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Small is beautiful: Future's rock magazine sell-off and the rise of the publishing startup

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Patrick Smith, TheMediaBriefing Experts' Blog, Consumer Media


UPDATE: The Guardian reports TeamRock plans to launch a digital radio station in May. The station will not run spot advertising, relying instead on promotions and sponsorship. 

The report also links the new venture with a potential purchase of Global Radio-owned Real XS, which broadcasts in Manchester and Scotland.  

 

Here's a question that's becoming increasingly relevant to the media industry: how do you take specialised print titles away from a big corporate owner, transform them, increase profits and create a plan for digital growth?

That's the teaser facing TeamRock, the proud new owners of Metal Hammer and Classic Rock magazines, bought from Future plc for £10.2 million, with funding from Harwood Private Equity (release).

The new startup is led by John Myers and Billy Anderson, the former CEO and regional MD of GMG Radio respectively, and the pair say they will be announcing more deals this morning with commercial radio stations the likely targets. Digital innovation for the magazines will come, but there are no details yet. Anderson confirmed to me there will be no redundancies or cost cutting.

So it's a multimedia portfolio play in an increasingly fragmented consumer media market. But what's the big picture?

 

Future's sell-offs and rise of the publishing startup

Future sold its rock titles because they didn't fit with its strategy of building digital and international media brands. Metal Hammer, for example has a circulation of 30,000 and the breakdown is 76.6 percent print newsstand, 18.3 percent print subscriptions and 4.1 percent digital editions.

Future CEO Mark Wood can now pay down some debt and please shareholders and everyone in his company gets on with building a business model based on tablet magazine editions and web publishing.

But TeamRock isn't the only publisher looking for success by buying print titles - here are a few entrepreneurs who have acquired print titles recently: 

-- Local World: The regional newspaper consolidation vehicle spent £52.5 million last year to buy up Northcliffe Media from DMGT, containing more than 90 newspapers - in a deal that sees Local World share the equity with Trinity Mirror, DMGT and the Yattendon Group.

Northcliffe's management team and offices remain but the decision-making chain is shortened to that of a small company, not the global PLC that is DMGT. Read our interview with Local World CEO Steve Auckland.

-- British Journal of Photography: Incisive Media this year sold BJP to a new company, Apptitude Media run by the title's management including MD Marc Hartog. The title was an odd match for B2B publisher Incisive and is now going it alone as a media house and app development business.

-- Broadcast: Emap's TV industry title and its related brands were spun off into a separate internal unit last year, Media Business Insights, controlled by MD Conor Dignam, with a view to selling the division in the near future. When we spoke to him in November, there had been no investor contact, but Emap is keen to reduce its print-focused portfolio and management-engineered buyouts could be an effective way to do it. 

-- Briefing Media: The owner of TheMediaBriefing.com bought Farmers Guardian and Pulse magazine from UBM in 2012, in a deal backed by private equity group GCP Capital Partners.

Small is beautiful

The trend here is clear. Big legacy businesses are actively managing their portfolios and turning dormant, growth-challenged assets into an improved balance sheet. There is appetite from investors, particularly in private equity, for small-scale deals around the £10 million mark with some big growth attached.

In consumer and B2B media, portfolios got too big too quickly in a debt-fulled pre-crash frenzy. What we're seeing now is a readjustment from big to small, from slow to nimble. It only sold its consumer titles in 2007, but it feels like a long time ago when Emap was a multi-billion pound conglomerate spanning B2B media, expos, supermarket magazines, monthlies and radio. 

But the only problem for legacy print titles is that crucial digital transition isn't always easier in a small company.

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