Big Deals and What They Mean
Audience, geography, events and investors loom large over the market.
Magazine M&A has gotten some momentum after a few lean years following the recession. Capital is flowing more freely than it has since the late-2000s and the publishers that managed to survive the recession are shifting into growth mode.
Here are a few of the standout deals and trends since the market has begun its rebound.
Scale Drives Deals
Advances in data collection have allowed publishers to get a lot better at finding untapped audience segments and targeting key demographics with individualized marketing efforts, but granularity doesn’t mean the advantages of pure volume have gone away.
Meredith created what it’s calling “a category killer” among women’s health and fitness titles when it bought Shape from American Media Inc. for a reported $60 million plus profit-sharing considerations in January. The company is merging Shape with its own similarly positioned title, Fitness, to create one magazine with a rate base of 2.5 million (60 percent higher than Shape’s 1.6-million rate base prior to the deal).
With the purchase, Meredith is hoping Shape’s new audience will have enough scale to provide significant differentiation from main competitors Health, Women’s Health and Self, attracting non-endemic advertisers. In dollars and cents, that means it’s looking at $50 million in revenue next year.
Through partnerships, strategic deals or organic launches, publishers have increasingly looked overseas for growth.
Politico has been the most aggressive (with more than a little help from German publisher, Axel Springer), acquiring European Voice in December as part of a reported eight-figure investment. The company’s Euro model will follow its American one closely—a smattering of free content, along with a few high-priced vertical subscription offers. Print will play a role, as well.
Time Inc. also got involved in Europe, raising $1.4 billion in debt to fund the purchase of its British counterpart, IPC Media, as the company prepared to spin-off from parent, Time Warner.
Interest has gone the other way, too. Via a subsidiary, Axel Springer took a stake in the women’s lifestyle publisher, Livingly Media, in February, buying the company for $25 million. On the B2B side, U.K.-based Informa bought the exhibitions division of Hanley Wood for $375 million in November, while UBM, another British company, purchased Advanstar for $972 million the month before.
Events Companies Consolidate
The Informa and UBM deals, along with Emerald Exhibition’s acquisition of GLM for $335 million in late 2013, are also harbingers of a major shift in the events realm: consolidation.
While all the companies involved in those transactions have traditional media components in magazines and websites, the events assets were the clear prizes. That emphasis, along with the fact that it’s the large event-first companies with the capital and caché to pull off the deals, is a testament to the value of experiential offerings right now—event companies are strong, and they’re ready and willing to get stronger.
While nine-figure mergers tend to dominate headlines, there’s also been a flurry of smaller transactions to the same effect. Emerald, Informa and Diversified Communications have each made a series of strategic tuck-in acquisitions recently.
PE In B2B
Private equity upped its stake in the B2B media world once again with a handful of hundred-million dollar acquisitions in 2014.
ALM stood out as the largest deal of the bunch, going to Wasserstein & Co. in June for a reported $417 million. Its “new” owners—it’s actually the second time Wasserstein has owned the publisher; the firm sold ALM for $630 million in 2007—haven’t been afraid to invest either. ALM has since snapped up Kennedy Consulting & Research and Summit Professional Networks in an effort to break into new strategic markets.
McGraw Hill Construction was another big name taken over by PE in 2014. Parent group McGraw Hill Financial sold the construction vertical to private equity firm Symphony Technology Group for $320 million in September. Asset International (sold to Genstar Capital for $125 to $150 million), SourceMedia (Observer Capital; $60 million) and Questex (Shamrock Capital Advisors; undisclosed) also changed hands.
Not everyone has a clean balance sheet though, so banks are still playing a critical role in B2B, as well. Cygnus completed its 18-month divestiture in December, widely viewed as a successful sell-off.