Bauer Media Group and Seven West Media will ramp up their efforts to convince the competition watchdog that a takeover of New Idea-publisher Pacific Magazines by the German-owned Woman’s Day publisher is the best outcome for the glossy magazine industry.
Bauer, which agreed to buy Pacific Magazines from Seven West Media in October, has contracted Frontier Economics to form its arguments in favour of the merger and will consult with the firm again for the next round of submissions due in February, sources with knowledge of the process said.
The Australian Competition and Consumer Commission delayed its decision on the $40 million deal on Thursday, raising concerns about the tie-up of direct rivals Woman’s Day and New Idea, Take 5 and That’s Life!, and broader issues around reducing competition for suppliers of content such as photography.
Both media businesses had been surprised by the decision, multiple sources said, particularly because the regulator’s New Zealand counterpart in 2014 cleared Bauer to buy the APN magazine portfolio that included some rival titles.
While there is little dispute that the Australian women’s-focused titles and the real-life stories magazines are direct competitors, the publishers have argued that these publications coming under one roof does not create a monopoly due to the growth in competitors online.
One of the crucial points being made by the magazine owners is that the rise in digital platforms, such as social media and websites, has resulted in many new competitors for women’s lifestyle content that has made audiences more price sensitive. Bauer chief executive Brendon Hill recently said Facebook-owned Instagram, in particular, had become a disrupter for lifestyle-content providers.
“At a superficial level you can see their [the ACCC’s] concern,” a source said about the rival magazines coming together, adding that the titles do often hike prices at the same time.
However, they said the “bigger picture” was all the content available online for free that acted as a constraint.
Bauer-owned TV Week has not put its price up since May 2015 despite being the only magazine in the television guide category.
The sources said the digital landscape would again be a cornerstone of submissions provided over the next two months in a push to get the deal approved, with a decision from the ACCC scheduled for April. The increasing spend from advertisers on digital was raised in Bauer’s submission to the New Zealand Commerce Commission to help justify the APN deal, with brands able to switch to online or lifestyle content on television if ad prices are hiked.
Media sources close to the deal also said there were clear benefits for a company to own two rival titles and keep them open, with the potential readership on both magazines not fully overlapping and some readers choosing to buy both. When Bauer shut down Cleo magazine the majority of readers did not buy rival Cosmopolitan, the sources said, and there had been no discussions about closing down the the Pacific Magazines publications should they be acquired.
One of the potential outcomes should the ACCC not be prepared to give the deal the green light is for the businesses to agree to undertakings, which a source said the magazine publishers were open to considering, or to appeal the decision in court.
Source: Thanks smh.com