Potential magazine merger to impact print

In a move that could have major implications for print, the owner of the country's second biggest magazine publisher Pacific Magazines is in talks with the biggest publisher, Bauer Media, over a possible sale.

New CEO of Seven Media, James Warburton, is reportedly looking to offload Pac Mags as part of a bid to get Seven back into the black, and is in talks with Bauer over a deal.

If Bauer does buy Pacific Magazines it may impact the country's two biggest printers, Ovato and IVE, with the former printing Bauer titles and the latter Pacific Magazines. Should Bauer buy Pac Mags and decide to opt for one printer or the other, it would leave a major hole in the production schedule of the losing team.

However, industry insiders say that if Bauer does end up with Pacific Magazines it may well keep on using both printers rather than going all in with one, as going all in with one while leading to a likely lower price initially would see the end of competitive pricing and printing options. The loser would be unlikely to retain much of its magazine printing capacity, as the two publishers have around 80 per cent of the market between them. No-one else has anywhere near the capacity to print the magazines.

Bauer publishes around 45 per cent of the entire Australian magazine market, while Pacific Magazines has around 33 per cent. Seven’s annual report says that Pacific Magazines generated revenue of $130m for the last financial year, down 7.2 per cent from $139.5m the previous year.

The major magazine publishers are facing a decline in advertising coupled with the expensive licence fees for the major titles such as Elle and Marie Claire, which are showing no sign of coming down in price.

Bauer was formerly ACP, the Kerry Packer publishing house, which was sold by James Packer to the German operation five years ago. Pacific Magazines was the business that PMP, now Ovato, was spun out of 20 years ago.