Posts Tagged ‘Future’

Reed, Pearson and Future: lessons in media strategy

January 8, 2020
12 magazine logos: Some of the magazine brands Future in buying from TI Media

Fifteen of the 41 magazine brands Future is buying from TI Media

In my days as a media academic, I developed a case study comparing the corporate strategies of Reed International and Pearson. Their progress has been brought back to mind as I ponder what Future is planning for the 41 media brands it is buying from TI Media. These are the remnants of what used to be IPC – Britain’s ‘Ministry of Magazines’ as it was called for its massive size and bureaucracy – and one of the biggest divisions of Reed back in 1980.

At a basic level, it’s a nice little project to map TI’s list of iconic brands, against Future’s justification for the £140m purchase. What divisions would you put the purchased magazines into? And why? Notice that Future lists Country Life in both the Lifestyle and Home Interest ‘verticals’; so where should that venerable title – founded in 1897 – belong? I argued two years ago that it was one of brands being neglected under TI:

[Moving Country Life out of London into a business park] suggests a lack of investment by its owners. However, even if this penny-pinching strategy leads to a decline in Country Life‘s fortunes, its history and contacts should enable it to attract a better owner – and its history can never be taken away. If I were the editor, I’d be trying to do a management buy-out.

And what will Future do with all the yachting and boating titles – sport or lifestyle? Do the hunting and shooting titles fit Future’s skills and company ethos? Where does CelebsNow belong? That’s the digital stump of Now, all that’s left since the magazine, which had a reputation for upsetting celebrities, closed in March last year. Is it worth pushing further into the celebrity sector?

Future’s managers will no doubt be running the Boston matrix over their purchases, deciding which ones are a good fit, which stars to fund for their growth potential, and which dogs to close or sell on to companies where they are a better fit. The UK periodical publishing industry is nothing if not dynamic.

200 years of Reed and Pearson history

More at the business degree end of things, Reed and Pearson are fascinating companies and between them encompass the fortunes of a huge part of British magazine and book publishing for much of the past 175 years. They are among only 28 survivors of the original companies in the FTSE 100 when the index was created in 1984; Future did not yet exist. Yet Reed and Pearson both have their roots outside publishing.

Reed started out as a papermaker in 1895, growing quickly alongside the boom in magazines and newspaper publishing that created a massive demand for newsprint made from wood pulp. This was a time when Fleet Street was the centre of the global media world and Reed’s business brought it into contact with printers, publishers and the building trade. Being a well run and profitable company, it had the cash to buy up companies in these sectors, so by 1980 Reed Group controlled IPC Magazines, Mirror Group newspapers, Odhams printers, Crown wallpapers and paints, and Polycell, among others.

Financial Times eggcup photo: Pearson owned the FT from 1957 to 2015

Pearson owned the FT from 1957 to 2015

Pearson was founded in 1844 as a building contractor and evolved into an international group working for governments across the world. If you’ve ever been to Malta, some of those Valetta harbours and fortifications are of its making, as are chunks of infrastructure in New York, London, Cairo and Mexico. It was also big in oil services. In the 1950s, Pearson became a conglomerate running a portfolio of companies in five sectors: financial services, publishing, oil, manufacturing, and investment trusts. The assets included Lazard bank, the Financial Times, the Economist, Penguin, Longman, Westminster Press, Yorkshire TV, Château Latour, Wedgwood, Royal Doulton and Madame Tussaud’s. The only common factor was that each one was regarded as being the best in its field.

Future was founded in 1985 by Chris Anderson (now better known for heading up the TED talks). Future’s first title was Amstrad Action, a games magazine for owners of Alan ‘Your Fired’ Sugar’s Amstrad computers. It was produced cheaply using computer technology outside London and the company then expanded into hobbies such as cross-stitch as a self-professed ‘anorak publisher’. Pearson actually owned Future for four year from 1984 as it pursued growth in multimedia.

Reed and Pearson were both massive and successful companies, with market capitalisations of £2.4bn and £1.7bn respectively in 1988. However, conglomerates were out of fashion and found it hard to justify their strategies to the financial markets. They were regarded as takeover targets that were more valuable by being split up; and Pearson was described as a ‘collection of rich man’s baubles’. They decided to change their strategies and concentrate on media – both were founder investors in British Satellite Broadcasting in 1989. However, they met with very different results.

All change in 1990s media

The May 1994 first issue of Loaded - a landmark title under James Brown

The May 1994 first issue of Loaded – a landmark title under James Brown

Reed sold its building divisions, newspapers and print plants; out went book publishing and IPC, publisher of iconic magazines such as Country Life, NME, Woman’s Own and Loaded. By 1990, it had changed analysts’ views – they regarded its share price of 443p as undervaluing the company compared with other international publishing businesses. It then merged with Elsevier, a Dutch professional publishing group, and concentrated on information and data that could be sold internationally over digital networks at high prices.  It moved up the ‘value pyramid’ in marketing jargon, away from high volume, low value fiction paperbacks and weekly magazines into expensive, global professional information and data. The nearest it kept to a consumer magazine was Reed Business Media and New Scientist – and that went in 2017. The strategy was a great success and Relx, as the company is now known, has a market capitalisation of £37bn and employs 30,000 people. Its share price is 1,905p and it is ranked 15 in the FTSE 100.

Penguin logo: Penguin was controlled by Pearson from 1970 to 2013

Penguin was controlled by Pearson from 1970 to 2013

Pearson sold Penguin and its other consumer imprints to concentrate on academic and educational publishing, student testing, and the FT and Economist. The strategy worked and by 1990 its shares were at 777p. The share price shot through the roof in the ‘dotcom boom‘ of 2000 – peaking at about £24 – because the company was seen as a ‘digital play’ for investors. But that bubble popped. The company’s valuation recovered to about £14 under former Economist publisher Marjorie Scardino as she pursued a ‘learning company’ strategy, but has since bombed under her successor John Fallon. He sold the FT and Economist to focus even more on education and testing, but exposed the company to falling sales as students and schools in the US cut back on buying books, its digital distribution did not take off and the share price dropped like a stone. Today, Pearson has a market capitalisation of £5bn and employs 24,000 people. Its share price is 634p, and it has dropped to 96th in the FTSE 100.

So, in 1980 Reed had a market capitalisation half as big again as Pearson’s; 30 years later it is seven times as big. Two conglomerates tried to focus on digital media, Reed executed the strategy far better.

So, what about Future?

Amstrad Action magazine first issue cover: Future's first title magazine in 1985

Amstrad Action was Future’s first magazine in 1985

Bath-based Future is a minnow compared with Reed and Pearson, just 35 years old with a market capitalisation of £1.4bn and 1,200 employees. It is ranked at about 240 on the FTSE. Future went through the dotcom bubble – publishing Business 2.0, which mapped the hopes for the ‘new economy’ – and nearly became a cropper through over-expansion and reliance on the US economy.

Now, Future plc has a similar level of turnover per employee as the enviable Reed. However, does it really have the skills and resources to exploit the historic shift being forced on periodical publishing by digital media? Investors think so. Future’s share price tripled in 2019 because they reckon it can buy up moribund print magazines and turn them into digital goldmines. That’s what Future says it will do with the 35 magazines and six websites it has bought from TI Media. What do you think?

 

This day in magazines: Woman’s Realm launch

February 22, 2017
The first issue of Woman's Realm dated 22 February 1958

The first issue of Woman’s Realm dated 22 February 1958

Woman’s Realm was launched as a mass-market women’s weekly magazine on 22 February 1958 to take sales pressure off Woman – which was selling three million copies an issue – and use printing capacity at a plant in Watford, Herts, owned by Odhams, its publishers.

Woman’s Weekly was an updated version of the well-tried formula of fiction plus domestic tips and information. By 1960, the latter dominated. It added a medical page, personal problems, fashion and regular spots for children. The Odhams publicity machine took sales to over a million. Clarity of hints on domestic matters in Woman’s Weekly, particularly cookery, kept those readers.

There had been intense rivalry since the 1930s between Odhams with Woman, George Newnes with Woman’s Own and Amalgamated with Woman’s Weekly (the oldest of the women’s weekly magazine trio, dating back to 1911). There was also a printing rivalry with both Woman and Woman’s Own being printed in Watford, at Odhams – the Art Deco building is still a print works today – and Sun Engraving. All that is left of the Sun plant, the biggest printing works in Europe in the 1930s producing a huge range from Picture Post to Vogue, is the clock building that stood at the factory entrance, some road names and a Sun bar in a hotel built on the site.

In spring 2001, Woman’s Realm magazine folded after 43 years and was merged with sister title Woman’s Weekly. Press reports quoted editor Mary Frances saying it could not get away from its old-fashioned image and an ‘association with knitting patterns’. Most sales for mass-market magazines had been falling since 1960 but Woman’s Realm had seen a sharp drop in 2000, down 15% year-on-year to 152,053. It was selling 500,000 copies a week in 1989. 

Woman’s Weekly has proved its staying power over more than a century, having overtaken its more lavishly designed rivals to register an ABC figure of 276,208, with no freebies, against Woman (208,145) and Woman’s Own (185,172).

Contraction in magazine publishing had set in during the 1950s after the launch of commercial television and later Sunday newspaper supplements. Odhams, Newnes and Amalgamated all merged to form IPC – which then controlled the bulk of British magazine sales – in the 1960s. In 2001, the group ended up in the hands of the US media group Time Inc. Turmoil in the US owners has resulted in cost-cutting and turmoil for the UK offshoot since 2018 and a massive drop in value for the company.

Addendum (April, 2019; February 2020)

With magazine sales in gradual decline, IPC was bought and sold several times:

  • 1998: Reed Elsevier sells IPC  for £860 to Cinven, a venture capital group.
  • 2001: Cinven sells IPC for £1.15 billion to AOL Time Warner. The US publishing giant ran down its British arm, closing or selling many magazines – including Woman’s Realm (after a half-hearted attempt to relaunch it as Your Life under editor Mary Frances). In 2015, it also sold IPC’s Blue Fin office building in London for £415m, moving half of the magazines to an industrial estate in Farnborough.
  • 2018: after Time Inc (what was left of AOL Time Warner) was itself bought by Meredith, another US group, the remains of IPC were sold to private equity company Epiris for a paltry £130m. It changed the name to TI Media.
  • September 2018: TI sells its comics division to Oxford-based 2000 AD and games publisher Rebellion Developments.
  • June 2019: TI sells NME and Uncut to BandLab Technologies, a music specialist group established in 2016 and based in Singapore.
  • September 2019: TI closes the print edition of Marie Claire, a title launched in 1988 as the ‘thinking woman’s magazine’ with serious features, fashion and beauty.
  • In October 2019, Epiris announced it was selling TI Media‘s 41 brands to Future for £140 million. The new owner said it would own 220 global media brands (nobody just publishes magazines any more). Listed as part of the ‘compelling strategic and financial rationale’ for the deal was the entry into ‘three new specialist verticals’, one of these being Women’s Interest with Woman’s Weekly, Woman’s Own, Woman and Chat. Another reason was that TI Media was historically UK-focused whereas Future had a global operating model.

The official sales figures of the three women’s weeklies at the end of 2018 and 2019 were:

  • Woman’s Weekly: 236,429 (227,505)
  • Woman: 133,103 (124,580)
  • Woman’s Own: 124,187 (113,963)

Information about magazines


To see almost 500 magazine covers and pages, look out for my book, A History of British Magazine Design, from the Victoria & Albert Museum, the world’s leading museum of art and design