generating initiatives that can dovetail into those markets.
There’s traditional publishers that really haven’t embraced digital disruption and kept pace with market forces in a manner in which they possibly should have. And generally, they are smaller publishers who are very emotionally connected to their brands.
Those small publishers are the ones that are struggling because they saw their magazine portfolio as being their payback, in a superannuation-type manner, to all the years that they’ve spent developing their product. Generally, they are so hands-on that they have made themselves a major part of the brand’s goodwill and would be required to stay with the brand during the transition stage after a sale.
Then, there are other publishers who are developing their brand to include different communication vehicles. And they’re focusing on reach, quality content, engagement, and growing brand extensions to their magazine. In other words, they’re embracing opportunities in the digital space. Some extend into the event space. They also look at seminars and collaborations to drive revenue.
There’s value in how a proprietor of a communication asset can look at the various components of their asset and create other assets from it, and as a consequence build out a lot of equity in their structure.
The important thing is to understand what the economy is doing…take a forensic analysis of your business and determine exactly where you want to go in relation to the environment you’re working in.
Basically, unto thyself be true. Don’t be blind to factors that influence your market. You’ve got to be true to yourself in what you’re doing and, sometimes take the emotional connection and gut feel out of your brand. Be realistic and constantly review your positioning in relation to your market sector, the broader economy and your competitors. A good old SWOT analysis offers a reality check. Budget ahead and plan for an exit at some stage.
LC: What about titles that have promise but are with publishers that are unable to or unwilling to take that deep-dive analysis into their business?
JB: I get a number of smaller publishers that speak to me when they’ve got to a point where they, unfortunately, find themselves in a predicament where a supplier will want to sell them up because they’re heavily in debt. I do get suppliers, mainly printers, contacting me about it too. Other small publishers are looking for equity partners to not only get some payout but also funding for growth opportunities.
In some instances, not all, I’ve managed to secure some revenues to either pay off the debts or find some assets within the company that I know another publisher or media owner could use. It could be a database. It could be the potential to develop a brand or an event from the brand they have that the other publisher would have access to a larger audience.
As an example, in 2018 I negotiated the sale of the well known title. It was experiencing financial difficulty at the time. And the company that acquired it was a complementary enterprise, but not a publisher. The brand is still in existence today. So it saved not only the brand, but also created continuing employment for some of the staff and the debts were honoured.
LC: Which types of publishers do you see as being resilient in the current market?
JB: The market is always evolving. Over the 40 years that I’ve been associated with the media market, I’ve seen a lot. I’ve seen recessions and several major downturns, and I’ve picked up publications in these times. I’ve also picked up a couple of publications and an event through being opportunistic through the rationalisation process attached to mergers.
I negotiated and picked up a number of hospitality titles through a custom publishing company that went into liquidation through a management buyout. And when Thompson’s, a major English based company, was acquired by Reed Elsevier, a global entity, I picked up National Liquor News and a few other assets. We launched an annual liquor industry awards event as well as several brand extensions in addition to the print titles and events.(These titles are now owned by The Intermedia Group.)
That business all started from the smell of an oily rag, but that’s a long time ago.
When the GFC came, a lot of publishers struggled. Advertising sort of fell off a cliff and survival became a big thing for many publishers.
But the strength of the B2B brands, as distinct from a lot of the consumer brands, carried them through. And in this particular market, now, we’re seeing that the B2B brands, who are often seen as the poor relations to consumer titles., are being quite resilient.
I’m finding more B2B brands are being transacted and discussed amongst publishers than ever before. And on the basis that there’s a realistic view on those that want to get out, and a realistic view on those that want to buy in.
LC: Where do you see the future of Australia’s media industry heading?
JB: I see the market going through a transition period over the next year, wherein 12 months’ time, we’ll see a really interesting media landscape develop. And that involves everyone from the big players, SMEs, and goliaths like Facebook, Twitter and LinkedIn.
We’ll see a lot of change, especially after Jobkeeper cuts out.
A shakeout is going to occur, and a publisher that’s able to take advantage of it will end up being in a good position this time next year. I believe that those able to take advantage are the publishers with platforms based on a well-defined strategy, valuable human resource, the right cost structure, and the ability to acquire now.
For more information about John Blondin’s services, visit the Media Titles website.
To read John Blondin’s strategies on how to revitalise your media brand in a shifting market, visit this interview.
