Tuesday, June 9, 2009

Bonnier's Putting Money into Magazines

Bonnier Group is one of the largest magazine owners in the United States, and it's looking to take advantage of other owners' pain by making more acquisitions.

Crazy? Aren't all the anti-print people saying magazines are dead? Readers of this blog know I don't think that. But I'm pleased to see someone with hundreds of millions of dollars agree with me.

Terry Snow, chief executive of the private Swedish company's U.S. magazine division, told the Financial Times that his company expected to be able to make moves that public companies and other investors could not.
“The public companies, unfortunately, are pressured by quarterly earnings, and then you have venture-backed companies which are fighting the banks,” he told the FT. Bonnier expected some large magazine owners to sell once credit markets improved, he said, “and I think we will be one of the few strategic buyers.”
But Bonnier's not stuck in the past, even though it's a 200-year-old company. It's exploring a wide array of multimedia and online extensions of the magazines it's been adding to its stable.

Even though Bonnier's a big player, it illustrates something I've been thinking about lately. Back in the mid-1990s, after cash-strapped Bob Guccione ceased publication of science fiction/fact magazine Omni, I pitched a smaller multi-title publisher the idea of a start-up (actually, a revival) magazine in the same market space. The publisher declined, but we talked at length about Omni, which was killed despite having a circulation of more than 600,000. He said -- with something sounding like astonishment -- (this is a paraphrase, of course, more than a decade after the fact), "I could make Omni work. But they can't. Guccione has to do everything big -- big staff, big salaries, high costs. But I could make it work for less."

What was a terrible money drain for Guccione at 600,000 would have been a high circulation for this other publisher, whose normal titles sold less than half that. It would have been a different magazine, of course, because money does buy a certain level of artistic and professional talent. But it wouldn't necessarily have been a bad magazine, as hundreds (thousands?) of small magazines have proven over the years.

And Omni's only one example. Some big publishers have commented that they can't make a magazine work financially if its circulation is below something like 750,000. So they close or -- here's my point -- sell magazines that don't attain that level.

That means there are a lot of magazines that could come to the auction block, and a well-funded publisher/investor could snap up a lot of them, publish quality titles at lower cost, and make a bundle. Hello?
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