This is either the silly season when the UK news media look for singing dogs or eggs being fried on unseasonally hot London pavements. Or it may be the perfect time for catch-up media deals. So, here are some very personal forecasts about deals that could just happen…
Desmond does it again
Now that Richard Desmond is (again) confounding London’s chattering classes by turning losses into profits, this time from the country’s lesser TV network Channel 5, he just might be expected to offload Express Newspapers which has been his springboard to the big league.
Who might buy the Express? Evidently, not the Daily Mail. How about The Independent owner Alexander Lebedev (with or without help from his Daily Mail partners)? Lebedev could merge the Express with his enterprising i newspaper which is building steadily in a ‘USA Today’ kind of way. However different are the audiences, could the Express conceivably be that next trick for The Independent/ i? Or is there some kind of play for the Express to get the excellent (and free) London Evening Standard back to paid sales and solid profitability? Who might, then, take on Desmond’s Daily Star? Perhaps, David Sullivan who has just bought back from administrators the Daily Sport, printed by one Richard Desmond.
Will the quietly rising privately-owned free newspaper City AM (apparently now profitable) be snapped up by Lebedev, enabling an obvious tie-up with the Standard‘s legendary City coverage? Or will the similarly well connected Telegraph Media Group or even Germany’s Axel Springer make a move for the free financial daily?
The slow dance of death
There is clearly the prospect of such consolidation, at the very least, in the battered UK daily press. But, judging by the slow dance still going on in the troubled regional press, we might not expect any quick progress along a road paved with the hazards of book values, investment losses, and pension deficits.
Magazines might be molten too.
Will this be the year when Time Warner’s expensively bought UK magazines leader IPC Media is sold? Perhaps to German private group Burda, publishers of 270 magazines worldwide, one-third of them in Germany? Burda pulled away from the tricky deal to acquire BBC Magazines, now all but sealed by private equity group Exponent (owner of special interest publisher Magicalia). Perhaps Exponent will then bring it all together with specialist group Future Plc, who have been under-appreciated by the stockmarket for more than 10 years and would be almost too neat a fit with Magicalia and BBC Magazines.
Time Warner’s reported talks now to buy the US edition of Richard Desmond’s OK! Magazine may be a wild card. Even if a deal materialised, it would not necessarily point to any longterm decision by Time Warner to keep or divest its magazine businesses in the UK or US. A OK! deal could strengthen the New York-based publisher of major weeklies like People,In Style, Entertainment Weekly, Money, Sports Illustrated and Time itself – whoever owns this venerable US business (or its market-leading UK subsidiary) in the longterm. Further, divestment of the US edition need not give any clues to the future ownership of OK! whose worldwide network includes strong owned magazines (as in the UK) along with others either in joint venture or licensed relationships. The UK edition of OK! also seems to be helping build Channel 5 audiences with a daily celebrity show.
The recent Hearst acquisition of Hachette magazines has probably deferred, for at least a year or two, any prospect of the US company acquiring Australia’s market leading ACP Magazines. ACP’s sharp decline in profits is the added salt in the wound of UK-based private equity group CVC which acquired the business along with Channel Nine in high times from James Packer’s then quoted PBL group in 2006.
The price then was a heady A$5bn, well north of any current valuations. PBL has been renamed Nine Entertainment Company to reflect the relative strength of the Channel Nine TV network versus the magazine group. CVC may want to do something more creative in order to offload ACP before trying for a 2012 IPO for the remaining TV/ online/ events business. Could that mean merging ACP with its nearest competitor Pacific Magazines, owned by the Seven West TV/ newspapers rival (Competition Commission permitting)? Or with the much smaller News Ltd magazine division? Or with the country’s leading daily newspaper group Fairfax Media (now under its third CEO in three years and expected to raise some hefty cash from a sale of its radio network)?
Or will CVC be forced to wait (and hope) for Hearst who are, crucially, partners in some of ACP’s key magazines including Harpers Bazaar, Madison, Grazia and Cosmopolitan? It is difficult to believe CVC will risk letting the ACP Magazines performance overshadow and reduce the ratings of the TV-led group, which also includes a profitable online JV with Microsoft. But a divestment of ACP will be difficult and may need to be linked to a continuing shareholding in a buyer’s business. Certainly, the possibilities have been narrowed by the strength of the Australian dollar which may deter foreign buyers, at least for now.
These are the sights and sounds of media companies desperate not to be chair-less when/if the hard copy music stops.