Will Seven West Media Consider A Pac Mags Buyout?

Following speculation last week that Bauer Media had made an offer to take over the Seven West Media-owned Pacific Magazines – creating a print publishing supergiant – The Australian is now reporting that Seven is keeping its options open for other parties.

Per The Oz, Seven has apparently asked other interested parties to sign a non-disclosure agreement in relation to Pacific Magazines acquisition talks, following The Oz revealing Bauer’s expressions of interest last week.

Bauer was rumoured to have approached Seven West Media with regards to buying out Pacific’s division, with The Oz claiming an unsolicited approach was made in recent months, despite talks between Bauer and Seven not progressing any further as of yet. It’s also not the first time the two have talked about a merger.

Last week, The Oz spoke to Australian Competition & Consumer Commission chairman Rod Sims about new online competitors to the magazine industry in the event of a potential deal between Bauer and Pacific. He claimed that any agreement made between the companies would be likely to require the ACCC’s approval given the dominance a new magazine juggernaut would possess.

“We are aware that the demand for magazines is declining so that just reinforces the point that we would need to look very closely at the competition between print magazines and the other various ways of getting other similar information online,” Sims told The Australian.

“Sometimes when people point out various forms of digital disruption, it is something expected to happen in the future as opposed to something that is happening now.

“Clearly, with the decline in magazines, that’s something that’s already happening.”

Both Pacific and Bauer declined to comment on the speculation last week when approached by B&T.

The combining of Bauer and Pacific would result in a magazine monopoly in Australia, with the business dominating advertising in print audiences and holding control over around 80 per cent of the mag market.

Off the back of its serious spending in its digital capabilities, Seven would no doubt expect generous compensation to recognise that. That being said, Pacific’s earnings pre interest and tax dropped by over 50 per cent for the year to June 30 2016, largely as a result of its heavy digital investments, while revenue dipped 8.6 per cent to $201 million.

According to the Standard Media Index’s latest report, Pacific had its biggest-ever advertising revenue share over Bauer of 47.8 per cent this year.

Consolidating is thought by many to be the best option, and per The Oz, industry sources believe Bauer needs to make this acquisition if it wants to maintain its place in this market.

Both magazines have suffered drops in circulation and magazine closures this year, with Bauer’s Dolly the most recent title to get the chop.

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